Doll v. Glenn

• Decision Date: 28 March 1956
• Docket Number: No. 12544.,12544.
• Citation: 231 F.2d 186
• Parties: Ethel A. DOLL, Appellant, v. Seldon R. GLENN, Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

231 F.2d 186 (1956)

Ethel A. DOLL, Appellant, v. Seldon R. GLENN, Appellee.

No. 12544.

United States Court of Appeals Sixth Circuit.

March 28, 1956.

Lee S. Jones, Louisville, Ky. (W. Scott Miller, Jr., W. Scott Miller, Sr., Louisville, Ky., on the brief), for appellant.

Louise Foster, Washington, D. C. (H. Brian Holland, Ellis N. Slack, Meyer Rothwacks, Washington, D. C., J. Leonard Walker, Louisville, Ky., on the brief), for appellee.

Before SIMONS, Chief Judge, and ALLEN and MILLER, Circuit Judges.

MILLER, Circuit Judge.

The appellant, Ethel A. Doll, sought by this action to recover $6,748.38 which she paid to the appellee as Collector of Internal Revenue on a jeopardy assessment of income taxes for the calendar year 1949. The District Judge heard the case without a jury, made findings of fact and dismissed the complaint, from which ruling this appeal was taken.

The appellant was not engaged in business. Her husband, H. A. Doll, was in the lumber business in Louisville, Kentucky, operating under the name of Doll Lumber Company. In an investigation of Mr. Doll's income tax liability, revenue agents were unable to find any return for the year 1949, and made a jeopardy assessment against him based on bank deposits. They later found that H. A. Doll and the appellant had filed a joint income tax return for 1949, showing gross receipts from dividends, rent and the Doll Lumber Company in the amount of $24,925.09 and a net income of $5,405.76, with resulting tax of $598.56. The agents were unable to find books and records which would show the net income for 1949, and for the purposes of this case it has been stipulated "that all the books and records and cancelled checks of H. A. Doll Company were not available and are not available to the revenue agents for the tax year 1949 and the plaintiff does not know of the whereabouts of said records." Accordingly, the assessment against H. A. Doll was abated and a joint assessment was made against H. A. Doll and the appellant, based on the same bank deposits, but giving credit for the tax reported in the joint return. Appellant paid this assessment, and, following a claim for refund, brought this action in the District Court to recover the amount of the alleged erroneous assessment.

H. A. Doll used the following three bank accounts: (1) H. A. Doll account in the Security Bank, Louisville, Kentucky; (2) Doll Lumber Company account in the same bank; (3) H. A. Doll account in the Farmers and Depositors Bank, St. Matthews, Kentucky, a suburb of Louisville. In making the assessment the agents used only the H. A. Doll account in the Security Bank. In this account there were eight deposits during the year 1949, totaling $28,556.85. This total was taken as gross income, against which no deductions were credited. The tax liability was then computed on that amount of income, resulting in the deficiency herein involved.

In the absence of the books and records of the Doll Lumber Company, the Commissioner was justified in treating the deposits in the bank account of H. A. Doll as gross income with the burden resting upon the taxpayer to show what amounts, if any, were nontaxable income and what deductions, if any, should be properly credited against it. Hoefle v. Commissioner, 6 Cir., 114 F.2d 713; Hague Estate v. Commissioner, 2 Cir., 132 F.2d 775, 777-778, certiorari denied 318 U.S. 787, 63 S.Ct. 983, 87 L.Ed. 1154; Goe v. Commissioner, 3 Cir., 198 F.2d 851, certiorari denied 344 U. S. 897, 73 S.Ct. 277, 97 L.Ed. 693; Leonard B. Willits, 36 B.T.A. 294, 297; Reinecke v. Spalding, 280 U.S. 227, 232-233, 50 S.Ct. 96, 74 L.Ed. 385. The fact that the circumstances are such that it is impossible for the taxpayer to meet this burden does not affect the rule. Burnet v. Houston, 283 U.S. 223, 228, 51 S.Ct. 413, 75 L.Ed. 991. The finding by the Commissioner is presumptively correct and the burden rests upon the taxpayer to prove it erroneous. Hord v. Commissioner, 6 Cir., 143 F.2d 73, 75-76; Greenfeld v. Commissioner, 4 Cir., 165 F.2d 318; Lenox Clothes Shops v. Commissioner, 6 Cir., 139 F.2d 56, 59.

In attempting to meet this burden, the appellant contends that one of the eight deposits in the H. A. Doll account at the Security Bank, namely a deposit of $24,851.75 on April 12, 1949, included $23,997.42 which was part of the proceeds received from the sale of the Doll Lumber Company, and being a return of capital was non-taxable income. The evidence showed without contradiction that the Doll Lumber Company was sold to purchasers Brown and Brown for $35,000.00, which sale was consummated on April 12, 1949. Appellant claims that the sale resulted in a capital loss of $831.63 and that the entire proceeds of sale represented a return of capital. No issue was made of this contention. Whether the deposit of April 12, 1949 included $23,997.42 of the proceeds of sale is the question involved in this case. By agreement between the parties this was the only issue presented to the Court. If appellant's contention is sustained by the proof the assessment was erroneous. The District Judge made a finding of fact that the appellant's evidence failed to sustain the contention.

On the evidence before the Court at that time there is no question about the correctness of the ruling. Although the evidence proved the sale of the Lumber Company for $35,000, it was also shown by the cancelled checks of the purchasers, together with the endorsements thereon, and by the ledger account of H. A. Doll in the Farmers and Depositors Bank, that $31,500 of the purchase price was deposited in the H. A. Doll account in the Farmers and Depositors Bank on April 12, 1949, the day the sale was consummated. It was not deposited in the H. A. Doll account in the Security Bank. No one testified that any part of the $35,000 was included in the $24,851.75 deposit of April 12, 1949 in the H. A. Doll account at the Security Bank. Nor were there any bank records or cancelled checks which showed this to be so. Following the ruling the appellant filed a motion to permit her to file additional exhibits, consisting of duplicate deposit slips and cancelled checks, and asked that the Court, on the basis of this new evidence, amend its findings of fact and conclusions of law. The ...