Curtis Gallery & Library, Inc. v. United States

The appellants in this case are H. T. Curtis, Sr., Ariette R. Curtis, his wife, Elizabeth J. Curtis and H. T. Curtis, Jr. The action is one to recover income taxes claimed to have been illegally collected. The final judgment awards to Elizabeth J. Curtis the principal sum of $80.46 and to H. T. Curtis, Sr., the principal sum of $262.97. The United States has also appealed. It attacks only the award to Elizabeth. The opinion of the trial court is reported at 241 F.Supp. 312 .

The Curtis Gallery & Library, a family partnership in which appellants were partners, employed the services of a Mr. Cusac from 1944 to 1955 to keep the partnership books and prepare the annual partnership tax returns. During this period he improperly treated amounts withdrawn by one of the partners as income rather than withdrawals from capital. This error resulted in overstatement of partnership income and accordingly overstatement of each partner’s distributive share of such income for each of the years in question, 1944-55. The error was discovered in 1959 during the preparation of the final partnership return for 1956, the year in which the partnership was dissolved.

In its return for 1956, the…