Bowlin v. Comm'r of Internal Revenue, Docket Nos. 55571
| Decision Date | 27 October 1958 |
| Docket Number | Docket Nos. 55571,65486. |
| Citation | 31 T.C. 188 |
| Parties | ROBERT LESLIE BOWLIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.ANN W. BOWLIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Ward Hudgins, Esq., and Richard H. Frank, Jr., Esq., for the petitioners.
James R. Harper, Esq., for the respondent.
1. Petitioner Robert Leslie Bowlin, for each of the years 1942 through 1947, failed to report substantial portions of his income in the returns filed by him, and his books and records are wholly inadequate for the determination of and do not reflect his income for those years. Held, that his returns were false and fraudulent with intent to evade tax, and the statute of limitations has not run for the years in question. Held, further, that the petitioners have failed to show error in the deficiencies for the said years as determined by the respondent, and that a part of the deficiency for each of the said years was due to fraud with intent to evade tax.
2. After the investigation of Bowlin's income tax liability by respondent's agents had been made, Bowlin made transfers of property, including all of the incidents of ownership in certain insurance policies on his life, to his wife, Ann W. Bowlin, which transfers rendered him insolvent. Held, that petitioner Ann W. Bowlin is liable, as transferee, for the deficiencies in income tax and additions to tax for fraud determined against Robert Leslie Bowlin for each of the years 1942 through 1947.
In Docket No. 55571, the respondent determined deficiencies in income tax and additions to tax for fraud against petitioner Robert Leslie Bowlin, as follows:
+-------------------------------------+
¦ ¦ ¦Addition to tax ¦
+------+------------+-----------------¦
¦Year ¦Deficiency ¦Sec. 293 (b) ¦
+------+------------+-----------------¦
¦ ¦ ¦ ¦
+------+------------+-----------------¦
¦1942 ¦$725.64 ¦$362.82 ¦
+------+------------+-----------------¦
¦1943 ¦1 2,402.83¦1,201.42 ¦
+------+------------+-----------------¦
¦1944 ¦4,449.68 ¦2,224.84 ¦
+------+------------+-----------------¦
¦1945 ¦7,965.70 ¦3,982.85 ¦
+------+------------+-----------------¦
¦1946 ¦5,076.86 ¦2,538.43 ¦
+------+------------+-----------------¦
¦1947 ¦4,027.08 ¦2,013.54 ¦
+------+------------+-----------------¦
¦ ¦ ¦ ¦
+-------------------------------------+
In Docket No. 65486, the respondent determined transferee liability against petitioner Ann W. Bowlin for the above deficiencies in income tax and additions to tax.
The questions for determination are: (1) Whether the statute of limitations has run for the taxable years 1942 through 1947; (2) whether the respondent erred in his determination of deficiencies in income tax against petitioner Robert Leslie Bowlin for the years 1942 through 1947; (3) whether petitioner Robert Leslie Bowlin is liable for additions to tax for fraud, under section 293(b) of the Internal Revenue Code of 1939, for each of the said years; and (4) whether petitioner Ann W. Bowlin is liable, as transferee, for deficiencies in income tax and additions thereto due from Robert Leslie Bowlin for such years.
Some of the facts have been stipulated and are found as stipulated.
The petitioners are husband and wife, and are residents of Memphis, Tennessee. Robert Leslie Bowlin filed individual income tax returns for the years involved with the collector of internal revenue for the district of Tennessee.
Robert Leslie Bowlin, hereafter referred to as Bowlin, was a practicing physician in Memphis. He had offices in the Exchange Building. They consisted of a reception room, a room used for examining and treating patients, and an office. All of the rooms were small, and economically maintained. He had no medical assistant. He employed a woman who acted as receptionist and did odd jobs, including some bookkeeping.
In the latter part of 1948, a special agent, in association with a revenue agent of the Internal Revenue Bureau, began an investigation of Bowlin's books and records, covering the years 1942 through 1947. The investigation was completed in 1950. The books and records examined were a large transfer binder, containing closed or old patient ledger cards, a binder containing current patient ledger cards, canceled checks and bank statements. The agents were advised by Bowlin and his employee that all records had been made available to them.
The agents transcribed from the patient ledger cards all credits that had been entered thereon during the period 1942 through 1947, listing by years, each individual payment according to the date received. It was found that except for 1942 the total ledger figures for each of the years were less than the gross receipts reported on Bowlin's returns.
Bowlin reported gross income, deductions, net income, and income tax due on his returns for the years in question, as follows:
+-----------------------------------------------------------------------------+
¦ ¦1942 ¦1943 ¦19455 ¦1945 ¦1946 ¦1947 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Gross income:¦ ¦ ¦ ¦ ¦ ¦ ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Compensation ¦ ¦ ¦ ¦ ¦ ¦ ¦
¦for personal ¦$5,992.85¦$8,564.55¦$10,101.06¦$11,876.43¦$11,736.56¦$10,970.75¦
¦services ¦ ¦ ¦ ¦ ¦ ¦ ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Interest ¦12.14 ¦ ¦ ¦ ¦ ¦ ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Total ¦6,004.99 ¦8,564.55 ¦10,101.06 ¦11,876.43 ¦11,736.56 ¦10,970.75 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Deductions: ¦ ¦ ¦ ¦ ¦ ¦ ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Contributions¦82.50 ¦203.50 ¦338.00 ¦429.00 ¦358.00 ¦426.00 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Taxes ¦895.78 ¦251.87 ¦258.66 ¦205.48 ¦230.60 ¦218.50 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Business ¦2,758.10 ¦3,911.58 ¦3,656.68 ¦4,342.17 ¦3,943.56 ¦3,610.18 ¦
¦expenses ¦ ¦ ¦ ¦ ¦ ¦ ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Total ¦3,736.38 ¦4,366.95 ¦4,253.34 ¦4,976.65 ¦4,532.16 ¦4,254.68 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Net income ¦2,268.61 ¦4,197.60 ¦5,847.72 ¦6,899.78 ¦7,204.40 ¦6,716.07 ¦
+-------------+---------+---------+----------+----------+----------+----------¦
¦Income tax ¦122.92 ¦636.79 ¦856.93 ¦1,135.94 ¦1,095.48 ¦974.87 ¦
¦reported ¦ ¦ ¦ ¦ ¦ ¦ ¦
+-----------------------------------------------------------------------------+
On his returns for each of the years herein, Bowlin claimed a dependency exemption credit for his wife, Ann.
Bowlin maintained an individual checking account at the National Bank of Commerce in Memphis, which was also used as a business checking account. All canceled checks for the years under investigation were obtained and listed by the agents. They also found all but two of the deposit slips for the period.
Bowlin usually prepared his own deposit slips, listing the amount of each individual check deposited. During the years 1942 and 1943 currency was shown on some of the deposit slips, but no currency was shown on any of the deposit slips for the years 1944, 1945, 1946, and 1947.
The items on the deposit slips could not be identified by name, but the agents compared the individual amounts of the checks deposited with those shown on Bowlin's records. Where amounts as shown on the deposit slips could not be found at the approximate dates on the records, they were considered payments received but not recorded by Bowlin.
The totals of the checks that appeared on the deposit slips and could not be traced on Bowlin's records, are as follows:
+----------------+
¦Year ¦Amount ¦
+------+---------¦
¦1942 ¦$614.28 ¦
+------+---------¦
¦1943 ¦2,897.59 ¦
+------+---------¦
¦1944 ¦3,191.39 ¦
+------+---------¦
¦1945 ¦5,643.28 ¦
+------+---------¦
¦1946 ¦1,980.74 ¦
+------+---------¦
¦1947 ¦3,532.16 ¦
+----------------+
The agents found substantial disbursements of currency which could not be traced from the bank account and which did not appear on Bowlin's records. Bowlin's bank deposits, plus his currency expenditures, were greatly in excess of his income as shown by his returns and by his books and records.
Bowlin's gross receipts as reported on his returns, the gross receipts as shown by his books, and the deposits he made in his checking account, properly adjusted for items of deposit which did not clear the bank, for the years 1942 through 1947, and the bank balance at the end of each of the years 1941 through 1947, were as follows:
+----------------------------------------------+
¦ ¦Gross ¦Gross ¦Deposits ¦Bank ¦
+----+---------+---------+---------+-----------¦
¦Year¦receipts ¦receipts ¦National ¦balance ¦
+----+---------+---------+---------+-----------¦
¦ ¦reported ¦per books¦Bank of ¦December 31¦
+----+---------+---------+---------+-----------¦
¦ ¦ ¦ ¦Commerce ¦ ¦
+----+---------+---------+---------+-----------¦
¦1941¦ ¦ ¦ ¦$667.35 ¦...To continue reading
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