Iley v. Commissioner
United States Tax Court
1. Held, respondent's determination that deficiencies in the petitioners' income tax were due to fraud with intent to evade tax not sustained where the evidence shows only ignorance and negligence on the part of the taxpayers. 2. Held, the respondent's determination that the method of reporting income by a partnership should be changed from the cash to the accrual basis is proper where the method of accounting employed by the partnership does not clearly reflect income. 3.…
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1. Held, respondent's determination that deficiencies in the petitioners' income tax were due to fraud with intent to evade tax not sustained where the evidence shows only ignorance and negligence on the part of the taxpayers. 2. Held, the respondent's determination that the method of reporting income by a partnership should be changed from the cash to the accrual basis is proper where the method of accounting employed by the partnership does not clearly reflect income. 3. Held, in the instant situation inclusion in income of the partnership's opening accounts receivable in the year of change…
1Opinion of the Court
OPINION.
Van Fossan, Judge:
The first issue involves the question of fraud. Fraud is never to be presumed. It must be proved by clear and convincing evidence. Moreover, the burden of proving fraud rests on the Government. Addressing ourselves to the facts established, we find abysmal ignorance on the part of the party charged with keeping petitioners’ accounts; the business had grown from small beginnings to large proportions, but the capacity of the member of the firm keeping the books did not grow in proportion. He was a farm boy, with a high school education, who had neither training nor…
2Cases cited6 opinions
- Commissioner of Internal Revenue v. Mnookin's EstateCourt of Appeals for the Eighth Circuit · 1950
- Mnookin v. CommissionerUnited States Tax Court · 1949
- Frame v. CommissionerUnited States Tax Court · 1951
- Commissioner of Internal Revenue v. FrameCourt of Appeals for the Third Circuit · 1952
- Carver v. CommissionerUnited States Tax Court · 1948
1 more not listed; retrieve them via the Exa API.
3Cited by49 opinions
- Professional Services v. CommissionerUnited States Tax Court · 1982
- Drobny v. CommissionerUnited States Tax Court · 1986
- Sadler v. CommissionerUnited States Tax Court · 1999
- Browning v. Comm'rUnited States Tax Court · 2011
- Green v. CommissionerUnited States Tax Court · 1993
44 more not listed; retrieve them via the Exa API.