*2120 1. The petitioner's gross income was determined on the basis of bank deposits. During the year he withdrew from the bank certain money to be used in cashing customers' checks which were in turn deposited to the petitioner's credit. Held that the evidence is insufficient to show any greater amount was withdrawn and redeposited than that determined by the respondent.
2. Held, the evidence is insufficient to show that any greater deduction for business expenses should be allowed than that allowed by the respondent.
*39 This is a proceeding for the redetermination of a deficiency in income tax of $485.30 and a delinquency penalty of $121.32 for 1921. The matters put in controversy by the petitioner are (1) the respondent's failure in determining the petitioner's gross income, which was determined from the petitioner's bank deposits, to allow as an additional credit an amount of $5,008.38 representing amounts transferred from the petitioner's commercial account to his savings account, (2) the respondent's failure in determining gross income to*2121 allow as an additional credit the amount of $4,341.90 representing money withdrawn for cashing customers' checks and redeposited, (3) the respondent's failure in determining net income to allow as an additional deduction the amount of $1,184.96, representing $709.75 expended for labor and an additional amount of $426.21 for miscellaneous expenses, and (4) the respondent's action in determining a penalty against the petitioner. At the hearing issue No. 1 was abandoned and it was conceded by the petitioner that if any tax is due the penalty will attach. There remains for our consideration only issues (2) and (3).
*40 FINDINGS OF FACT.
The petitioner is a resident of Memphis, Tenn., and during 1921 was a retail merchant engaged in selling dry goods in that city. In April, 1921, the petitioner moved his business from a location on California Street to one on South Main Street, on which he took a lease for three years. Both locations are near railroad stations, one being near Union Station and the other near Central Station.
During 1921 most of the petitioner's business was with railroad employees. About the first and fifteenth of each month the petitioner, as was the*2122 custom with merchants in the section of the city in which he was located, cashed the pay checks of his customers that were railroad employees. In order to have sufficient funds on hand for this purpose it was necessary for the petitioner to withdraw some of the money he had on deposit with his bank, the American Savings Bank & Trust Co., or, when the amount he had on deposit was insufficient for this purpose, to make arrangement with a bank official to obtain the amount needed. After cashing the checks of the railroad-employee customers, the petitioner deposited them in his commercial account in his bank, thereby replacing the amounts he had withdrawn or otherwise obtained.
The deficiency here involved was determined on the basis of the petitioner's gross bank deposits less certain deductions. The total bank deposits for the year were $36,698.86. In determining the deficiency the respondent reduced total bank deposits by the amount of $12,450 as representing amounts withdrawn and subsequently redeposited.
During the year the petitioner paid for clerk hire $570.10, for moving merchandise to South Main Street $19, for lumber and shelving in new location $21, and for services*2123 of carpenters in putting in shelving at the new location and for work about the store, $97.70, or a total of $707.80.
The petitioner also paid during the year the following amounts for the purposes indicated:
| City and county licenses | $27.00 | |
| Electricity | 211.53 | |
| Water | 26.15 | |
| Jewelry tax | 4.43 | |
| State, county, and city taxes | 204.56 | |
| Attorneys' fees | 30.00 | |
| Insurance on merchandise | 98.37 | |
| Membership in Memphis Chamber of Commerce | 4.00 | |
| Fixtures, awnings, etc | 81.76 | |
| Drayage charges | 6.34 | |
| Wrapping paper | 6.60 | |
| Interest | 73.16 | |
| Donations: | ||
| Baron Hirsch Synagogue | $14.00 | |
| Independent Order of B'nai Brith for Old Men's Home | 9.00 | |
| Hebrew Alliance | 5.00 | |
| $28.00 | ||
| Total | 801.90 |
*41 In determining the deficiency here involved the respondent allowed as a deduction the amount of $2,097.10, representing ordinary and necessary expenses paid or incurred by the petitioner during the year in carrying on his business.
OPINION.
TRAMMELL: In his petition the petitioner alleges that his gross bank deposits should be reduced by a further amount of $4,341.90, representing money withdrawn for cashing customers' checks and redeposited. *2124 In his brief the petitioner contends that his gross bank deposits should be reduced by $16,854.50 instead of by $12,450, the amount by which the respondent reduced the deposits. The amount contended for in the petitioner's brief is $62.60 in excess of that alleged in the petition.
In support of his contention for an amount in excess of that allowed by the respondent, the petitioner submitted his check or voucher register for 1921 in addition to oral testimony, including that of himself. The petitioner's oral testimony in connection with his register clearly shows that $7,800 of the deposits made by him in 1921 represent amounts previously withdrawn. With respect to an additional amount of $6,900 that was withdrawn, we are unable from the evidence to hold that it was subsequently redeposited. The petitioner contends that the remainder of the $16,854.50 contended for, or $2,154.50, represents amounts withdrawn for accommodation loans and redeposited when repaid, amounts withdrawn by him personally or by getting others to cash his checks on his own account and which were redeposited, and a bad check. While the evidence shows that during the year the petitioner made some loans, *2125 and that others besides his bank cashed checks for him, we are unable to determine what part, if any, of the loans upon payment were redeposited or whether the proceeds from the checks were redeposited.
The respondent has allowed a deduction of $12,450 on account of amounts withdrawn and redeposited. The record is silent as to the various items composing this amount. Whether it includes all or any portion of the $7,800 that the evidence shows represented *42 amounts withdrawn and redeposited, we are not informed. Nor are we informed whether there was included all or any portion of the amounts of the $6,900 and $2,154.50 that we are unable to find represent money withdrawn and redeposited. In view of the record, the petitioner's contention for a reduction of any amount in excess of that allowed by the respondent must be denied.
In his petition the petitioner alleges that he was allowed a deduction of $2,097.10 for business expenses, whereas he is entitled to a deduction of $3,282.06, or an increase of $1,184.96. The petitioner alleges that of the increase, $709.75 represents expenditures for labor and $476.21 represents additional miscellaneous expense.
In his brief*2126 the petitioner contends that the expenditures for labor, clerk hire, etc., amounted to $720.21 and that the miscellaneous expenses totaled $856.81. In our findings of fact we have set out the items that we have been able to determine from the evidence had any connection with the petitioner's business. In our opinion, not all of the amounts shown for such items are allowable deductions in the taxable year, as, for example, the amounts expended for labor and lumber for putting in shelving at the new location or expenditures for fixtures and awnings. We do not deem it necessary, however, to enter into a detailed discussion of these or other items urged by the petitioner in support of his contention, for the reason hereinafter set out.
The respondent has allowed $2,097.10 as a deduction for business expenses. The record is silent as to the items and amounts entering into this deduction. Whether any or all of the items and amounts contended for by the petitioner are included, we do not know. Manifestly, if they have been included, they should not be deducted again. Unless we know what the respondent has allowed, we are not in a position to determine that the items and amounts*2127 contended for by the petitioner should be allowed in addition to what the respondent has already allowed. The petitioner's contention is, therefore, denied.
Judgment will be entered for the respondent.