Estate of Maceo v. Commissioner, Docket No. 55506
| Decision Date | 27 February 1964 |
| Docket Number | 55709,63934.,63933,Docket No. 55506 |
| Citation | 23 TCM (CCH) 258,1964 TC Memo 46 |
| Parties | Estate of Sam Maceo Deceased, Edna Sedgwick Maceo Plitt, Independent Executrix, and Sam Serio, Independent Executor, and Edna Sedgwick Maceo Plitt, Individually, et al. v. Commissioner. |
| Court | U.S. Tax Court |
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Memorandum Findings of Fact and Opinion
These consolidated proceedings involve the determination of deficiencies in income tax and additions to tax as follows:
The cases were consolidated for hearing pursuant to agreement of the parties.
The principal issues presented for our consideration are:
(1) Whether respondent was justified in making use of the net worth plus expenditures method in reconstructing net income for the taxable years 1948 through 1950, inclusive;
(2) Whether and to what extent petitioners understated their net taxable income for the years 1948 through 1950, inclusive;
(3) Whether the capital investments of Sam Maceo, Rosario and Vincent in Maceo and Company at December 31, 1950, were $245,742.02, $245,742.02 and $80,792.31, respectively, as contended by respondent in his motion to correct the amounts previously stipulated as investments of Rosario and Vincent in said company;
(4) Whether any part of the deficiency determined against petitioners for each of the years 1948 through 1950, inclusive, was due to fraud with intent to evade tax within the meaning of section 293(b) of the 1939 Code;2 (5) Whether assessment and collection of deficiencies determined in Docket Nos. 55709 (Rosario and Frances) and 63934 (Vincent and Estelle) for the years 1948 and 1949 and for the year 1948 in Docket No. 63933 (O. E. Voigt) are barred by the statute of limitations, as provided by section 275(a) of the 1939 Code;
(6) Whether Sam Maceo and Edna Maceo Plitt are liable for an addition to tax for 1950 for their failure to file a declaration of estimated tax for said year within the purview of section 294(d)(1)(B) of the 1939 Code; and
(7) Whether the several petitioners are liable for the addition to tax for substantial underestimation of estimated tax under section 294(d)(2), Code of 1939, for the respective years for which determined by respondent.
Part of the facts are stipulated (orally and in writing) and, together with stipulated exhibits, were so found and are incorporated by this reference.
The petitioners in Docket No. 55506 are the Estate of Sam Maceo, Deceased, and Edna Sedgwick Maceo Plitt, wife of the decedent. The petitioners in Docket No. 55709 are the Estate of Rosario Maceo, Deceased, and Frances Maceo, wife of the deceased. The petitioner in Docket No. 63933 is O. E. Voigt. The petitioners in Docket No. 63934 are Vincent A. Maceo and Estelle Maceo Parmer.
During the taxable years 1948, 1949 and 1950, the aforesaid petitioners resided in Galveston, Texas.
Frances Maceo and Sam Serio are duly qualified independent executrix and executor, respectively, of the Estate of Rosario Maceo, Deceased. Frances Maceo, wife of the deceased Rosario, is also a petitioner in this proceeding in her individual capacity. Sam Serio and Frances Maceo are citizens of the United States.
Edna Sedgwick Maceo Plitt and Sam Serio are duly qualified independent executrix and executor, respectively, of the Estate of Sam Maceo, Deceased. Edna Sedgwick Maceo Plitt, former wife of the deceased Sam Maceo, is also a petitioner in this proceeding in her individual capacity.
Sam Maceo was born in Palermo, Italy, on March 1, 1894. He became a United States citizen through naturalization and took up residence in Galveston, Texas, in 1915, which continued to be his residence until the time of his demise on April 16, 1951.
Sam Maceo was the younger brother of Rosario Maceo.
Sam Maceo married Jessica McBride prior to 1932 and they were divorced on November 8, 1941.
Sam Maceo married Edna Sedgwick on December 29, 1941, and she was his surviving spouse at the time of his death.
Sam and Edna Sedgwick Maceo Plitt had three children as a result of their marriage. They were Salvatore Maceo and Victor Edward Maceo, born in 1942, and Edna Sedgwick Maceo born in 1944.
Rosario Maceo was born in Palermo, Italy, on September 8, 1887, and came to the United States in 1901. Rosario was a citizen of the United States at the time of his demise on March 15, 1954. He established his residence in Galveston in 1913 and continued to reside there until the time of his death.
Rosario Maceo married Frances Dispensa in September 1922.
Frank Maceo and Vic C. Maceo are brothers and were first cousins of Sam Maceo and Rosario.
O. E. Voigt was born in Brenham, Texas, on November 18, 1888. Voigt married Bessie Downey and they were divorced sometime during the period 1923 to 1925. Voigt and Bessie had three children. The married names of Voigt's three children during the taxable years 1948, 1949 and 1950 were Bessie Cripps, Estelle Maceo Parmer and Margaret Williams.
At the time of the instant trial Voigt had been engaged in the gambling business for about 50 years. He commenced his gambling activities in 1910 in Galveston where he ran a poker game.
Sam and Rosario had been barbers for a number of years before they went into the bootlegging business with Voigt in 1923 or 1924.
Vincent A. Maceo was born in New Orleans, Louisiana, on January 27, 1914. Vincent is the son of Frank Maceo and the son-in-law of O. E. Voigt. Vincent married Estelle Voigt, daughter of O. E. Voigt on June 1, 1939. Vincent and Estelle were divorced in November 1951.
Vincent A. Maceo was a second cousin of Sam and Rosario. Vincent is the nephew of Vic C. Maceo.
After Vincent left Texas A & M he worked as an apprentice for Home Electric Company until 1943.
In 1943 Vincent acquired an interest in a partnership known as McCarty Roofing Co., which continued the roofing business operated by J. E. McCarty under the name of J. E. McCarty and Co. In 1944 the McCarty Roofing Co. partnership ceased operations.
Vincent became a partner in the "Turf" owned by Maceo and Company on July 1, 1946, at which time he purchased a five percent interest from Voigt.
Turf was organized on August 6, 1932. The organizers were Rosario, Sam, Voigt, Frank and D. D. Alexander.
Sam Maceo, Rosario, Voigt and Vincent were partners in Maceo and Company during the taxable years 1948, 1949 and 1950.
Maceo and Company was the successor of Turf and R. Maceo and Company.
Partnerships in which Rosario, Sam, Voigt and Vincent had financial interests and the amount of their interests therein were as follows:
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