Jack M. Chesbro, Carl Silverstein, Morris Silverstein, Smiling Jack Chesbro, Inc. v. Commissioner of Internal Revenue

We adopt the opinion of the Tax Court. 21 T.C. 123. We add only a few words addressed to the appellants’ contention that the Pax Court erred in failing to apply the holding of this court announced in Cohan v. Commissioner, 39 F.2d 540. The principal similarity of that case to this lies in the fact that in neither did the taxpayer have books of account to support the allowance. of claimed deductions. But in Cohan, the Tax Court was reversed only because it found that the taxpayer had made some allowable expenditures, yet gave him credit for none. That holding is not applicable here. To the extent that the Tax Court found credible evidence to support deductible expenditures, it allowed them, even in the absence of supporting books of account. The evidence offered to prove further expenditures was not such that the Tax Court was obliged to accept it, since it depended on the credibility of witnesses — largely on the credibility of the taxpayers themselves who concededly had long engaged in illegal business activities. That a witness had engaged in practices violative of federal price controls is a factor properly to be considered in judging of his credibility. Nothing in the Cohan case holds to the contrary. Here, the decision below was consistent with findings which on the evidence were well within the province of the trier.

Affirmed.