Switzer v. Comm'r of Internal Revenue
| Decision Date | 30 June 1953 |
| Docket Number | 28257,Docket Nos. 28256,28258,28259. |
| Citation | 20 T.C. 759 |
| Parties | L. GLENN SWITZER, ET AL.,1 PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Petitioners L. Glenn Switzer and Howard A. Switzer were partners in the Transit Mixed Concrete Company during 1944 and 1945. Petitioner Ida H. Switzer is the wife of L. Glenn Switzer; and petitioner Florence M. Switzer is the wife of Howard A. Switzer. One-half of each husband's partnership interest constituted community property of said spouses under California law. A partnership return of income for each of the years 1944 and 1945 was filed on or before March 15, 1945, and March 15, 1946, respectively. Individual income tax returns were filed by each of the four petitioners for each of the years 1944 and 1945 on or before the 15th day of March following such year. The respondent determined deficiencies and a 5 per cent negligence penalty under section 293(a) against all four petitioners, and asserted fraud penalties for both years against the two husbands.
1. Held, no part of any of the deficiencies for either of the taxable years determined with respect to the two husbands was due to fraud with intent to evade tax.
2. Held, further, no part of any of the deficiencies for either of the taxable years determined against the wives was due to negligence.
3. Held, further, part of the deficiencies for each of the taxable years determined against the husbands was due to negligence.
4. Held, further, each of the petitioners for each of the taxable years omitted gross income in excess of 25 per cent of the gross income stated in his or her respective return, and the deficiencies were timely asserted within the 5-year period provided by section 275(c) of the Code. William A. Cruikshank, Jr., Esq., and John I. Bolen, Esq., for the petitioners.
R. E. Maiden, Jr., Esq., for the respondent.
These consolidated proceedings involve Federal income tax deficiencies and penalties for the calendar years 1944 and 1945 as follows:
1 Includes claimed increased deficiencies.
2 Negligence penalty asserted in Docket Nos. 28256 and 28258, in event Court should hold fraud not established.
The questions to be decided are: (1) Whether a part of each deficiency for each taxable year in Docket Nos. 28256 and 28258 is due to fraud with intent to evade tax; (2) if no part of the deficiencies is due to fraud with intent to evade tax, is a part of each deficiency for each taxable year in said dockets due to negligence within the meaning of section 293(a); (3) whether a part of each deficiency for each taxable year in Docket Nos. 28257 and 28259 is due to negligence within the meaning of section 293(a); and (4) whether the 5-year period of limitations is available to the respondent under section 175(c) by reason of the omission of gross income in excess of 25 per cent of the gross income stated in each return.
The 5 per cent addition to the tax under section 293(a) was pleaded affirmatively by the respondent in amendments to his answers. In Docket Nos. 28256 and 28258, it was an alternative plea to the allegation of fraud. The statutory period for assessment was not extended by any waivers.
Some of the facts were stipulated.
FINDINGS OF FACT.
The stipulated factors are so found and are incorporated herein.
The petitioners L. Glenn Switzer and Howard A. Switzer were partners during the years 1944 and 1945, carrying on their partnership business under the firm name of Transit Mixed Concrete Company in Pasadena, California. The interests of said L. Glenn Switzer and Howard A. Switzer in that partnership were two-thirds and one-third, respectively.
During said years L. Glenn Switzer was married to Ida H. Switzer; said two-thirds partnership interest constituted the community property of said spouses under the laws of the State of California. During said years Howard A. Switzer was married to Florence M. Switzer; said one-third partnership interest constituted the community property of said spouses under the laws of the State of California.
All of the income of the petitioners during the years 1944 and 1945 was derived from said partnership, Transit Mixed Concrete Company.
A partnership return of income for each of the years 1944 and 1945 was filed on or before March 15, 1945, and March 15, 1946, respectively. Individual income tax returns were filed by each of the four petitioners for each of the years 1944 and 1945 on or before the 15th day of March following such year. The notice of deficiency in each proceeding, covering both taxable years, was mailed on February 24, 1950. The respective deficiencies were, therefore, determined and asserted beyond 3 but within 5 years after the respective returns were filed.
The income of said partnership, as reported on the partnership returns and as corrected, is as follows:
+--------------------------------------------------+
¦Year¦Reported ¦Corrected ¦Reported ¦Corrected ¦
+----+-----------+-----------+----------+----------¦
¦ ¦gross ¦gross ¦net ¦net ¦
+----+-----------+-----------+----------+----------¦
¦1944¦$384,905.04¦$405,394.12¦$13,936.73¦$34,425.81¦
+----+-----------+-----------+----------+----------¦
¦1945¦526,068.71 ¦594,262.31 ¦15,332.71 ¦83,526.31 ¦
+--------------------------------------------------+
The gross receipts of the partnership, as reported and as corrected, together with the amount omitted expressed as a percentage, are as follows:
+-------------------------------------------+
¦Year¦Reported ¦Corrected ¦Percentage¦
+----+-------------+-------------+----------¦
¦ ¦ ¦ ¦omitted ¦
+----+-------------+-------------+----------¦
¦1944¦$1,271,448.34¦$1,291,937.40¦1.5% ¦
+----+-------------+-------------+----------¦
¦1945¦1,729.486.97 ¦1,797,680.57 ¦3.9% ¦
+-------------------------------------------+
Each petitioner's share of net partnership income, as reported and as corrected, is as follows:
+-------------------------------------------------------------+
¦ ¦1944 ¦1945 ¦
+-------------------+--------------------+--------------------¦
¦Petitioner ¦ ¦ ¦ ¦ ¦
+-------------------+---------+----------+---------+----------¦
¦ ¦Reported ¦Corrected ¦Reported ¦Corrected ¦
+-------------------+---------+----------+---------+----------¦
¦L. Glenn Switzer ¦$4,645.58¦$11,475.26¦$5,110.91¦$27.842.11¦
+-------------------+---------+----------+---------+----------¦
¦Ida H. Switzer ¦4,645.58 ¦11,475.27 ¦5,110.91 ¦27,842.11 ¦
+-------------------+---------+----------+---------+----------¦
¦Howard A. Switzer ¦2,322.79 ¦5,737.63 ¦2,555.45 ¦13,921.05 ¦
+-------------------+---------+----------+---------+----------¦
¦Florence M. Switzer¦2,322.78 ¦5,737.63 ¦2,555.45 ¦13,921.05 ¦
+-------------------------------------------------------------+
The following deficiencies are due in the event that the Court holds that the assessment of such deficiencies, or any of them, is not barred by the statute of limitations:
+----------------------------------------+
¦Petitioner ¦1944 ¦1945 ¦
+-------------------+---------+----------¦
¦L. Glenn Switzer ¦$2,258.86¦$11,074.91¦
+-------------------+---------+----------¦
¦Ida H. Switzer ¦2,258.86 ¦11,074.91 ¦
+-------------------+---------+----------¦
¦Howard A. Switzer ¦809.91 ¦3,768.68 ¦
+-------------------+---------+----------¦
¦Florence M. Switzer¦779.91 ¦3,653.68 ¦
+----------------------------------------+
The statutory notices issued to petitioners, Howard A. Switzer, Docket No. 28258, and L. Glenn Switzer, Docket No. 28256, contain the following determination of the additional income giving rise to the deficiencies:
The following adjustments to the ordinary net income of the Transit Mixed Concrete Company, a partnership, for its taxable years ended December 31, 1944 and December 31, 1945, are based upon an audit made of the books of the partnership * * * as shown below:
+-----------------------------------------------------------------------------+
¦ ¦1944 ¦1945...To continue reading
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Shirley v. Commissioner, Docket No. 312-69.
...any claim of forgetfulness or carelessness is untenable. Compare John Marinzulich Dec. 23,261, 31 T.C. 487 (1958); L. Glenn Switzer Dec. 19,787, 20 T.C. 759 (1953). Mrs. Kub asked for and received the payments in return for promised services; they bear none of the hallmarks of gifts or loan......
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...therefore limited to the $5,014.60 shown therein and does not include any amounts stated in her husband's return. In Switzer v. Commissioner, 20 T.C. 759, 1953 WL 98 (1953), the taxpayer-husbands (H's) were partners whose partnership interests constituted community property under California......
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Brountas v. Comm'r of Internal Revenue , Docket Nos. 6255-78
...v. Commissioner, 67 T.C. 143, 159 (1976). Fraud is never presumed or imputed; mere suspicion of fraud is not sufficient. Switzer v. Commissioner, 20 T.C. 759, 765 (1953). Respondent, however, may meet his burden of proof through circumstantial evidence. Powell v. Granquist, 252 F.2d 56, 61 ......
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