Anderson v. Commissioner, Docket No. 7408-70.
| Decision Date | 12 July 1973 |
| Docket Number | Docket No. 7408-70. |
| Citation | 32 TCM (CCH) 762,1973 TC Memo 155 |
| Parties | William T. Anderson v. Commissioner. |
| Court | U.S. Tax Court |
William A. Barnett, 135 S. La Salle St., Chicago, Ill., for the petitioner. William L. Ringuette, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent has determined the following deficiencies and additions to the Federal income tax of petitioner for the taxable years 1954 through 1965:
Prepayment
Credit Adjustment Additions to the Tax
Statutory Tax F.I.C.A. Net Additional Sec. 6653 (b) Sec. 6654 Sec. 294 (d) (1) (A
Year Deficiency Withheld Tax Credit Tax 1954 Code 1954 Code 1939 Code
1954 $ 10,482.17 $ 5,767.00 $ 72.00 $ 4,643.17 $ 5,241.08 $429.50
1955 8,136.68 4,990.00 84.00 3,062.68 4,068.34 $ 24.87
1956 11,092.16 6,920.00 84.00 4,088.16 5,546.08 30.42
1957 17,483.80 7,811.00 94.50 9,578.30 8,741.90 173.33
1958 14,820.58 6,776.50 94.50 7,949.58 7,410.29 140.13
1959 28,338.41 10,776.00 120.00 17,442.41 14,169.20 357.63
1960 40,016.57 13,728.00 144.00 26,144.57 20,008.28 565.44
1961 30,191.23 11,728.00 144.00 18,319.23 15,095.61 370.47
1962 37,800.83 13,716.00 150.00 23,934.83 18,900.41 503.78
1963 52,599.60 17,179.00 174.00 35,246.60 26,299.80 778.66
1964 49,582.79 18,036.00 174.00 31,372.79 24,791.40 659.91
1965 35,487.35 16,456.00 174.00 18,857.35 17,743.67 328.45
___________ ___________ _________ ___________ ___________ _________ _______
$336,032.17 $133,883.50 $1,509.00 $200,639.67 $168,016.06 $3,933.09 $429.50
=========== =========== ========= =========== =========== ========= =======
Certain concessions having been made by the parties, the issues remaining for decision are as follows:
(1) Whether petitioner is entitled to deductions in excess of those allowed by respondent for the taxable years 1954 through 1963.
(2) Whether petitioner is entitled to the benefits of a joint return election under section 6013(a)1 for the taxable years 1954 through 1965.
(3) Whether respondent is justified in asserting additions to petitioner's tax under section 6653(b) for the taxable years 1954 through 1965.
(4) Whether petitioner is subject to additions under section 294(d)(1)(A) of the 1939 Code and under section 6654 of the 1954 Code for failure to file timely declarations of estimated tax for the taxable year 1954 and for underpayment of estimated tax for the taxable years 1955 through 1965, respectively.
The facts are fully stipulated. The stipulations together with the exhibits attached thereto are incorporated herein by reference.
William T. Anderson (hereinafter "Anderson" or "petitioner") resided in Arlington Heights, Illinois, at the time of the filing of the petition.
Anderson was born in Minneapolis, Minnesota, in the year 1917. He attended the University of Minnesota and majored in engineering, but left after one year to accept a job as a junior draftsman for Continental Machines of Minneapolis. He worked for Continental Machines until 1940 when he was transferred to DoALL Company of Des Plaines, Illinois (hereinafter sometimes referred to as "DoALL"). Anderson has remained within the DoALL organization ever since. He currently serves as its vice-president in charge of engineering and product development. His duties include the establishment of new foreign manufacturing and sales corporations in Sweden, England, Switzerland, and various other countries. In addition to his position at DoALL, Anderson also served as president of Contour Saws, Inc., a related corporation, until 1965, at which time he became vice-chairman of its board of directors. He was listed as an officer of DoALL of Canada and of several other corporations within the DoALL organization, but received no income from these corporations.
During the years in question, Anderson's only sources of income were his salary and bonuses from DoALL Company and Contour Saws, Inc., and the interest he received from a joint savings account he maintained with his wife. He received W-2 Forms from both corporations for each year in question. The amounts Anderson received from each source were as follows:
Taxable Interest Total
Year DoALL Company Contour Saws, Inc. Income Gross Income
1954 $ 9,004.00 $20,059.00 __ $29,063.00
1955 5,004.00 20,061.50 __ 25,065.50
1956 5,004.00 25,064.00 __ 30,068.00
1957 6,000.00 34,062.50 $ 89.50 40,152.00
1958 11,861.00 24,065.00 128.74 36,054.74
1959 25,996.00 29,067.50 461.04 55,524.54
1960 35,996.00 34,070.00 737.30 70,803.30
1961 25,996.00 34,070.00 758.47 60,824.47
1962 35,996.00 34,072.50 723.60 70,792.10
1963 38,002.00 49,575.00 1,585.36 89,162.36
1964 40,004.00 52,077.50 1,887.86 93,969.36
1965 20,004.00 62,080.00 1,004.01 83,088.01
During all the years in question, Anderson was married and had three dependent children. He and his wife resided in Des Plaines, Illinois, until 1957, when he sold his home, subject to a $10,000 mortgage, for approximately $18,000 and moved to Long Grove, Illinois. He rented a home there until October of 1964, when he purchased his present home in Arlington Heights, Illinois, for $73,000. He paid $40,000 down and obtained a mortgage on the balance. His mortgage payments amounted to approximately $300 per month.
Anderson did not file Federal income tax returns for the taxable years 1954 through 1965. Nor did he file any estimated tax declarations or make any payments of estimated tax pursuant thereto for the same period. Prior to the taxable year 1954, Anderson prepared and regularly filed his own returns.
In November of 1966, Revenue Officer George Pistanowich (hereinafter referred to as "Revenue Officer Pistanowich") was assigned to contact Anderson concerning his income tax return for 1963. The first interview held between Anderson and Pistanowich on December 7, 1966, was brief, lasting only about fifteen minutes. In response to Pistanowich's questions concerning his 1963 return, Anderson admitted that he had not only failed to file his 1963 return, but also the ones for 1962, 1964, and 1965. He stated that he could not remember the last time he had filed a Federal income tax return. When asked why he had not filed these past returns, Anderson replied, "I have no excuse."
Anderson was interviewed again on February 20, 1967, this time by Special Agent Richard C. Wassenaar of the Intelligence Division of the Internal Revenue Service (hereinafter referred to as "Special Agent Wassenaar"). Special Agent Wassenaar was accompanied by Revenue Officer Pistanowich. During the course of the interview, Anderson acknowledged that he had not filed a Federal income tax return or a declaration of estimated tax since approximately 1954.2 He again repeated he had "no excuse" for not filing returns during this period. He had prepared a return for 1954, but decided not to file it since the funds available at that particular time were not "in excess,"3 and he did not want to deprive his family of their customary standard of living by paying the tax out of funds that would ordinarily inure to them. His salary at that time was approximately $1,000 or $1,100 per month. Anderson did not recollect the exact amount of additional tax due, but believed it was a relatively small amount which he could have paid with the funds available.
Anderson stated that he did not file any returns for the subsequent years because he could not bring himself to truthfully answer the question on the face of each return asking if he had filed a return for the previous year. One year after another passed in like manner. He attempted to rationalize his behavior by saying that his withholdings were sufficient to cover the tax due, but he knew that this was not true. He analogized his behavior to that of "an ostrich sticking his head in the sand" hoping that the danger around him would go away by itself. Each year he expected that the Internal Revenue Service would catch up with him, but hoped that it would not be until the following year. He admitted that he probably had sufficient funds available to pay any additional tax due though he did not specifically compute the tax owing.
Anderson said he did not file estimated tax declarations for any of the years in question because he felt that the Internal Revenue Service would surely inquire about his failure to file his regular income tax returns.
He did not discuss his failure to file returns with anyone, including his wife. He did not approach the head of the tax department of DoALL Company for advice because he did not want anyone at the company to know of his predicament.
Anderson provided Special Agent Wassenaar with the W-2 Forms he received from DoALL Company and Contour Saws, Inc., for the years 1960 and 1965. The W-2 Forms received for the other years in question were apparently lost during his move from Long Grove to his present residence in Arlington Heights in October of 1964. In addition, he said that most of his...
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