Cole v. Comm'r of Internal Revenue, Docket No. 43248.
| Decision Date | 23 June 1958 |
| Docket Number | Docket No. 43248. |
| Citation | 30 T.C. 665 |
| Parties | FRANK COLE, ALIAS FRANK SHAPIRO, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Allen M. Mesirow, Esq., for the petitioner.
John James O'Toole, Esq., and Norman L. Rapkin, Esq., for the respondent.
1. Deficiency notices, improperly addressed, were not received by petitioner and were returned by postal authorities. Thereafter a second set of deficiency notices, properly addressed, was mailed and received by petitioner. Held, the Court had jurisdiction, since the petition was filed within 90 days of the successful (second) mailing, regardless of the fact that more than 90 days had elapsed from the date of the unsuccessful (first) mailing.
2. Petitioner is not entitled to have the Court enter orders of deficiency in accord with certain proposed stipulations which behold signed, but which are found herein not to have been executed on behalf of respondent, and which were not filed in this Court as stipulations. Nor is there any basis for an estoppel in this regard.
3. Respondent's determination of unreported income approved and fraud found.
The respondent determined deficiencies in income tax and additions to tax for fraud as follows:
+----------------------------------+
¦Year¦Deficiency ¦Additions to ¦
+----+-----------+-----------------¦
¦ ¦ ¦tax, sec. 293 (b)¦
+----+-----------+-----------------¦
¦1946¦$173,286.58¦$86,643.29 ¦
+----+-----------+-----------------¦
¦1947¦173,872.46 ¦86,936.23 ¦
+----+-----------+-----------------¦
¦1948¦164,371.03 ¦82,185.52 ¦
+----+-----------+-----------------¦
¦1949¦164,007.81 ¦82,003.91 ¦
+----+-----------+-----------------¦
¦1950¦168,268.61 ¦84,134.31 ¦
+----------------------------------+
The amounts of the deficiencies and additions to tax were scaled down by respondent's answer to the amended petition, where he affirmatively alleged that for the years 1946 through 1950 petitioner, with the intent to evade payment of his income tax, willfully and fraudulently understated his taxable income as follows:
+------------------------+
¦Year ¦Understatement ¦
+------+-----------------¦
¦1946 ¦$26,962.44 ¦
+------+-----------------¦
¦1947 ¦65,388.20 ¦
+------+-----------------¦
¦1948 ¦20,692.59 ¦
+------+-----------------¦
¦1949 ¦63,365.55 ¦
+------+-----------------¦
¦1950 ¦83,952.25 ¦
+------------------------+
The issues are:
1. Whether the petitioner was filed within 90 days after the notices of deficiencies were mailed so as to give this Court jurisdiction.
2. Whether this Court should order the entry of deficiencies in accordance with the contents of copies of stipulations between the parties, which respondent contends were never executed on his behalf and which were not filed as stipulations in this Court.
3. Whether respondent's determination of income of petitioner for the taxable years by the use of the increase in net worth plus expenditures method correctly reflects the true taxable income of the petitioner for those years.
4. Whether a part of the deficiency for each of the taxable years is due to fraud with intent to evade and defeat payment of tax within the meaning of section 293(b), I.R.C. 1939.
Certain facts were stipulated orally at the hearing and are incorporated herein by reference.
Petitioner is a resident of Mount Pocono, Pennsylvania. During the years 1946 through 1950 he was married to Helen Cole. They lived at 311 Bradford Parkway, Syracuse, New York. They had one child, Barbara Joyce Code, who was 5 or 6 years old in 1950. In 1948 petitioner and Helen Cole were separated, but resumed living together in 1949. In 1953, they were divorced.
Petitioner had a son, Herbert M. Cole, and a daughter, Beverly Cole, by a prior marriage.
During the years 1946 to 1950, inclusive, petitioner was engaged in the operation of an illegal lottery in the northern part of the State of New York. Under his method of operation the only records maintained consisted of weekly memorandum sheets identified by a code number. The code numbers were assigned to distributors at various locations. The sheets purported to show the number of tickets given to each distributor and the number of tickets returned by the distributor to petitioner. Total receipts were determined thereon by multiplying the number of tickets sold by the unit price. From the amount thus determined certain deductions were taken by the distributor, and the remainder was paid to petitioner. Small ‘hits' were paid by each distributor from his share of the profits, but petitioner was responsible for the payment of ‘prime hits' amounting to $1,100 or more. Hits were paid in cash. If any hit amounted to $1,100 or more, and the distributor did not have enough cash from the week's collections belonging to petitioner from which payment could be made, petitioner would send a postal money order to the distributor. Petitioner never dealt directly with any winner.
He operated through the use of aliases. Names other than Frank Cole used by him were Joseph Fritt, Manny Weisbond, Ralph Hodgen, Herbert M. Cole, Frank Flanagan, James Ryan, Frank Shapiro, John Murphy, and Frank Clark. His expenditures were usually in the form of cash, bank drafts, or cashier checks. The income realized by him from his business could not be ascertained or verified from books or records maintained by him.
Petitioner filed timely income tax returns for the taxable years 1946 through 1950 disclosing the following amounts of net taxable income:
+------------------+
¦Year ¦Amount ¦
+------+-----------¦
¦1946 ¦$38,255.80 ¦
+------+-----------¦
¦1947 ¦29,521.76 ¦
+------+-----------¦
¦1948 ¦31,294.87 ¦
+------+-----------¦
¦1949 ¦26,462.89 ¦
+------+-----------¦
¦1950 ¦24,232.94 ¦
+------------------+
In the returns filed for the years 1946, 1947, and 1949, petitioner stated that his home address was 311 Bradford Parkway, Syracuse, New York. In the returns filed for the years 1948 and 1950, he stated that his home address was 2515 E. Fayette Street, Syracuse, New York. In August of 1951 he left Syracuse permanently and became a resident of Pennsylvania.
All of the returns filed for the years 1946 to 1950, inclusive, were signed only by Frank Cole. All of the income reported in these returns was his income. The returns filed for the years 1946 and 1947 were individual returns of Frank Cole. The returns filed for the years 1948, 1949, and 1950 purported to be joint returns of Frank Cole and his wife, Helen Cole.
In 1955 petitioner was indicted for willfully and knowingly attempting to evade and defeat a large part of the income tax due and owing by him for the year 1949 and for the year 1950, by filing false and fraudulent income tax returns. On March 6, 1957, he entered a plea of guilty to both counts and was convicted.
On April 7, 1952, the respondent issued a jeopardy assessment against the petitioner under the name of Frank Cole, alias Frank Shapiro. The name Frank Shapiro was used because the special agent who recommended the issuance of the jeopardy assessment knew that this was the alias petitioner was using. The jeopardy assessment was in the following amounts:
+---------------------------------------------+
¦Year¦Tax ¦Addition to ¦Interest ¦
+----+-----------+-----------------+----------¦
¦ ¦ ¦tax, sec. 293 (b)¦ ¦
+----+-----------+-----------------+----------¦
¦1946¦$173,286.58¦$86,643.29 ¦$52,641.14¦
+----+-----------+-----------------+----------¦
¦1947¦173,872.46 ¦86,936.23 ¦42,387.01 ¦
+----+-----------+-----------------+----------¦
¦1948¦164,371.03 ¦82,185.52 ¦30,208.24 ¦
+----+-----------+-----------------+----------¦
¦1949¦164,007.81 ¦82,003.91 ¦20,301.02 ¦
+----+-----------+-----------------+----------¦
¦1950¦168,268.61 ¦84,134.31 ¦10,732.31 ¦
+---------------------------------------------+
On April 28, 1952, statutory notices of deficiencies for the years 1946 to 1950, inclusive, to ‘Frank Cole, alias Frank Shapiro, Albany, New York,‘ were mailed by respondent by registered mail addressed to ‘Frank Shapiro, DeWitt-Clinton Hotel, Albany, New York.’ The notices mailed on that date were not received by petitioner and were returned to the respondent by the postal authorities.
On June 3, 1952, these same notices, bearing date of April 28, 1952, were remailed by registered mail addressed to Frank Cole, Jefferson-Clinton Hotel, Syracuse, New York, and duplicates of these notices were also mailed by registered mail on June 3, 1952, addressed to Frank Cole, Mount Pocono, Pennsylvania. The second group of notices was received by petitioner on June 6, 1952.
With respect to the taxable years 1946, 1947, and 1948, petitioner and the Commissioner of Internal Revenue consented in writing to the assessment of the amount of any income taxes due for those years at any time on or before June 30, 1953. The statutory notices of deficiency for the years 1946 to 1950, inclusive, were issued prior to the expiration of the applicable statute of limitation.
On July 2, 1952, the Commissioner made the following partial abatement of the jeopardy assessments:
+-------------------------------------------+
¦Year¦Tax ¦Addition to tax¦Interest ¦
+----+-----------+---------------+----------¦
¦ ¦ ¦sec. 293 (b) ¦ ¦
+----+-----------+---------------+----------¦
¦1946¦$172,020.20¦$86,643.29 ¦$52,256.44¦
+----+-----------+---------------+----------¦
¦1947¦173,872.46 ¦86,936.23 ¦42,387.01 ¦
+----+-----------+---------------+----------¦
¦1948¦156,538.40 ¦82,185.52 ¦28,768.76 ¦
+----+-----------+---------------+----------¦
¦1949¦163,706.65 ¦82,003.91 ¦20,263.74 ¦
+----+-----------+---------------+----------¦
¦1950¦167,792.15 ¦84,134.31 ¦10,701.92 ¦
+-------------------------------------------+
Petitioner filed a petition...
To continue reading
Request your trial
-
Webb v. Commissioner
...affg. per curiam [Dec. 32,038(M)] T.C. Memo. 1973-145; Gardner v. Commissioner [Dec. 37,507], 75 T.C. 475 (1980); Cole v. Commissioner [Dec. 23,046], 30 T.C. 665, 674 (1958), affd. per curiam [59-2 USTC ¶ 9787] 272 F.2d 13 (2d Cir. 1959); Baratelli v. Commissioner [Dec. 50,148(M)], T.C. Mem......
-
Hubbard v. Comm'r of Internal Revenue
...with respect to the May 27, 1986 mailing of the notice. Accordingly, the Tax Court has jurisdiction over this case. See, Cole v. Commissioner, 30 T.C. 665, 672 (1958); McCraig v. Commissioner, 51 T.C. 331, 336-337 (1968); Cooper v. Commissioner, T.C. (Memo.) 1984-329; see also, Frieling v. ......
-
Dorchester Indus. Inc. v. Comm'r of Internal Revenue
...agreement with R. R's motions for entry of decision will be granted with respect to all dockets (except with regard to W). Cole v. Commissioner, 30 T.C. 665 (1958), affd. 272 F.2d 13 (2d Cir. 1959), will not be followed to the extent that it indicates that a party to a settlement agreement ......
-
Nelson Brothers, Inc. v. Commissioner
...parties were in agreement is irrelevant if they are no longer in agreement when the case is called for trial," citing Cole v. Commissioner [Dec. 23,046], 30 T.C. 665 (1958), affd. per curiam [59-2 USTC ¶ 9787] 272 F.2d 13 (2d Cir. Rule 91(e) does provide that a stipulation under Rule 91(a) ......