Richard Douglas Furnish and Emilie Furnish Funk v. Commissioner of Internal Revenue

Before us are separate appeals by Richard Douglas Furnish and Emilie Furnish Funk, his onetime wife. Richard Douglas Furnish appeals from determinations of deficiencies of income tax for the years 1939 to 1949; his former wife for the period 1939 to 1942. Mrs. Funk’s responsibility rests on her alleged joint and several liability for the filing of joint returns found to have been fraudulent. Mrs. Funk had actually signed such income tax forms, while blank, at her husband’s request.

I — Dr. Furnish’s Appeal

Richard Douglas Furnish, a doctor of medicine practicing in California, filed income tax returns for the years 1939 to 1948 reporting net income of $101,407.88 for these years. In the court below, he admits that he received a net income of $529,854.84 during these years, computed by his accountant through use of the net worth method. The figures established originally by an audit of taxpayer’s books, prepared by an auditor of taxpayer’s choice — the so-called Hill Audit — and as revised and checked by the Commissioner, enabled him to find, and he did find, that the doctor’s net income during this period was $649,512.73. The Tax Court found the Commissioner’s method of…