Masters v. Commissioner

McLAUGHLIN, Circuit Judge,

The taxpayers, operators of restaurants, kept two sets of business records during the years 1943-1947 and filed income tax returns reporting admittedly understated gross receipts. They contend the Commissioner has not proved fraud nor the correct amount of the understatement, and that there are compensating _ understatements in deductible items in precisely the same amount consisting of premiums paid for black-market food and bonus payments to key employees in excess of the compensation Permitted by the wage stabilization regulations.

The three restaurants involved…