Joyce v. Comm'r of Internal Revenue
| Decision Date | 14 October 1955 |
| Docket Number | Docket No. 52458. |
| Citation | 25 T.C. 13 |
| Parties | WALTER M. JOYCE AND MYRTLE JOYCE, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
J. E. Rappoport, Esq., for the petitioners.
James F. Shea, Esq., for the respondent.
1. ESTIMATED TAX— FAILURE TO FILE DECLARATION— REASONABLE CAUSE SEC. 294(d) (1)(A)— No reasonable cause having been established for failure to file declarations of estimated tax, held, Commissioner's addition to tax proper.
2. DEDUCTIONS— DEPRECIATION— PARTIAL USE OF FAMILY CAR FOR BUSINESS PURPOSES.— Deduction allowed on Court's determination of reasonable allowance for depreciation. (Cohan v. Commissioner, 39 F.2d 540.)
The Commissioner determined deficiencies in and additions to the income tax of the petitioners as follows:
+---------------------------------------+
¦ ¦ ¦Addition under ¦
+------+------------+-------------------¦
¦Year ¦Deficiency ¦sec. 294(d)(1)(A) ¦
+------+------------+-------------------¦
¦1950 ¦$158.76 ¦$1,077.00 ¦
+------+------------+-------------------¦
¦1951 ¦306.12 ¦1,372.70 ¦
+---------------------------------------+
The issues for decision are whether there was reasonable cause for the late filing of the declarations of estimated tax so that the additions to the tax are not due and whether the petitioners are entitled to deductions for depreciation of an automobile.
The petitioners, husband, and wife, filed timely joint income tax returns for 1950 and 1951 with the collector of internal revenue for the first district of Ohio. Myrtle had no income.
Walter, as sole proprietor, conducted a business of selling copper and brass products at wholesale during the taxable years. He reported gross profits from that business in excess of $78,000 and net profits in excess of $41,000 for each taxable year. The tax due shown on his original returns was $12,741.22 for 1950 and $19,384.76 for 1951.
The petitioners filed a declaration of estimated tax for 1950 on December 22, 1950. The estimated tax of $10,000 shown thereon was paid on December 27, 1950. The petitioners filed a declaration of estimated tax for 1951 on January 15, 1952. The estimated tax of $20,000 shown thereon was paid on January 15, 1952. The petitioners filed no declarations of estimated tax for the taxable years.
The petitioners could reasonably have expected at all times during each taxable year that their gross income from sources other than wages would exceed $100 and that their gross income would exceed $600 for that year.
The failure of the petitioners to make and file a declaration of estimated tax for each taxable year within the time prescribed was not due to reasonable cause but was due to willful neglect.
Walter owned an automobile during the taxable years which he used, partly for the purposes of his business and partly for nonbusiness purposes, in the ratio of about 80 per cent for the former and 20 percent for the latter. The cost, the date of purchase, and the probable useful life of the automobile at times material hereto have not been proven. No deduction for depreciation of the automobile was taken on the original returns for the taxable years or allowed in the determination of the deficiencies. The deficiency notice was mailed on January 15, 1954. Thereafter amended returns were filed claiming a deduction of $530 as depreciation on the automobile for each year. The entries on the depreciation schedule represented that the automobile had been acquired in 1949 at a cost of $2,650, it had an estimated life of 4 years, and it had been ‘Used in Business 80%.’ A reasonable allowance for depreciation on the automobile on account of its use in Walter's business for each taxable year is $400.
The petitioners concede that their declarations of estimated tax should have been filed on March 15 of the year to which applicable and seek to avoid the additions imposed by section 294(d)(1)(A) by showing reasonable cause...
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