Ginsberg's Estate v. CIR, 17674.
| Decision Date | 09 December 1959 |
| Docket Number | No. 17674.,17674. |
| Citation | 271 F.2d 511 |
| Parties | Estate of Charles J. GINSBERG, Deceased, Burton Ginsberg and Harry Steinberg, Co-Executors, and Annette Ginsberg, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Arthur B. Cunningham, Cunningham & Weinstein, Miami, Fla., for Ginsberg's Estate.
Robert Alpern, Shapero & Shapero, Detroit, Mich., for petitioner Annette Ginsberg.
Charles K. Rice, Asst. Atty. Gen., Arch M. Cantrall, Chief Counsel, Internal Revenue Service, John M. Morawski, Special Atty., Internal Revenue Service, Washington, D. C., Joseph Kovner, Lee
A. Jackson, Harry Baum, Dept. of Justice, Washington, D. C., for respondent.
Before RIVES, Chief Judge, and TUTTLE and BROWN, Circuit Judges.
This is a petition to review the unreported decision, based on findings of fact and conclusions of the Tax Court in two cases which were consolidated for trial in that Court. The two questions involved in this appeal are: (1) whether the Tax Court was in error in holding the estate liable for income taxes and the fraud penalties for income received by the decedent, Charles J. Ginsberg, during the years 1946, 1947 and 1948, and the widow liable for the taxes and penalty for 1948, for which a joint return was filed; and (2) whether the Tax Court properly determined that the alleged gift of $20,000 to the individual petitioner, Annette Ginsberg, by a close corporation of which her husband, the decedent, owned one-half of the stock at his death was payment for her husband's services, and, therefore, taxable income. For the reasons set forth below we hold the estate and the individual petitioners are liable for both the taxes and the fraud penalties.
The decedent and his brother, Sydney Ginsberg, operated a partnership known as "Nash Motors" in Miami, Florida, from November, 1945, until February 5, 1947. On the latter date Nash Miami Motors, Incorporated was organized under the laws of Florida and succeeded the partnership. The deceased was the president of the corporation until his death on September 22, 1948, and his brother was the secretary-treasurer during this time and thereafter became president. The corporation sold used cars to various dealers in the Miami area and particularly to the R. S. Evans Motor Company. Robert W. Muir and other purchasers testified that Nash Motors and Nash Miami Motors, Incorporated, required them, when a purchase was made, to pay one amount by check, which amount was put on the invoice, plus an additional amount in cash. Only the invoice amounts were recorded on the company's books and the book entries were the only income reported on the tax returns. The cash was never shown in the corporation's books or included in the decedent's or the corporation's income tax returns.
All cash payments were made directly to Charles or Sydney or to them jointly. The Commissioner assessed one-half of the excess payments to each brother, those received during the partnership on the basis of understatement of partnership income and those received by the stockholders during the corporation's existence as dividends received from the corporation, not reported by the individual taxpayers.
Approximately two months after the death of Charles the Board of Directors of the corporation passed the following resolution:
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...6501(a). Thus, the Commissioner need only prove that some portion of the deficiency is due to fraud. Ginsberg v. Commissioner of Internal Revenue, 5th Cir. 1959, 271 F.2d 511. A finding of fraud by the Tax Court is generally treated as a fact finding which is not to be disturbed unless clea......
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...fraud penalty, notwithstanding that one of the parties to the joint venture may be innocent of the fraud. Ginsberg's Estate v. Commissioner, 271 F.2d 511, 513-514 (C.A. 5, 1956); Furnish v. Commissioner, 262 F.2d 727, 731-732 (C.A. 9, 1958); Kann v. Commissioner, 210 F.2d 247, 252 (C.A. 3, ......
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