Pеtitioner, sometimes spoken of herein as taxpayer, seeks to set aside the decision of the Tax Court of the United States establishing certain defiсiencies in income and victory taxes for the year 1943, in income tax for the year 1944 and penalties for those years. The findings of fact and the opinion of the court are reported in
The Tax Court found that the business of the Royal Distillers Products was conducted solely by the taxpayer. He was admittedly its sole proprietor prior to its alleged oral assignment to his daughter Anne. It found also that, after the purported exchange, the business continued tо be conducted by the taxpayer and his employees in substantially the same manner as previously. All this appears fully from the reported opinion of the Tax Court, which concluded that the income for the years 1943 and 1944, though the company was purportedly conducted by Anne, was really that of the taxpayer; that, inasmuch as he was the sole proprietor and his daughter merely a figurehead, the income for those years should have been repоrted by him, and that, therefore, the deficiencies levied because the income was not so reported were proper.
A taxpayer cаnnot avoid income taxes by assigning his property to others if he reserves such control over the property or business transferred or the receipt of income produced therefrom as to make it reasonable to treat him as the owner or recipient of the income for tax purposes. Helvering v. Clifford,
The Commissioner had made a determination that income for the year of 1943 in the amount of $174,063.65, and for the year 1944 of $7,706.75 had not been reported and that these amounts-should be included in the deficiencies for those two years. The twо sums reflected the Commissioner’s calculation of income from over-ceiling prices of liquor sold by the taxpayer in those years. The latter claimed that their profits should be reduced by the black market costs which he had been compelled to pay to-parties from whom he purchased. Thе taxpayer kept no records showing what *734 his over-ceiling profits were and none showing what he had paid out in over-ceiling cost prices. His suppliеrs denied receiving over-ceiling prices. Quite naturally, the Tax Court encountered difficulty in getting at the truth. By examining all of the evidence and exercising its own judgment, it came to the conclusion that the Commissioner’s determination of deficiencies was excessive, and that for the year 1948 the amount of unrepоrted income was $50,000, and that for the year 1944 $5,000.
Petitioner claims that these figures reflect mere speculation. But the court had before it all of the circumstances surrounding the transactions, and the evidence was, we think, entirely sufficient to justify the determination. The case lies within the rule of Cohan v. Commissioner, 2 Cir.,
It should be observed further in this connection, moreover, that when the Commissioner made a determination of deficienciеs which was attacked by the taxpayer, the burden was .upon the latter to overcome the determination. In this he failed completely, for he offеred no evidence other than his own vague testimony to overcome it. That testimony was merely that he had paid out over-ceiling prices, the number аnd amount of which he was wholly unable to supply. There was complete failure on his part, therefore, to meet the preponderance of evidence réquired of him in this respect. In that situation, the Tax Court had the right to refuse any deduction. However, it evidently believed it only fair to strike out some 70% of the deficiency levied by the Commissioner. The taxpayer can have no complaint in this respect.
The Tax Court, in considering the question of fraud, said: “As to the fraud issue, the burden was on the respondent. We think he sustained his burden. In each of the years 1943 and 1944 petitioner received cash in excess of the invoice prices on sales of Royal, and paid part of this excess to those from whom whiskey was purchased. His daughter, Anne, knew nothing about these receipts and disbursements and did not report them in her returns. The petitioner who knew about them and the profit which resulted therefrom failed to report the profit realized by him in his income tax returns for 1943 and 1944. His failure to report this profit in such returns is clear and convincing evidence of his fraudulent purpose. We have, therefоre, found as a fact that a part of the deficiency for each of the years 1943 and 1944 is due to fraud with intent to evade tax. Moreover, it has cleаrly been shown that the attempt to ascribe Royal’s profits to Anne Davis was a sham, and it is plain that petitioner’s failure to report such profits was delibеrate and fraudulent.” The evidence amply supports the conclusion that the transfer, the operation, the realization of income by the taxpayer and all the other circumstances presented convincingly proved a fraudulent attempt to evade income taxes. Indeed, the taxpayer pleaded guilty to an indictment charging just such an offense.
Petitioner complains that to collect additional taxes from him upon the income of the liquor business results in double taxation of that income, inasmuch as his daughter reported and paid a tax upon it. It appears from the record, hоwever, that these taxes were paid *735 from the income of the liquor business and that the daughter reported them as her own. It appears further that, upon being advised that she ought to protect herself by a claim for refund, she refused to do so. Thus, she had a remedy, and if she did not invoke it, the fault is hers; we are powerless to help her. Furthermore, she is not a party to this proceeding.
Finding no error in the disposition of the case by the Tax Court, the decision is
Affirmed.