Court Opinion

ID: 9653437
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:46:37.847242+00
Date Added: 2024-06-11T18:12:59.189126
License: Public Domain

KERNER, Circuit Judge
(dissenting).
In this case the Commissioner determined that petitioner and his wife were not carrying on the business operated under the name of Noblesville Rendering Company as a partnership. Whether a real partnership existed was a question of fact, to be determined from the testimony disclosed by their agreement and by their conduct in execution of its provisions. Commissioner v. Tower, 327 U.S. 280, 287, 66 S.Ct. 532, 90 L.Ed. 670. The Tax Court, after considering all the testimony and the conduct of the parties, upheld the Commissioner’s determination. It is true that the court’s conclusion is directly contrary to the testimony of petitioner and his wife. But the court was not bound to reach its conclusion exclusively on the basis of their testimony when there were facts which gave rise to inferences contradicting their testimony. Cohen v. Commissioner, 2 Cir., 148 F.2d 336, and Neville Coke & Chemical Co. v. Commissioner, 3 Cir., 148 F.2d 599.
In addition to the facts mentioned in the majority opinion, the record discloses that in the conducting of the business only one bank account was maintained and that it was in the name of petitioner; that on many occasions petitioner represented himself as the owner of the business; that a form filed with the Treasury Department under the Federal Social Security Laws, 42 U.S.C.A. § 301 et seq., on October 11, 1937, stated that the “Business name of [the] establishment” was “Noblesville Rendering Co. David Wilson (owner).” The form was signed by “David Wilson” and his official position was stated to be “owner.” Similar forms filed by petitioner for the quarters ending March 31, 1941, September 31, 1941, and December 31, 1941, were also signed by “David Wilson” and in them his title was stated to be “owner.” The record also discloses that returns filed with the Indiana State authorities showed the business to be an individual business and not a partnership business; that no part of the profits of the business had ever been ascribed to petitioner’s wife as “partner” or distributed to her, but that the profits were used for household expenses, the purchase of trucks and other equipment, and for the purchase of real estate which was taken in the joint names of petitioner and his wife; that neither petitioner nor his wife ever filed federal income tax returns prior to 1940 and that the return for 1910 accounting for all the business profits of Noblesville Rendering Company was filed by petitioner in his own name.
In this state of the record a case is presented where the evidence is conflicting. Under these circumstances it is the province of the Tax Court to harmonize the evidence insofar as that is possible, choose from among conflicting factual inferences and conclusions those which it considers most reasonable, and determine the question of fact in the light of the manifest conduct of the parties. In such a situation, upon appeal, our function is limited to determining whether there was substantial evidence to support the Tax Court’s conclusion, and the only question is whether there was a rational basis for the inference drawn by the Tax Court. If there was, then a reviewing court is not at liberty to re-weigh the evidence or to choose between conflicting inferences. It may not substitute its *666view of the facts for that of the Tax Court. Where the findings of the court are supported by substantial evidence, they are conclusive. Wilmington Co. v. Helvering, 316 U.S. 164, 62 S.Ct. 984, 86 L.Ed. 1352; Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239, 88 L.Ed. 248; Commissioner v. Scottish American Co., 323 U.S. 119, 65 S.Ct. 169, 89 L.Ed. 113.
In this case, it seems to me that my colleagues have returned to erroneous standards of review rejected by the Supreme Court in the above cases. In my opinion, there is in this record ample basis for the Tax Court’s conclusion, hence I would affirm.