Schrader v. CIR

• Decision Date: 23 January 1970
• Docket Number: No. 19363.,19363.
• Citation: 420 F.2d 443
• Parties: Erma M. SCHRADER, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

420 F.2d 443 (1970)

Erma M. SCHRADER, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 19363.

United States Court of Appeals Sixth Circuit.

January 23, 1970.

Erma Schrader, pro se.

William L. Goldman, Atty., Dept. of Justice, Washington, D. C., for respondent-appellees; Johnnie M. Walters, Asst. Atty. Gen.; Lee A. Jackson, William A. Friedlander, Attys., Dept. of Justice, Washington, D. C., on brief.

Before PHILLIPS Chief Judge, PECK, Circuit Judge, and WILSON, District Judge.^*

PER CURIAM.

This case involves deficiencies of approximately $10,000 in taxpayer's income taxes for the years 1963 through 1965. The Commissioner determined that the taxpayer's income tax returns did not accurately reflect her true income, and, accordingly, redetermined her income by using the net worth method. Internal Revenue Code of 1954 § 446(b) (hereinafter "the Code"); Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150 (1954). Following the Tax Court's affirmance of the Commissioner's determination of the deficiencies, taxpayer appealed.

Taxpayer conducted a number of businesses in properties she owned in Louisville, Kentucky. Among them were a coin operated car wash, a beauty salon and a beauty aids supply business. She also owned and rented some apartments. The primary issue, both in the proceedings below and here, is the proper allowable depreciation for these various properties.

Throughout the proceedings below, taxpayer, who unfortunately proceeded pro se, apparently failed to understand that she had the burden of showing that the Commissioner's net worth computation, including his allowances for depreciation, were wrong. See Harp v. Commissioner of Internal Revenue, 263 F.2d 139, 141 (6th Cir. 1959); Schira v. Commissioner of Internal Revenue, 240 F.2d 672, 673-74 (6th Cir. 1957); Thomas v. Commissioner of Internal Revenue, 223 F.2d 83, 87 (6th Cir. 1955). The Tax Court affirmed the Commissioner's net worth computation primarily on the basis of the taxpayer's utter failure to introduce any probative evidence which would overcome the presumptive correctness of the Commissioner's determination. On the state of this record we would be inclined to affirm the findings of the Tax Court under the clearly erroneous rule (Fed.R.Civ.P. 52(a)) were it not for the fact that both in his brief and in oral argument the Commissioner conceded certain errors of law in his net worth computation.

Each of the errors conceded by the Commissioner relates to the proper depreciation deductions for certain of the properties used by taxpayer in her business activities. In the Tax Court the parties referred to the properties by Louisville street address, and we shall similarly refer to the properties in a short discussion of each concession.

1. 4161 Taylor Boulevard. This property contained taxpayer's coin operated car wash. Taxpayer computed depreciation on this property on the basis of a 10-year useful life for both the building and the car wash equipment. The Commissioner accepted the 10-year useful life for the equipment but substituted a 25-year useful life for the structure. The Commissioner asserts that the Tax Court correctly adopted his separate useful life determinations for the building and equipment. However, the Commissioner, who originally computed depreciation on the building and equipment separately, now concedes that the allowable depreciation for the building and equipment should have been computed by using the composite account method set forth in...