following statement is made without prejudice to the rights of the
above-mentioned taxpayer in any proceedings that may be instituted
The facts stated are upon information and belief only.
taxpayer is now 31 years old, and has continuously lived with his wife
his marriage in 1917. He has one child, a son, now nearly 12 years old.
1922 he has been the principal support of his widowed mother and his
brother, now 19 and 21 years of age, respectively.
the latter part of the year 1926 he was employed at a salary which at
exceeded $75 per week. During the years 1926 to
inclusive, he was the recipient of considerable sums of money, title to
vested in him by right of possession only.
became active as a principal with three associates at about the end of
1926. Because of the fact that he had no capital to invest in their
undertakings, his participation during the entire year 1926 and the
part of 1927 was limited. During the years 1928 and 1929 the profits of
organization of which he was a member were divided
follows: one-third to a group of regular employees and one-sixth each
taxpayer and three associates.
taxpayer was at no time the banker for the organization, nor did he,
actively participate in the conduct of its individual enterprises.
attorneys employed by the taxpayer personally during this period were
& Ahern, Ben Epstein and Capt. Billy Waugh, all of Chicago, Ill.
The so-called bodyguards with which he is reputed to surround himself
occasion of infrequent appearances in public, were
general rule, his personal employees, but were, in
fact, employees of the
organization which participated in its profits. Several
employees stopped at the same hotel with the ,taxpayer while he was in Chicago.
large force of bodyguards did not continually surround him is
the fact that on the occasion of his arrest at Philadelphia in 1929 only one
furniture in the home occupied by the taxpayer while he was in Florida was
a cost not in excess of $20,000. The house and
have been thoroughly appraised and the appraisal has been heretofore
mortgage against the house and grounds of $30,000. His indebtedness to
associates has rarely ever been less than $75,000
since 1927. It has frequently been much more.
that two of the taxpayer's associates from whom,I have sought
respect to the taxpayer's income insist that his yearly income never
$50,000 in anyone year, I am of the opinion that his taxable income for
years 1925 and 1926 might fairly be fixed at not to exceed $26,000 and
respectively and for the years 1928 and 1929 not to exceed $100,000 per