Kartman v. Commissioner

*174 This proceeding is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1921 in the amount of $162.49.

*175 FINDINGS OF FACT.

The petitioner is an individual residing at Chicago, Ill. During the year 1921 he was a married man with two children under the age of eighteen years, and was engaged in the retail meat business at Chicago in partnership with one Louis Goldstein. The petitioner also owned two buildings from which he derived income. These buildings were managed by a real estate man. The petitioner kept no books of account either for the meat market in which he was interested or for his other business. He speaks English but can neither read nor write that language.

The petitioner filed an income-tax return*4164 for the year 1921, reporting a net profit from the meat business of $2,080 and net rentals of $1,279.03. He claimed deductions of $185 for taxes and losses, making a net income of $3,174 upon which a tax of $10.96 was paid.

In the year 1925 the petitioner was requested to and did submit to the respondent a statement of his bank deposits for the year 1921, and thereupon the respondent caused to be prepared and filed for the petitioner an amended return for that year. The respondent took the petitioner's bank deposits, less identified rent deposits, and added thereto $5,000 for business bills paid by cash and $1,500 on account of personal expenses paid by cash, and determined that 25 per cent of the total thus arrived at represented the gross profit of the meat market, and that 24 per cent of the gross profit represented the net profit. The net profit from rents was determined to be $3,760. On this basis a gross income of $6,509.14 was computed and deductions were allowed in the amount of $185, making a net income of $6,324.14 and a deficiency in tax in the amount of $162.49.

In the year 1921 the petitioner paid taxes on his real estate in the amount of $646.12 which he failed*4165 to deduct in computing his income for that year and which has not been allowed as a deduction by the respondent. The petitioner in his return claimed depreciation on his two buildings computed at the rate of 2 per cent on values of $13,400 and $24,000, respectively. The respondent allowed depreciation computed at the rate of 2 per cent on values of $10,000 and $20,000, respectively.

OPINION.

MARQUETTE: It is the contention of the petitioner that the respondent erred, (1) in arbitrarily adding to gross income the amount of $6,500 to represent bills paid by cash; (2) in failing to allow adequate depreciation on the buildings owned by the petitioner; (3) in not allowing a deduction for real estate taxes paid during the year *176 1921, and (4) in taxing all the income from the meat market to the petitioner.

Upon consideration of the record herein we are of the opinion that the petitioner was a partner of Goldstein in the meat market and that only one-half of the income from the market should be taxed to the petitioner; that he is entitled to deduct in computing his net income for the year 1921 the amount of $646.12 on account of taxes paid on his real estate, and that*4166 he is entitled to a credit against his net income for two dependent children under the age of eighteen years.

In regard to the additions to the petitioner's income and the depreciation on his buildings, the petitioner has failed to produce sufficient evidence to warrant us in disturbing the respondent's determination as to those items.

Judgment will be entered on 15 days' notice, under Rule 50.