Ming v. Commissioner
| Citation | 1976 TC Memo 115,35 TCM (CCH) 522 |
| Decision Date | 15 April 1976 |
| Docket Number | Docket No. 177-71. |
| Parties | Estate of William R. Ming, Jr., Deceased, Irvena H. Ming, Administrator with the will annexed and Irvena H. Ming v. Commissioner. |
| Court | U.S. Tax Court |
Aldus S. Mitchell, 1500 Westminster, Chicago, Ill., for the petitioners. William L. Ringuette, for the respondent.
Memorandum Findings of Fact and Opinion
The Commissioner has determined deficiencies in and additions to petitioners' income taxes as follows:
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Additions to Tax Alternative
Sec. 6653(b), Additions to Tax
Year Deficiency I.R.C. 1954 Sec. 6651(a) Sec. 6653(a)
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1964 ...... $ 906.86 $3,495.77 $1,747.89 $349.58
1965 ...... 503.32 3,194.20 1,597.10 319.42
1966 ...... 1,303.89 2,302.20 1,151.10 230.22
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Petitioners now concede their liability for the deficiencies in tax. The remaining issues, in respect of the additions and alternative additions to tax, are as follows:
1. Was any part of the underpayment of tax for each year due to the fraud of William R. Ming, Jr.? If such fraud is found, then petitioner Estate of William R. Ming, Jr., is liable for the additions to tax imposed by section 6653(b), but petitioner Irvena H. Ming is not liable for such additions because the parties have stipulated that no part of the underpayments was due to fraud on her part. Also, if fraud on the part of William R. Ming, Jr., is found, the respondent does not seek to support the alternative additions under sections 6651(a) and 6653(a).1
2. If it is found that no part of the underpayments was due to fraud, petitioners have stated on brief that they do not contest the section 6651 additions to tax, thereby leaving in issue only whether any part of the underpayments was due to "negligence or intentional disregard of rules and regulations (but without intent to defraud)" so as to make applicable the additions to tax under section 6653(a).
This case was submitted for decision solely on a stipulation of facts which, aside from stating those facts as to which the parties are in agreement, incorporated a number of documents and presented as the bulk of the evidence herein the record and associated history of a related criminal proceeding involving the same taxpayer, William R. Ming, Jr. (United States v. William R. Ming, Jr., No. 70 C.R. 213, United States District Court, Northern District of Illinois, Eastern Division).
William R. Ming, Jr., and Irvena H. Ming resided in Chicago, Illinois, on the date they filed their petition in this case.
On June 30, 1973, subsequent to the filing of the petition herein, William R. Ming, Jr., died in Chicago, Illinois. Petitioner Irvena H. Ming was duly appointed and is now acting as "Administrator" with the Will Annexed of the Estate of William R. Ming, Jr. Pursuant to a joint motion of the parties, "Estate of William R. Ming, Jr., Deceased, Irvena H. Ming, Administrator with the Will Annexed", has been substituted for William R. Ming, Jr., the individual, as a party to this proceeding.
William R. Ming, Jr., was an attorney whose career was long and distinguished. He served in both state and Federal governments, becoming at one time Assistant Attorney General of the State of Illinois. In addition to working during certain periods of his career as a full-time public servant, Mr. Ming was also a member of a number of special committees which dealt with matters of national importance. These committees included the Administrative Procedure Committee of the United States (Ming appointed by President Nixon), and the President's Lawyers' Committee for the Protection of Civil Rights (Ming appointed by President Kennedy). He was, for a time, a professor of law, first at Howard University, and then at the University of Chicago.
Apart from his time to time teaching and public service activities, Mr. Ming not only carried on a busy private practice but also involved himself deeply in the civil rights movement of the 1950's and 1960's. He was a member of the National Board of the National Association for the Advancement of Colored People. His greatest efforts, however, were in support of the N.A.A. C.P. Legal Defense and Educational Fund, Inc. Between 1937 and 1967, Mr. Ming was either counsel or among counsel in all the major litigation in which the N.A.A. C.P. participated; he especially involved himself in those cases which reached the Supreme Court, the most famous of which was Brown v. Board of Education of Topeka, 347 U.S. 483.2 Mr. Ming received no significant compensation for his work on any of these cases.
During 1964, 1965 and 1966 — the tax years specifically before this Court — Mr. Ming actively pursued both his private law practice and his public service interests. He conducted his practice from offices in Chicago, Illinois, where he was associated with other lawyers practicing under the style of McCoy, Ming and Black.
Irvena H. Ming was Mr. Ming's wife from 1941 until his death in 1973. She was employed by the Board of Education of Chicago, as an attendance (truant) officer from 1953 at least through 1970.
Between 1964 and 1966 various illnesses affected members of the Ming family. Mr. Ming was hospitalized for approximately one week during November, 1964, because of an intestinal disorder, and an undiagnosed leg ailment kept him laid up, unable to walk, for about ten days during 1966. His mother-in-law died in September, 1965, after a long illness, and his father passed away one year later, also after a long illness.
Mr. Ming received self-employment income from his law practice, in at least the amounts shown in the following table:
Year Amount
1962 ........... $26,900.76
1963 ........... 14,797.41
1964 ........... 23,198.64
1965 ........... 23,966.64
1966 ........... 19,449.77
Mrs. Ming received wages subject to withholding as shown below:
Year Wages Witholding
1962 ........... $4,741.18 $842.40
1963 ........... 4,681.63 832.50
1964 ........... 4,525.00 670.60
1965 ........... 4,825.00 687.50
1966 ........... 5,245.20 838.92
Mr. and Mrs. Ming in fact received taxable income (gross income minus deductions) and incurred joint Federal income tax liabilities as follows:
Federal
Taxable Income Tax
Year Income Liability
1964 ........... $25,739.58 $6,991.54
1965 ........... 25,303.31 6,388.39
1966 ........... 19,351.75 4,604.39
The Mings maintained adequate books and records from which their income, expenses, and Federal income tax liability could be determined for the years 1964, 1965 and 1966. The records of Mrs. Ming's income consisted primarily of W-2 Forms stating, for each year of her employment, her wages and the amount of Federal income tax withheld therefrom. The records of Mr. Ming's income from his law practice — which constituted substantially all of his income — were maintained by the bookkeeper employed at McCoy, Ming and Black. At least during the years 1963 through 1966, inclusive, the bookkeeper prepared by-weekly "draw" or "draw-recap" statements which reported Mr. Ming's share of the firm's net receipts for the preceding two weeks. (The net receipts were computed in such manner as to take into account all office expenses and related deductions.) These draw or draw-recap sheets were in the possession of, available to, or under the direction and control of Mr. Ming. Mr. Ming maintained his own records of his individual business expenses.
Mr. Ming has admitted that he knew he received over $600 of gross income during each of the years 1964 through 1966. He in fact knew that he earned many thousands of dollars during each of these years. Nearly every two weeks for the entire period 1964-1966, a check was drawn on the account of McCoy, Ming and Black and was deposited to Mr. Ming's personal account. The amounts of these checks, representing Mr. Ming's full share of the earnings of McCoy, Ming and Black, ranged from a low of $10 to a high of $12,054.16. In almost every case, the check to be deposited was not endorsed by Mr. Ming personally but instead was endorsed and deposited on his behalf by his secretary. Mr. Ming could have ascertained the exact amount of any of these checks at any time.
Mr. Ming knew that every person who received at least $600 of gross income during any of those years was required to file a Federal income tax return for each such year. He also knew that the law required that the return be filed by April 15 of the year following the tax year to which the return related.
On May 8, 1956, William and Irvena Ming filed a joint Federal income tax return for the tax year 1955, and paid in full the tax liability disclosed thereon.
Thereafter William and Irvena Ming failed to file timely Federal income tax returns for any tax year of the 11-year period 1956 through 1966, inclusive. And they failed to make timely payments of any Federal income taxes due for any of those years.
In his criminal trial for willful failure to file returns, Mr. Ming testified that at some time between 1956 and 1967, he asked Arthur J. Wilson, a certified public accountant, to "bring my Ming's tax returns down to date". Mr. Ming stated that to accomplish this, he gave Wilson access to his personal records as well as to relevant records of his law firm. He further testified that in 1965 or 1966, he executed a power of attorney, giving Wilson authority to sign tax returns on Ming's...
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