Brosnan v. Undercofler

• Decision Date: 12 January 1965
• Docket Number: No. 3,41030,Nos. 41029,s. 41029,3
• Citation: 140 S.E.2d 517,111 Ga.App. 95
• Parties: Dan J. BROSNAN v. Hiram K. UNDERCOFLER, Commissioner (two cases)
• Court: Georgia Court of Appeals

Page 517

140 S.E.2d 517

111 Ga.App. 95

Dan J. BROSNAN v. Hiram K. UNDERCOFLER, Commissioner (two cases).

Nos. 41029, 41030.

Court of Appeals of Georgia, Division No. 3.

Jan. 12, 1965.

Rehearing Denied Jan. 28, 1965.

Syllabus by the Court

A deficiency tax assessment upon which an execution has been issued by the State Revenue Commissioner is presumed to be prima facie correct, and the burden is upon the taxpayer in his pleadings and proof to show clear and specific error or unreasonableness in the assessment.

The State Revenue Commissioner instituted garnishment proceedings against the plaintiffs in error (hereinafter referred to as the taxpayers) and the Citizens & Southern Bank of Albany as garnishee in attempt to collect certain delinquent State income taxes allegedly owed the State by the taxpayers upon which execution had previously been issued. The taxpayers filed a dissolution bond and traverse to the garnishee's answer in which they denied the alleged tax liability, and the State filed general demurrers to their pleadings. The trial court sustained the general demurrers to the taxpayers' pleadings as amended and dismissed them; and the taxpayers excepted, bringing the cases to this court for review.

Smith, Gardner, Kelley & Wiggins, Fred E. Bartlett, Jr., Albany, for plaintiff in error.

Eugene Cook, Atty. Gen., John A. Blackmon, Asst. Atty. Gen., Atlanta, for defendant in error.

JORDAN, Judge.

A deficiency tax assessment upon which an execution has been issued by the State Revenue Commissioner is presumed to be prima facie correct, and the burden is upon the taxpayer in his pleadings and proof to show clear and specific error or unreasonableness in the assessment. Head v. Edgar Brothers Co., 60 Ga.App. 482, 487, 4 S.E.2d 71.

The taxpayers' attack upon the assessments and executions in issue here was predicated upon the grounds that the State Revenue Commissioner had refused to allow certain enumerated sums, designated as 'sales discounts' and 'bad debts,' as deductions from gross income in computing net income for tax purposes under the provisions of Code Ann. § 92-3109(a, e). It was thus incumbent upon the taxpayers in order to set forth an issuable defense to allege sufficient facts to bring themselves within the statutory provisions permitting the claimed deductions. 'Deductions from gross income in arriving at net income, on which an income tax is imposed, are This burden the taxpayers did not sustain for it was not shown in their pleadings that the alleged sales discounts and bad debts which they sought to claim as deductions in arriving at their net income had ever been included by them in their gross income. 'The words 'net income' mean the gross income of a taxpayer, less the deductions allowed by this law.' Code Ann. § 92-3108. Clearly, sales discounts are not allowable as ordinary and necessary business expense deductions from gross income under the provisions of Code Ann. § 92-3109(a) unless the total undiscounted sales have first been included by the taxpayer in his gross income; otherwise an unauthorized double deduction could be claimed. The same is true of bad debts. Code Ann. § 92-3109(e) specifically provides: 'Bad debts.--Debts ascertained to be worthless and actually charged off within the taxable year, (or, in the discretion of the Commissioner, a reasonable reserve created for bad debts), provided...