James J. Donohue v. Commissioner of Internal Revenue

KILEY, Circuit Judge.

This is an appeal by taxpayer 1 from a judgment of the Tax Court confirming Commissioner’s determination of a deficiency in taxpayer’s income tax for the year 1954.

Because the records of taxpayer’s tavern business did not “clearly reflect income,” Commissioner used a mark-up method in determining a deficiency for 1954. 2 It is undisputed that taxpayer’s 1954 income tax return did not include as gross income the $8,392.23 embezzled from taxpayer’s tavern business in that year by John Bittner, his accountant who had been given complete control over the financial matters of…