Cesanelli v. Comm'r of Internal Revenue, Docket Nos. 10002
| Decision Date | 03 April 1947 |
| Docket Number | 10005,10007.,10004,10006,10003,Docket Nos. 10002 |
| Citation | 8 T.C. 776 |
| Parties | NAZZARENO D. CESANELLI, PETITIONER, ET. AL.1 v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
1. Respondent's determination that petitioners, waiters in a restaurant, received income as tips in an amount equal to 10 per cent of sales to patrons, sustained.
2. Charge of fraud to evade taxes sustained.
Joseph A. Brown, Esq., for the petitioners.
Leonard A. Marcussen, Esq., for the respondent.
The respondent determined deficiencies and penalties against the several petitioners, as follows:
+-----------------------------------------------------------------------------+
¦Penalty ¦ ¦ ¦ ¦ ¦ ¦
+----------------------------------+----+------------------------+-----+------¦
¦ ¦ ¦Deficiency ¦ ¦ ¦
+----------------------------------+----+------------------------+-----+------¦
¦Petitioner ¦Year¦Tax ¦ ¦25% ¦50% ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Nazzareno D. Cesanelli ¦1940¦Income ¦$37.70¦$9.43¦$18.85¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1941¦Income ¦72.00 ¦18.00¦36.00 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1942¦Income ¦219.34¦ ¦77.50 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦287.65¦ ¦143.83¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1944¦Income ¦353.00¦ ¦176.50¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Carlo Baletta ¦1941¦Income ¦83.91 ¦ ¦41.96 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1942¦Income ¦103.00¦ ¦30.50 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦402.32¦ ¦201.16¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Rudolph Frey and Maxine Frey ¦1942¦Income ¦159.00¦ ¦79.50 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦417.86¦ ¦208.93¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Felice Genardini and Rina ¦1941¦Income ¦22.00 ¦5.50 ¦11.00 ¦
¦Genardini ¦ ¦ ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1942¦Income ¦215.50¦ ¦95.00 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦330.02¦ ¦165.01¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1944¦Income ¦415.91¦ ¦207.96¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Julius Tosch and Hilda Marie Tosch¦1942¦Income ¦95.84 ¦ ¦47.92 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦254.76¦ ¦127.38¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1944¦Income ¦251.00¦ ¦125.50¦
+----------------------------------+----+-----------------+------+-----+------¦
¦Eugene A. Holtz and Emma Holtz ¦1941¦Income ¦25.82 ¦6.46 ¦12.91 ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1942¦Income ¦277.66¦ ¦131.83¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1943¦Income and ¦438.80¦ ¦219.40¦
¦ ¦ ¦victory ¦ ¦ ¦ ¦
+----------------------------------+----+-----------------+------+-----+------¦
¦ ¦1944¦Income ¦460.00¦ ¦230.00¦
+-----------------------------------------------------------------------------+
The parties stipulated substantially as follows:
As used in this opinion, the term ‘petitioners‘ refers only to Nazzareno D. Cesanelli, Carlo Baletta, Rudolph Frey, Felice Genardini, Julius Tosch, and Eugene A. Holtz, and not to the wives of any of them unless otherwise specifically stated.
All the petitioners herein were employed as waiters at Solari's Grill, a restaurant at 354 Geary Street, San Francisco, California, and received income in the form of wages from that restaurant and in the form of tips from patrons served by petitioners during all of the taxable years for which deficiencies were asserted against each petitioner, except as follows:
Petitioner Baletta was employed as a waiter at Solari's Grill only from March 1943 to December 1943, inclusive.
Petitioner Frey was employed as a bus boy at Solari's Grill from January 1942 to August, 1942, inclusive, and as such bus boy received income in the form of wages from Solari's Grill and also received remuneration from the waiters whose tables he set and cleared. Petitioner Frey was employed as a waiter at Solari's Grill from September 1942 to December 1943, inclusive.
Each of the petitioners, including the wives of those who filed jointly, filed Federal income tax returns for each of the years respectively involved in these proceedings with the collector for the first district of California, except that petitioners Genardini and Holtz failed to file returns for the year 1941. The respondent has erred in determining that petitioner Cesanelli did not file income tax returns for the years 1940 and 1941 and in applying the 25 per cent penalty under the provisions of section 3612 of the Internal Revenue Code. Petitioner Cesanelli timely filed returns and paid taxes of $4.36 and $17 for those years, respectively.
In so far as the deficiencies involved in these proceedings are based upon the failure of the respective petitioners to report income from tips, said deficiencies have been computed on the basis of 10 per cent of the gross receipts received by Solari's Grill from the patrons served by each of the petitioners, respectively, and by deducting from said tip income an allowance for amounts paid to bus boys.
The amounts of gross sales to patrons of Solari's Grill by each of the petitioners for each year, as shown by Solari's records, the amount of tips received from Solari's Grill and reported for taxation by each petitioner, and the amount of tip income received from Solari's Grill as compiled by the Commissioner, are as follows:
+--------------------------------------------------------------+
¦ ¦ ¦ ¦ ¦Tips ¦
+----------------------+----+-----------+--------+-------------¦
¦ ¦ ¦ ¦Tips ¦determined by¦
+----------------------+----+-----------+--------+-------------¦
¦Petitioner ¦Year¦Gross sales¦reported¦Commissioner ¦
+----------------------+----+-----------+--------+-------------¦
¦Nazzareno D. Cesanelli¦1940¦$9,318.00 ¦None ¦$718 ¦
+----------------------+----+-----------+--------+-------------¦
¦ ¦1941¦8,919.00 ¦None ¦678 ¦
+----------------------+----+-----------+--------+-------------¦
¦ ¦1942¦13,929.60 ¦$200 ¦1,108 ¦
+----------------------+----+-----------+--------+-------------¦
¦ ¦1943¦19,709.70 ¦200 ¦1,525 ¦
+----------------------+----+-----------+--------+-------------¦
¦ ¦1944¦22,793.55 ¦225 ¦1,900 ¦...To continue reading
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