1 Dissenting Opinion by Judge Madden not show that plaintiff's parents made any report of gifts in their tax reports. The vague testimony as to the time of making, and amount of such gifts, even if accepted as definite proof, falls short of establishing the existence of an amount equal to the $400,000 which plaintiff claimed to possess in cash or equivalent in October 1943. His income tax reports do not show appreciable earnings during that period, certainly not enough to anything like make up the difference. If he made such sums, he did not report them. He should not be heard now to take advantage of any possible delinquencies on his part as a reasonable explanation of his net worth during the taxable years in question. In addition if large gifts had been made as far back as before the First World War, it seems strange that plaintiff would have kept a considerable part of them in cash without allowing them to produce income. There is nothing to show that he buried his talents, or like Silas Marner just liked to feel and touch the gold. The Collector of Internal Revenue has a difficult assignment at best. To permit plaintiff to recover for the years 1945-1947 under the vague uncertain state of the record largely on the unsupported self-serving declaration of the plaintiff would be unfair to the thousands of citizens who pay their taxes, perhaps not joyfully, but without mental reservation or purpose of evasion. We conclude that plaintiff cannot recover for the fiscal years 1945, 1946, and 1947, but is entitled to recover the deficiency, penalty, and interest collected for the fiscal year 1944, that is, $86,097.87, with interest as provided by law. It is so ordered. LARAMORE, Judge; WHITAKER, Judge; and LITTLETON, Judge, concur. MADDEN, Judge, dissenting in part: I do not agree with the court's conclusion that the plaintiff may recover the tax, penalty, and interest assessed and paid for the year 1944. That conclusion means that the court is not satisfied that the plaintiff did not have, at the beginning of the 1944 tax year, approximately $200,000 in assets. If he did have that amount, then the Commissioner Dissenting Opinion by Judge Madden 131 C. Cls. of Internal Revenue's determination that his net worth increased during 1944 by an amount which justified the assessment made, was wrong. The court does not, of course, decide that it was wrong. It only decides that it has not been proved that it was right. This result is reached because, the normal period of the statute of limitations having elapsed before the 1944 deficiency was assessed, the Government had the burden of proving that the plaintiff's return for 1944 understated his proper tax by at least 25 percent. I think the plaintiff has not given us all the evidence that he could have given us about his assets and his income. It seems incredible that a person who was carrying on a successful business, who, in addition, had substantial commercial and savings bank accounts and a considerable quantity of bonds, notes, and stocks, could not, if he would, tell us what else he had and where he had it. Vague and indefinite statements about prodigious quantities of money in jars, money belts and pockets, with no real explanation as to how or when the money got there, or why it was removed from those receptacles and placed where other people place their valuables, during the tax years in question, do not ring true. The net result may be that the plaintiff, merely by keeping silent and saying to the tax authorities, "You have the burden of proof; I am the only one who knows the facts and I won't tell you," has his Government at his mercy. I think the burden which is on the Government when it attempts to apply Section 275 (c) of the Internal Revenue Code is the burden of going forward with the evidence. This it did by showing what assets the plaintiff had at the beginning of the 1944 year, in those places where people ordinarily keep their assets. Then the plaintiff could, of course, show that he had other assets which he kept in unusual places. Instead of showing that, he tells us a vague story about total assets of $400,000, most of which were not to be found in places where valuables are ordinarily kept. If the court had believed the plaintiff's testimony it would have concluded that he owed no income taxes for any of the years in question. It obviously did not believe his testimony. But instead of disregarding it as unworthy of belief, it merely discounted it by some two-thirds. 1 Findings of Fact I see no reason for this treatment of the case. I think that, as the proof stands, and regardless of presumptions of correctness, and burdens of proof, the only trustworthy evidence supports the assessments made by the Commissioner of Internal Revenue. If the real facts are otherwise, our lack of knowledge of them is due to the refusal of the plaintiff to enlighten us. FINDINGS OF FACT The court, having considered the evidence, the report of Commissioner Currell Vance, and the briefs and argument of counsel, makes findings of fact as follows: 1. Plaintiff is an unmarried resident of Memphis, Tennessee. He was born in Nashville, Tennessee, on December 23, 1894. He married in 1927 and lived with his wife until 1938. He and his wife were divorced in 1940. One son, Jerome, was born to the couple in 1929. 2. During the taxable years involved in this suit, and prior thereto, plaintiff filed his individual income tax returns on the cash receipts and disbursement basis of accounting. The books and records of the Jacobs Furniture Company from 1941 until the date of sale of that business were kept on the installment sales basis of accounting and on the basis of a fiscal year ending October 31st. During the years involved, plaintiff filed his individual income tax returns on said fiscal year basis and included therein the income of the furniture company until July 16, 1945. On that date, the business was sold for its then book value of $86,979.27. The purchase price was paid half in cash and half in notes which were paid off within two years. On the same date, plaintiff sold the lease on the business premises for $15,000, payable in monthly installments of $306.12. 3. Plaintiff filed no Federal income tax returns for the calendar years 1918 to 1923, inclusive. For the calendar year 1924, he filed a return showing no tax due, but deficiency assessments of $4.85 and $5.89 were subsequently made and paid. That total would be the tax on a net income of approximately $2,500. Plaintiff filed no income tax returns for 1925, 1930, and 1931. For the years 1926, 1927, 1928, 1929, 1932, Findings of Fact 131 C. Cls. 1933, 1934, 1935, 1936, 1937, 1938, and 1939, plaintiff filed individual Federal income tax returns showing annual income in such small amounts that no taxes were due. The returns were accepted by the Collector of Internal Revenue for the District of Tennessee as filed. 4. For the calendar year 1940, plaintiff filed a Federal income tax return disclosing tax due of $360.59, but an amended return for that year disclosed additional income tax due of $83.51, plus interest of $3.49. Subsequently, a further additional assessment was made against plaintiff of $237.37, plus interest of $23.93. All of the above amounts were duly paid. 5. Having received permission to change to a fiscal-year basis, plaintiff filed his individual income tax return for the fiscal period beginning January 1, 1941, and ending October 31, 1941, showing total tax due of $308.91, which amount was paid. An additional assessment for the fiscal period ended October 31, 1941, in the amount of $2,057.99, plus interest of $104.59, was subsequently made and was paid on December 2, 1942. 6. Plaintiff duly filed his income tax return for the fiscal year ended October 31, 1942, disclosing $4,842.54 taxes due, which amount was paid. An additional assessment for the fiscal year 1942 was made in the amount of $379.08, plus interest of $54.56. The additional assessment was paid on June 16, 1945. 7. Plaintiff duly filed his individual income tax return for the fiscal year ended October 31, 1943, showing total tax due of $5,686.50. The amount shown due for the fiscal year 1943 was abated under the forgiveness features of the Current Tax Payment Act of 1943, and was treated as part of the taxes assessed for the fiscal year ended October 31, 1944. The amount of plaintiff's net income for the years 1918 through 1943 is not in evidence, with the exception of the year 1924. 8. For the fiscal year ended October 31, 1944, plaintiff filed an individual income and victory tax return with the Collector of Internal Revenue for the District of Tennessee on December 30, 1944. The return showed victory tax net 1 Findings of Fact income of $13,608.19, income tax net income of $13,155.33, and after making adjustments for the forgiveness features of the Current Tax Payment Act of 1943, total taxes due of $6,632.68. The latter amount was paid on or before January 2, 1945. 9. For the fiscal year ended October 31, 1945, plaintiff filed an individual income tax return with the Collector of Internal Revenue for the District of Tennessee on November 19, 1945. The return showed total income of $33,112.01 and total taxes due of $14,900.64, computed under the so-called "alternative" method. The total tax shown due was paid to the Collector on or before November 18, 1945. 10. From November 1, 1940, to the fiscal year ended October 31, 1945, plaintiff included the income of Jacobs Furniture Company, his individually owned furniture store, in his individual income tax returns. 11. For the fiscal year ended October 31, 1946, plaintiff filed an individual income tax return with the Collector of Internal Revenue for the District of Tennessee on December 30, 1946. The return showed total income of $10,059.26 and total tax due of $1,918.60. The latter amount was paid on or before December 30, 1946. 12. For the fiscal year ended October 31, 1947, plaintiff filed an individual income tax return with the Collector of Internal Revenue for the District of Tennessee on November 21, 1947. The return showed total income of $8,809.90 and income tax due thereon of $1,350.74. The latter amount was paid to the Collector on or before November 21, 1947. 13. By a statutory notice of deficiency dated June 28, 1949, the Commissioner of Internal Revenue asserted deficiencies in income tax and penalties against the plaintiff as follows: |