- 27 -
basis. As this case comes to us, * * * [the
taxpayer's] 1953 and 1954 tax returns show two
defects. The first is that certain alleged credits
for the purchase of metals are not adequately
documented. The second is the use of an improper
accounting method. What the Commissioner has done is
to determine deficiencies attributable to the first
defect but to leave the second alone. We may guess
that this decision was made because it was believed
that the game was not worth the candle: the
additional deficiencies, if any, which use of the
accrual method might reveal would not warrant the
considerable effort which a redetermination would
require. Whatever the reason, however, we cannot see
why the decision should be held improper.
* * * * * * *
Of course, it is possible that the taxpayer's
accounting system may be so inadequate that the
Commissioner has no choice but to redetermine the
liability on the basis of his own system; * * * But
where the taxpayer does have a rational, though
improper, system, we think that the Commissioner may
choose to let it stand and to pursue only specific
deficiencies within it. And so long as the
deficiencies which he determines are not themselves
infected by the system's shortcomings, the taxpayer
may not avoid the deficiencies simply by pointing to
the inadequacy of his own accounting system. [Id. at
204-205; citation omitted.]
In Keneipp v. United States, 184 F.2d at 268, the court
reversed and remanded for further proceedings. In that case,
the court stated:
such proceedings need not be elaborate or extensive.
The Bureau of Internal Revenue has many auditors who
can quickly compute the gain properly taxable to
these appellants upon the facts of this case and the
principles we have referred to.
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