Milford R. Baumgardner and Pearl E. Baumgardner v. Commissioner of Internal Revenue

The problems involved in this petition to review the decision of the Tax Court entered on August 30, 1956, determining deficiencies for the years, 1942, 1944, 1947, 1948, 1949, 1950 and 1951, and assessing penalties for some of the years involved, 1945, 1947, 1948, 1949, 1950 and 1951, which included fraud penalties for some of the years are chiefly factual. This court has repeatedly stated the limited scope of our review of Findings of the Tax Court.

Given the opportunity of the trial court to appraise the credibility of witnesses in front of it, we will not ordinarily hold a ruling to be clearly erroneous unless

This Court has summed up the problem succinctly in one of the cases just cited :

I.

The Net Worth Method.

The real party in interest in this case is Milford R. Baumgardner. His wife was joined merely because, under the community property law of California, she joined in making some of the returns. The Court found her guiltless of any fraud. So when we refer to the “taxpayer”, we are referring to Baumgardner.

The Tax Court modified in some respects the determinations of deficiencies made by the Commissioner. As they were favorable to the taxpayer, he is not…