Floersheim v. Commissioner

B. FLOERSHEIM, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Floersheim v. Commissioner

Docket Nos. 15565, 29039.

United States Board of Tax Appeals

13 B.T.A. 1276; 1928 BTA LEXIS 3069;

October 30, 1928, Promulgated

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">*3069 Disallowance of an alleged contribution to charity approved.

B. Floersheim pro se.

L. A. Luce, Esq., for the respondent.

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MURDOCK

">*1276 Income and profit taxes for the following years and in the following amounts are in controversy:

1921	$16,822.45
1922	43.71
1924	2,639.85
1925	177.84

The petitioner alleges that the Commissioner erred in failing to allow a deduction for 1921 of $25,000 as a contribution made to and for the use of Passavant Hospital, Pittsburgh, Pa., or a similar institution, and in including in the petitioner's income for 1922, 1924, and 1925, the interest credited the bank account in which he had deposited the $25,000.

FINDINGS OF FACT.

The petitioner is an individual residing in Pittsburgh, Pa. At some time during the year 1921 he was asked to make a contribution to a dispensary being conducted in connection with the Passavant Hospital at Pittsburgh under the direction of the dispensary board, mostly made up of women of the City of Pittsburgh. After some investigation the petitioner in 1921 offered the board of this dispensary $25,000 for the erection of a building to be used as a free ">*1277 ">*3070 dispensary and to be called, in honor of his mother, "The Pauline Floersheim Free Dispensary." At the petitioner's request a surveyor prepared a plat of the ground on which the proposed building was to be erected. This plat bears the date November, 1921. In 1921 the petitioner made arrangements with an architect for the preparation of drawings of the proposed building. Drawing No. 1 was prepared by the architect and bears the date December 14, 1921.

The petitioner received a letter from the Duquense Construction Co. dated February 22, 1922, in which it agreed to furnish all labor and material to erect the dispensary building for the Passavant Hospital, in accordance with certain plans, for the sum of $13,975.

At some time the petitioner drew a check dated December 31, 1921, on his checking account in the Farmers Deposit National Bank of Pittsburgh in the amount of $25,000, payable to the order of "Pauline Floersheim Trust." On March 1, 1922, he deposited this check in the Farmers Deposit National Bank of Pittsburgh in a new account called "Pauline Floersheim Trust." Withdrawals from this account were to be made and were actually made by checks signed by the petitioner as trustee.

">*3071 One of the conditions on which the petitioner made his offer of $25,000 was that women would have a place on the board which would control the operation of the dispensary for which the building was to be erected. In April, 1922, the petitioner was advised by the board of directors of the Passavant Hospital that under its constitution and by-laws, no woman could become a member of its board of directors. The petitioner's offer was thereupon rejected and the petitioner never gave any of the money to the Passavant Hospital.

Only four checks have been drawn against the Pauline Floersheim Trust account. A check dated September 15, 1922, in the amount of $532.61, was drawn to the order of the architect for services in connection with the proposed dispensary building for the Passavant Hospital. A check dated May 22, 1923, for $500, was drawn to the Pittsburgh Skin and Cancer Foundation. A check dated December 1, 1923, for $200, was drawn to the Federation of Jewish Philanthropies of Pittsburgh, Pa. A check dated July 7, 1924, in the amount of $500, was drawn to the order of Pittsburgh Skin and Cancer Foundation.

The pass book of the Pauline Floersheim Trust account in the Farmers">*3072 Deposit National Bank contains entries dated in the year 1922 and designated interest, which total $824.69, entries dated 1924 designated interest which total $1,028.92 and also entries dated 1925 and designated interest, which total $1,058.93.

The Commissioner admitted that he included in the petitioner's income for 1924 the amount of $1,028.92, and for 1925 the amount of ">*1278 $1,058.93, as interest on the account in the Farmers Deposit National Bank of Pittsburgh, called Pauline Floersheim Trust.

OPINION.

MURDOCK: The petitioner contends that for the year 1921 he is entitled to a deduction of $25,000 under section 214(a) 11 of the Revenue Act of 1921. He identified a voucher which was introduced in evidence without objection. We are unable to understand exactly the purpose of the voucher. From it we judge that the petitioner did business as B. Floersheim & Co. The voucher is to the Pauline Floersheim Trust Co. in the amount of $25,000 and refers to check No. 6982. Check 6982 is the one drawn by the petitioner for $25,000 to the Pauline Floersheim Trust set forth above. Attached to the voucher is a typewritten statement as follows:

Contribution of $25,000.00">*3073 Made to or for the use of Passavant Hospital, Pittsburgh, Pennsylvania, or a similar institution, under the provision of Section 214, Paragraph 11, Revenue Act of 1921, and to be known as the Pauline Floersheim Trust.

APPROVED:

By [signed] B. FLOERSHEIM.

We have not been told of the use to which this voucher and the writing which accompanied it was put, but apparently it was only used for the purpose of keeping the petitioner's records and was always in his possession and control.

It is clear from the evidence that the petitioner paid no part of the $25,000 in the year 1921. While his check was dated December 31, 1921, it was in his possession until March 1, 1922, when he deposited it in a new account in the Farmers Deposit National Bank, which account was designated Pauline Floersheim Trust, but against which he alone was authorized to draw checks. His offer of $25,000 to the Passavant Hospital was never accepted by the latter institution, but on the contrary was rejected in the year 1922. The uses to which the money in the bank account were put have been set out above. The money was under the petitioner's exclusive control. So far as we can see he could have done">*3074 with it as he saw fit. No trust resulted from his acts or writings in connection with the $25,000 in question.

The petitioner has not shown us whether his books were kept and his income-tax returns made on a cash receipts and disbursements basis or on an accrual basis, but regardless of which method was used, the petitioner is not entitled to deduct the $25,000 in the year 1921 under section 214(a) 11 of the Revenue Act of 1921. Furthermore, the Commissioner was not in error in including in the petitioner's income the interest credited to the bank account in which ">*1279 this $25,000 was deposited. Those being the only questions presented for our consideration,

Judgment will be entered for the respondent.