Goldman v. CIR

• Decision Date: 21 December 1967
• Docket Number: No. 17560.,17560.
• Citation: 388 F.2d 476
• Parties: Douglas GOLDMAN and Evelyn K. Goldman, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Court of Appeals — Sixth Circuit

388 F.2d 476 (1967)

Douglas GOLDMAN and Evelyn K. Goldman, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 17560.

United States Court of Appeals Sixth Circuit.

December 21, 1967.

Jerome Goldman, Cincinatti, Ohio, for petitioners.

Albert J. Beveridge, III, Department of Justice, Washington, D. C., Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson, David O. Walter, Robert M. Willian, Attorneys, Department of Justice, Washington, D. C., on brief, for respondent.

Before PECK, McCREE and COMBS, Circuit Judges.

JOHN W. PECK, Circuit Judge.

In their income tax return for the calendar year 1961 petitioner (the singular is used because although this was a joint return, the issues herein considered arise solely from the husband's activities) claimed two charitable deductions which were disallowed by the respondent. Subsequent to such disallowance relief was sought in the Tax Court, and this appeal is from an order favorable to the Commissioner of Internal Revenue.

The two alleged contributions (or, more accurately, the two categories of claimed contributions) are factually and in legal concept different from one another and will be herein separately treated. The first gift was of medical books and journals to the Good Samaritan Hospital of Cincinatti, Ohio, which is conceded by respondent to be a charitable organization under Section 170(c) of the Internal Revenue Code of 1954. The charitable contribution claimed in the return on account of the donated books and journals was in the sum of $1,500. As has been indicated, this claimed deduction was disallowed in full, but on review the Tax Court determined the fair value of the books to be $415.50 and directed the allowance of a deduction in that sum. The issue here presented is therefore not whether a deduction on this account is allowable, but rather the method of computation to be followed in determining the amount of the deduction.

The books constituting the gift in question were bound volumes of medical journals published between 1938 and 1960. There were 42 such volumes of the Archives of Internal Medicine, 34 volumes of the American Journal of Medical Sciences, 26 of the Archives of Neurology and Psychiatry, 24 of the American Heart Journal and 25 of the American Journal of Medicine. As the record shows, and indeed as is obvious from a review of the titles, these volumes constitute a commodity for which there is a very limited market. Perhaps for this reason, in the briefs, throughout the record of the trial in the Tax Court and in the opinion therein filed difficulty is encountered in determining what method of computation was being urged or followed. Section 170-1(c) (1) of the Treasury Regulations on Income Tax provides that if a deductible contribution "is made in property other than money, the amount of the deduction is determined by the fair market value of the property at the time of the contribution." In the Opinion of the Tax Court it is stated that the only question in this regard is the "fair market value" of the volumes, but no suggestion as to how "fair market value" should be determined is offered. Petitioner frames the issue here to be whether such fair market value is that which an ultimate consumer would pay rather than that a dealer purchasing for the purpose of resale would pay.

Having properly stated that issue, however, petitioner goes on to argue that the Tax Court applied the wrong criterion, as evidenced by the fact that the fair market value of the books as testified to by respondent's sole witness was accepted by the Court, and as further evidenced by the fact that that witness stated on cross-examination that the prices to which he had testified were based upon what he, a bookstore proprietor, would have paid for the purpose of resale. However, respondent's witness gave his opinions immediately after the Court announced the correct rule ("Well, I don't mean the wholesale value where a man is buying it for resale. I mean a consumer sale."), the import of which was ostensibly acknowledged by this witness when he remarked, "A consumer sale." In these circumstances it cannot be held that the Court applied an improper standard regarding the fair market value of the books in question. It is further observed that a court speaks only through its orders (See United States v. Eisner, 329 F.2d 410 (6th Cir. 1964)) and that nothing in the Tax Court's findings of fact or conclusions of law indicate that an improper basis of computation was used in the determination of reasonable value. We hold that where a deductible charitable contribution is made in property other than money, the allowable deduction is the fair market value computed on the price an ultimate consumer would pay, and that what might be paid by a dealer buying to resell is not a proper consideration.

Counsel for both parties, in their briefs and oral presentations, initially recognize the issues to be questions of law, but then proceed to offer extended arguments on the weight of the evidence. The record discloses that the petitioner himself and two expert witnesses presented by him tend to show a value of at least $10.00 a volume for the books in question, or $1,500 for the 151 books. The sole witness presented by the respondent expressed the opinion that they were worth a total of $415.50, and that is the precise "reasonable value" found by the Tax Court to be assignable to the books. The Tax Court Opinion makes a rather detailed review of the testimony of all of the witnesses, including a summary (supported by the transcript) of the qualifications of the experts. Petitioner's arguments in this area are not without persuasive elements, but we once again remind that our review is not for the purpose of arriving at an independent conclusion. We are limited to a determination as to whether the trier of fact made a clearly erroneous finding on the basis of the record (Rule 52(a), F.R. Civ.P.; Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, ...