*1 unpaid Florence, taxes federal income without consideration in fraud years 1945, creditors.1 and 1947. There was substantial evi- support findings. They dence to are David and be- his brother Simon clearly not judgment And erroneous.2 property come the Dis- co-owners of in rendered followed from the trict Lot 834 described Columbia findings it 27, 1948, Square in 424. On October Simon, Florence, David, wife his Affirmed. property corded a deed of trust on the $13,000 to secure in the sum a note
payable Harry brother, Mil- to another
loff. lien Notice of the tax filed was September 1, On 1949. States shortly day notice the same after the but attempted filed and Florence was David PLISCO, Appellant, Abe property convey their interest in the May 14, 1956, Thereafter, Simon. Goldkind, appellee America, UNITED STATES who was a defendant Appellee. Court, judg- in the District obtained against ment Simon in the District Percy MAY, Appellant, M. Court. deed District Court held that the America, UNITED STATES of Harry of trust and the note to secured Appellee. thereby consideration, had were without BAKER, Appellant, Norman R. creditors, been executed in fraud of were null held void. The court UNITED America, STATES of United States entitled was Appellee. $12,- recover 847.21, David and Florence Nos. 16488-16490. costs, with interest and property question fee titled in was Appeals United States Court of simple subject to sale Simon District of Columbia Circuit. judg- under the tax lien and under the Argued Feb. Goldkind, ment lien of latter amount- Decided June $8,637.00. Rehearing Petition for En Banc Denied appointed The District Court a trustee July 30, En Banc property to sell the distribute proceeds in accordance with the above rulings, any balance remain paid attorney
to be to the for Simon provisions judg-
Milloff. These independently
ment are contested on appeal. only dispute for decision this adequacy court is over the evi- findings support dence to Dis- Court, particularly
trict the note Harry and deed of trust in favor of Mil- loif, 27, 1948, recorded on October (1961) provides D.C.Code § shall deemed a of fact and not property whether a transfer of has been of law. made with intent credi defraud persons just having 52(a), tors or other claims 2. Fed.R.Civ.P. 28 U.S.C.A. *2 Allder, Washington,
Mr. H.
D.
Clifford
C.,
appellants.
for
Atty.
Waters,
Dept,
Mr. Robert L.
Supreme
the bar of
Justice of
Alabama, pro
vice, by special
hac
leave
Atty.
court,
whom
Asst.
Gen.
Oberdorfer, Messrs.
Louis F.
David C.
Acheson,
Atty.,
U.
Lee A.
S.
Jackson and
Attys.
Howard,
Dept,
Joseph M.
of Jus-
brief,
appellee.
tice,
were on the
Mr.
Duncan, Principal
T.
Asst. U.
Charles
S.
Atty.,
Just, Atty.,
R.
and Mrs. Caroline
Justice,
Dept,
appear-
entered
appellee.
ances
Edgekton,
Before
Fahy,
Bazelon
Judges.
Circuit
Judge.
BAZELON,
correct,
Circuit
and since
offered
rebutting evidence,
no other
the court
is a
This
suit
the United States
judgment
rendered
for the Government.2
judgment
jeopardy assess-
reduce
taxpayers appealed.
ment
disallowance
*3
of
the
Internal Revenue
Commissioner of
judgment
We think the
be af-
appellants
their
certain losses
claimed on
reaching
result,
firmed.
In
that
we as-
1948, 1949 and 1950 income tax returns.
deciding
taxpay-
sume without
Appellants
partners in a
were
ers’
past
records were
as
admissible
day’s
enterprise. They computed each
appellant
recollections recorded since
subtracting
profit
pay-
net
or
the
loss
posted
testified that he
the entries
expenses
day's
outs
win-
and
daily
they accurately
and that
reflected
nings and
their
recorded the result on
day's operations.
also assume
We
rejected
books.
The Commissioner
appellants’
urge
that
this
failure
day
characterizing
figures,
loss
them
ground
admissibility
of
below does not
“self-serving,”
daily
accepted the
but
bar consideration here.3
profit figures
against in-
as admissions
“clearly
But these
do not
records
terest.
meaning
reflect income” within the
of
than a
Unable
more
collect
446(b). Appel
Int.Rev.Code of 1954 §
by distraint,
fraction of
daily
the assessment
sup
lants’
statements were not
brought
the Government
this
in the ported by
suit
individual,
memoranda of
veri
unpaid por
District Court to reduce the
fiable transactions.4 And
their
judgment
expired.1
tion to
it
At
before
concerning
contained no
in
information
parties
trial,
stipulated
that
Com
come and costs which
have enabled
deficiency
missioner had made
assess
verify
the Commissioner to
state
years
ments for
here.
by comparing appellants’
ments
expense
income-
sought
Appellants
daily
to introduce the
ratios
the ratios of similar
above,
described
enterprises.
data,
Without such
the rec
objection.
excluded on the Government’s
nothing
ords reflect
more than the tax
prima
Since assessments
deemed
concerning
are
payers’ naked conclusions
levy
1. An
must be
assessment
collected
refund,
In
Court and in suits for
proceeding
years
or
a court
within six
assessment
is deemed
Commissioner’s
after
the assessment
is made.
Int.Rev.
generally
Mer-
correct. See
Code of 1954
tens,
§
§
U.S.C.A.
Law of
§
Federal
Income Taxation
that,
contend
since the Gov-
(1958);
58A.01,
50.61
10 id. §§
58A.35
ernment chose
collect
this
(1958);
assessment
The
cases cited therein.
by levying upon
property,
their
applies
§
same rule
when the Commissioner
compels
action
bars
this
because it
jeopardy
seeks to
a
assessment
reduce
Authority
bring
election of remedies.
a
judgment.
States,
See Becker
United
civil action to collect
(5th
1927);
taxes is conferred
records revealed as “net wins” for each *5 Judge although FAHY, (dissenting). day, and Circuit same records in- these dicated “net losses” the Commissioner engaged partners in were disregard could all such claimed losses gambling enterprise. operating Defi- they by ap- were not substantiated against ciency assessments entered pellants. deficiency Since assessments for the federal income taxes them for prima are deemed to correct it facie 1950, years 1948, in the amount 1949 and proved is considered that the Government Plisco, $309,- $412,729.87applicable to by merely its case in the District Court $324,- applicable Baker, to and 740.33 introducing in evidence the assessments May.1 applicable to With interest 933.69 arrived inat this manner. judgments assess- on these the entered are, respectively, $614,551.46, ments difficulty The above the is that $497,437.99. $474,397.38, and is There given controlling the assessments thus satisfactory that these men no evidence entirely effect are based on records which large sums to owe these States, the gambling losses, also indicate substantial to I cannot affirm so none of which were taken into account. judgments. the may I the think United States not thus years appel- reject the For in each choose and from the records. same reported parts individual lant as his share The chosen have no more trust- partnership, rejected. parts amount income worthiness than the Dewey paid Hotchkiss, the tax on amount 497, income the v. 30 N.Y. 499- reported. (1864); Welsh, from As derived 501 Weaver v. 325 Pa. three-year $56,607.23 571, period, 574-75, 3, (1937); was re- 191 A. 6 Rowan Dean, States, proceeding 24 P-H Tax Ct.Mem. 1. The United Semble: under dis- (1955). warrants, had, 1954, also Holland v. United See traint in 1952 and 121, 127, upon States, Plisco, U.S. S.Ct. levied certain assets (1954). realizing $11,984.65, L.Ed. which was credited to deficiency Payments his of $40 11. “The Commissioner’s reconstruction from $30 were received in 1955. presumed will be correct with the No amounts have been obtained from taxpayer disprove burden on the his Baker. computation.” Mertens, Federal crude (1961) 12.12 Taxation at I § Income note that the Commissioner has im- authorities). (citing posed negligence penalties against ap- pellants. may could have rebutted These be levied for failure validity adequate presumption Stein, accorded the Com- to maintain records. See 62,019; assessment missioner’s the cash ex- 1962 P-H Tax ers, Mem. Ct. Bick- If penditures deposit 60,083 bank method. 29 P-H Ct. Mem. 1f generally, Mertens, (1960). 1954, See Federal Income see And Int.Rev.Code of § 6653(a). 12.12 § Taxation ing 292-293, 287, were transferred Chenoweth, v. 49 W.Va. Wigmore, condensed Evi- to the more 544, (1901); sheets S.E. indicating summary and losses. see net wins And ed. dence § majority opinion that these The Commissioner, assumes 238 F.2d Showell v. past opin- recollec 1956) records were admissible as (dissenting yet recorded, evi is no tions there ion). dence that of the losses thus shown none say that I also think inaccurate is necessary to was incurred. It is not the disallow-
the assessments result from recorded; establish occurred alleged gambling losses which ance of May’s testimony, for Mr. considered This is not were not substantiated. overcome was sufficient result from The assessments situation. taking prima correctness of Com taxpayers’ records, ac- own pre missioner’s determinations. cepting completely there- the wins shown sumption upon favor his losses, entirely disregarding judgments disappears when com rest taxpay- except accounted for contrary petent intro is evidence to reaching me This wins. ers Commissioner, 267 duced. Cf. Gersten arbitrary meth- an unreliable and indeed 1959); Cullers judgments. which to obtain these od Commissioner, been used method shown 1956); su Showell destroys facie correctness Mertens, 153-155; pra 238 F.2d at majority opinion itself result. The 50.71 Law of Federal Income Taxation § the records referred “do states ‘clearly within mean- reflect income’ foregoing, it 446(b) Aside from the seems that of Int.Rev.Code of § *6 * * principle nothing of Cohan v. more *. The records reflect 1930), is taxpayers’ naked conclusions than the applicable. concerning advanced reason next income or taxable contrary majority position day operations. for from each loss any produce required failed that was not The Commissioner n accept from which an liable estimate Yet the did them.” Commissioner disregard very could be made. losses them. These and incurred sustained some losses sole are the basis the amounts of three-year expense during pe- majority opinion some .assessments. some- by riod, ar- difficulty those considered in other than how seeks overcome this riving Bickers, supra at wins. In .accepting wins shown un- they acceptable in somewhat similar circumstanc- note show the if judg- es, income, relying theoiy Tax its “best appel- Court used on the wagering determining ment” lants incentive reduce their entirely overstating had been excluded which losses and under- taxes substantiation, stating profits. may lack One Commissioner Drews, (1956), incentive, wholly see T.C. 1354 but its existence fails to however, testimony, accuracy where, there was establish reasonableness accepted, there income taxed or of the method Stein, supra some losses. note it. used to determine These “wins” were parcel showing part reasonably cannot “losses” be con- any event, I would hold In separately complemen- sidered facie correctness assess- tarily “losses.” shown by the made Commissioner was ments Moreover, appellant when the manner in which testified overcome disclosed, employed recording made was and also method the were May. day’s testimony appellant operations, explain- of each .results