MacCrowe's Estate v. CIR, 7792.

Decision Date09 March 1959
Docket NumberNo. 7792.,7792.
Citation264 F.2d 621
PartiesESTATE of Albert E. MacCROWE, Deceased, James C. L. Anderson, Administrator de bonis non, with the will annexed, and Hazel B. MacCrowe (Now Hazel B. Keen), Surviving Wife, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
CourtU.S. Court of Appeals — Fourth Circuit

D. Sylvan Friedman, Baltimore, Md., for petitioners.

Joseph Kovner, Attorney, Department of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., and Lee A. Jackson, Attorney, Department of Justice, Washington, D. C., on brief), for respondent.

Before SOBELOFF, Chief Judge, and SOPER and HAYNSWORTH, Circuit Judges.


For the third time this case is before us on petition to review a decision of the Tax Court. The litigation arises out of the Commissioner's reconstruction of the gross income for the years 1948 and 1949 of Dr. Albert E. MacCrowe, now deceased, and the consequent deficiency assessments. The petitioners are the Estate of Dr. MacCrowe and, since joint returns were filed, Hazel B. MacCrowe (now Hazel B. Keen), surviving wife.

The decedent kept no records but estimated that in 1948 he treated 400 patients at $125 per patient, and the joint tax return filed by him and his wife accordingly showed estimated receipts in that year of $50,000 from his practice as a physician. The 1949 return estimated receipts of $24,000.

Initially the case was tried before Judge Johnson, of the Tax Court, who filed his findings and memorandum opinion in August, 1955, T.C.Memo. 1955-238, 24 T.C. 1168. From these it appears that Dr. MacCrowe, a physician, was primarily engaged in performing abortions during 1948 and 1949; that in 1948 he conducted his activities in two private homes, having a total of 19 to 21 beds available for patients; and that in 1949 a third home with 7 or 8 beds was also used.

The parties stipulated that in 1948 the decedent purchased 480 "HMC No. 1" tablets (each tablet contains one-quarter grain of morphine) and 240 such tablets in 1949. The Commissioner determined that the number of tablets purchased equalled the number of operations performed. Upon this evidence and upon an estimated average fee of $400 (instead of $125) per patient, the Commissioner had adjusted the decedent's gross receipts for 1948 to $192,000 (480 × $400); for 1949, to $96,000 (240 × $400).

Two former employees of the decedent, a woman in whose house many of the patients were treated, and her son, the decedent's chauffeur and messenger, later testified in the Tax Court that the decedent performed 30 to 36 operations a week for 40 weeks in 1948 and half as many in 1949, and that the operations yielded an average fee of $400 per case. Judge Johnson noted that this testimony, if accepted, would result in an estimated gross income for 1948 of nearly $500,000 and half as much in 1949. These figures the Judge termed "almost incredible." A certified public accountant, produced by the petitioners, testified that the decedent's net worth in the years in question was in keeping with his reported income. Judge Johnson held that "petitioners have shown respondent's Commissioner's determination to be incorrect." Nevertheless, "from the evidence" the Judge was satisfied that the decedent failed to report all of his income from his medical activities and redetermined the gross income at $115,000 in 1948 and $55,000 in 1949, instead of the $50,000 and $24,000 for the respective years reported by the taxpayer, or the $192,000 and $96,000 determined by the Commissioner.

On review, this Court declared:

"The Commissioner arrived at these figures by estimating the number of patients operated on by the physician on the basis of morphine tablets purchased by him and multiplying this by a charge of $400 per patient. The Tax Court found that the Commissioner\'s determination was incorrect; but, while finding generally that taxpayer\'s gross income was $115,000 for 1948 and $55,000 for 1949, did not find the facts upon which this ultimate finding as to gross income was based." 4 Cir., 1956, 240 F.2d 841, 842.

We vacated the judgment and remanded the case, with...

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4 cases
  • Auto. Club of New York, Inc. v. Comm'r of Internal Revenue
    • United States
    • U.S. Tax Court
    • 20 July 1959 support its conclusion. See Gilbert v. Commissioner, 248 F.2d 399 (C.A. 2), reversing a Memorandum Opinion of this Court; MacCrowe's v. Commissioner 264 F.2d 621 (C.A. 4), vacating and remanding 30 T.C. 653.II. The second ground for my dissent from the Court's opinion on the first issue ......
  • Schultz v. CIR, 17914.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 30 May 1960
    ...basis of the record before Judge Rice. We mention only that to the many cases urged pro and con1 should be added MacCrowe's Estate v. Commissioner, 4 Cir., 1959, 264 F.2d 621; 4 Cir., 1958, 252 F.2d 293; 1956, 240 F.2d 841, in which the Fourth Circuit, after three appeals, expressly directe......
  • 57 HERKIMER STREET CORPORATION v. Commissioner, Docket No. 64531
    • United States
    • U.S. Tax Court
    • 9 August 1961
    ...was transacted in cash. See Harry Gleis, supra. Nor do we understand MacCrowe's Estate v. Commissioner 59-1 USTC ¶ 9334, 264 F. 2d 621 (C. A. 4, 1959), reversing Dec. 23,043 30 T. C. 653, to prohibit such a method of proof for there we did not accept for computation of the deficiency the re......
  • Lohr v. United States
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 16 April 1959
    ... ... Reagan v. Traders and General Insurance Co. 5 Cir., 255 F.2d 845, 847. See also, United States v. Woodard 5 Cir., 257 F.2d ... ...

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