Estate of Walter F. Rau, Sr., Deceased, Raymond J. Shorb, Administrator With the Will Annexed v. Commissioner of Internal Revenue

This is a petition by Raymond J. Shorb, as administrator with the will annexed of the estate of Walter F. Rau to review a decision of the Tax Court of the United States determining a deficiency in the income tax of Walter F. Rau for the years 1942 through 1947, with the addition of 50 per cent to the tax for fraud for each of those years, assessed pursuant to the provisions of section 293 (b) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 293 (b).

The Tax Court slightly reduced the 1942 tax deficiency and addition assessed by the Commissioner and as modified confirmed his computation and determination for each year as follows:

Year Kind of Tax Deficiency Addition to Tax 1942 Income $ 5,901.47 $ 2,778.22 1943 Income & Victory 52,913.50 33,454.19 1944 Income 53,725.33 28,728.08 1945 Income 46,292.81 23,146.41 1946 Income 12,303.72 6,151.86 1947 Income 17,214.11 8,607.06

During the tax years in question Rau had earnings from several sources but the subject of this appeal concerns his income from two businesses — the French Cafe and a bar and a liquor store known as the Southern Wine & Liquor in Bakersfield, California, where he also operated a hotel. The Commissioner…