Bouche v. Comm'r of Internal Revenue, Docket No. 33249.
| Decision Date | 30 April 1952 |
| Docket Number | Docket No. 33249. |
| Citation | 18 T.C. 144 |
| Parties | RENE R. BOUCHE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Petitioner filed no declaration of estimated tax for the year 1947. For such omission, respondent determined petitioner to be subject to an addition to his tax for that year pursuant to section 294(d)(1)(A), I.R.C. Held: No reasonable cause existed for petitioner's failure to file the requisite declaration and respondent is sustained in his determination. Ruth Lewinson, Esq., for the petitioner.
Joseph F. Rogers, Esq., for the respondent.
The respondent determined a ‘deficiency in penalty‘ in the amount of $1,114.22 for the year 1947, consequent on the failure of the petitioner to file a declaration of estimated tax for that year. The only question raised by the pleadings is whether petitioner is subject to such addition to his income tax because of such failure to file.
The petitioner is Rene R. Bouche, a painter and artist who came to the United States from France in 1941. He maintains a studio at 38 Central Park South, New York, New York. Petitioner filed his individual income tax returns for the taxable years 1945 through 1950 with the collector of internal revenue for the third district of New York. He filed a declaration of estimated tax with the same collector for the years 1945, 1946, and 1950, and made payments thereon. He did not file declarations of estimated tax, nor make payments thereon, for the years 1947, 1948, and 1949.
Petitioner's wife and son came to the United States from France in February 1946, and petitioner supported them during 1947. The son, now 18 years old, was the victim of paralysis due to an attack of poliomyelitis at the age of four, from which he never fully recovered. During the year, also, petitioner moved with his family into a seven-room house which he had purchased in 1946 with a cash payment of $20,000 and the assumption of a mortgage for $10,000. He expended an additional $9,267.77 on this house in 1947 for furniture, home furnishings, fixtures, decorations, repairs, and current maintenance. In that year he also owned a Cadillac automobile for which he had paid $1,500 in 1943 or 1943.
Petitioner's individual income tax returns for 1945 through 1950 reported net income and dependents as follows:
+------------------------------------------------+
¦Year¦Net income¦Number¦Relationship ¦
+----+----------+------+-------------------------¦
¦1945¦$32,463.89¦2 ¦Wife and mother-in-law. ¦
+----+----------+------+-------------------------¦
¦1946¦25,953.69 ¦3 ¦Wife, son, mother-in-law.¦
+----+----------+------+-------------------------¦
¦1947¦26,994.59 ¦2 ¦Wife and son. ¦
+----+----------+------+-------------------------¦
¦1948¦13,983.40 ¦2 ¦Wife and son. ¦
+----+----------+------+-------------------------¦
¦1949¦16,034.07 ¦2 ¦Wife and son. ¦
+----+----------+------+-------------------------¦
¦1950¦14,575.93 ¦2 ¦Wife and son. ¦
+------------------------------------------------+
Petitioner, in his returns, itemized his medical expenses for the years 1945 through 1950 as follows:
+---------------+
¦1945¦None ¦
+----+----------¦
¦1946¦None ¦
+----+----------¦
¦1947¦$2,113.97 ¦
+----+----------¦
¦1948¦1,679.73 ¦
+----+----------¦
¦1949¦None ¦
+----+----------¦
¦1950¦None ¦
+---------------+
The collector's Certificate of Assessments and Payments (Form 899), showed the following:
+-----------------------------------------------------------+
¦ ¦Payments on ¦ ¦ ¦
+----+------------+----------+------------------------------¦
¦ ¦declaration ¦ ¦ ¦
+----+------------+----------+------------------------------¦
¦Year¦of estimated¦ ¦Balance of tax assessed ¦
+----+------------+----------+------------------------------¦
¦ ¦tax ¦ ¦ ¦
+----+------------+----------+------------------------------¦
¦1945¦$4,600.00 ¦$10,094.03¦paid (no outstanding balance).¦
+----+------------+----------+------------------------------¦
¦1946¦3,000.00 ¦$7,556.05 ¦paid (no outstanding balance).¦
+----+------------+----------+------------------------------¦
¦1947¦* None ¦$9,919.75 ¦outstanding balance. ¦
+----+------------+----------+------------------------------¦
¦1948¦* None ¦$2,402.02 ¦paid (no outstanding balance).¦
+----+------------+----------+------------------------------¦
¦1949¦* None ¦$2,935.30 ¦ ¦
+----+------------+----------+------------------------------¦
¦ ¦ ¦2,644.06 ¦paid ¦
+----+------------+----------+------------------------------¦
¦ ¦ ¦291.24 ¦outstanding balance. ¦
+----+------------+----------+------------------------------¦
¦1950¦1,400.00 ¦$1,255.02 ¦paid (no outstanding balance).¦
+-----------------------------------------------------------+
FN* No declaration of estimated tax.
The petitioner's 1945 return was prepared and signed by one Julius W. Heynemann of the accounting firm of Heynemann & Spitzer, New York, New York. Heynemann was not a certified public accountant but had been practicing the profession of accounting for 25 years, originally in Europe, later in the United States. After coming to the United States in 1941, he had taken a 3-year course of study at New York University. He has done all of the petitioner's accounting work and has been his tax adviser since 1942 or 1943. Petitioner would submit his bank statements and canceled checks to Heynemann, who would then take care of the preparation and filing of petitioner's returns. Such returns for the years 1946 through 1950 were signed by Heynemann's partner, Harold W. Spitzer, who is a certified public accountant.
In the early part of 1947 petitioner owed considerable back taxes and had insufficient cash on hand with which to pay them and the installment of his estimated tax. Faced with the dilemma of whether to have petitioner pay the cash which was available on the tax arrears or on the estimate then due to be filed, Heynemann telephoned the office of the collector for the third district of New York. In the telephone conversation with an unnamed, unknown, and unidentified employee in the collector's office, Heynemann understood the party to state that a declaration of estimated tax without the prerequisite payment thereon would not be considered as the filing thereof, and that, under petitioner's circumstances, as between payment on the delinquent taxes and payment on estimated taxes, it was preferable to pay the former to eliminate the necessity of having two accounts running. Thereafter Heynemann prepared for petitioner no declaration of estimated tax for 1947 and none was filed by petitioner. No such declaration was prepared and filed for 1948 or 1949.
Attached to the petitioner's 1949 individual income tax return was a letter signed by petitioner reading as follows:
Memo: To the Collector
Every effort is being expended in order to pay my taxes. I am presently trying my utmost to clear up back taxes which are considerable. My record reveals that while it takes me some time to pay, I eventually clear up my obligations. Your indulgence in this matter will be appreciated.
R. R. BOUCHE. (S) R R Bouche.
There was no reasonable cause for petitioner's failure to file a declaration of estimated tax for 1947.
Petitioner failed to file a declaration of estimated tax for the taxable year 1947 as required by section 58(a), Internal Revenue Code.1 Respondent has accordingly determined that petitioner is subject to an addition to his tax for that year pursuant to section 294(d)(1)(A) of the Code. 2
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