Bushnell v. Commissioner

Dawson, J., concurring: I agree with the result reached by Judge Pierce in this case. It may well be that he is entitled to rely on the petitioner’s records as the best evidence of unreported income in these circumstances. However, I cannot subscribe to some of the statements expressed by him under the heading “Kejection of Respondent’s Net Worth Computations” which appear on pages 21 to 28 of his opinion. The Holland case does not stand for the proposition that if a taxpayer’s books and records are adequate, the net worth method may not be used by the Commissioner. In fact, a number of cases clearly support the view that the net worth method of reconstructing income may be used to test the accuracy and adequacy of a taxpayer’s books and records regardless of whether they are on their face adequate or inadequate. See Schwarzkopf v. Commissioner, 246 F. 2d 731 (C.A. 3, 1957), affirming a Memorandum Opinion of this Court; Davis v. Commissioner, 239 F. 2d 187 (C.A. 7, 1956), affirming a Memorandum Opinion of this Court, certiorari denied 353 U.S. 984 (1957); Vloutis v. United States, 219 F. 2d 782 (C.A. 5, 1955); and Morris Lipsitz, 21 T.C. 917 (1954), affd. 220 F. 2d 871 (C.A. 4, 1955), certiorari denied 350 U.S. 845 (1955.) Certainly the attempted use of the net worth computations by respondent does not shift to respondent the burden of proving the basic deficiencies. That burden still remains on the petitioners.

I also disagree with Judge Pierce’s reliance on Thomas A. Talley, 20 T.C. 715 (1953), a pre-Holland opinion which has been sapped of its vitality by Holland and subsequent decisions.

DkeNNBN, AtkiNS, Fat, Hott, Tannenwald, and FeatherstoN, //., agree with this concurring opinion.