prima facie evidence of the facts contained therein. For example, the Board has held that they will be accepted as reflecting the true earned surplus unless the Board has before it affirmative evidence which warrants it finding as a matter of fact that the surplus is not correctly reflected therein.10

Section 62. Burden of Proof. The burden of proof before the Board is on the taxpayer petitioning. The rules of the Board provide that upon hearing of appeals the taxpayer shall open and close the case and the burden of proof shall be upon him." Where there is no evidence, or the evidence submitted is insufficient to sustain the allegations, the Board will order that the determination of the Commissioner shall stand.12 The Commissioner is under no necessity of submitting evidence unless the taxpayer has constructed a prima facie case.13

10 Appeal of Rub-No-More Co., 1 B. T. A. 228, Dec. No. 91, Docket No. 57 (A). See also Section 68, "Book Entries."

11 See Rule 20 of "Rules of Practice," Appendix, p. 138. But see Sec. 83, Chap. VI.

12 Appeal of M. Kline, 1 B. T. A. 102, Dec. No. 53, Docket No. 282; Appeal of S. & G. Hotel Supply Co., 1 B. T. A. 200, Dec. No. 82, Docket No. 175; Appeal of Lowell Cotton Mills, 1 B. T. A. 303, Dec. No. 120, Docket No. 453; Appeal of Elmer E. Scott Co., 1 B. T. A. 445, Dec. No. 164, Docket No. 530; Appeal of Gaukler & Stewart, 1 B. T. A. 578, Dec. No. 213, Docket No. 62; Appeal of Whitney Duplicating Check Co., 1 B. T. A. 1028, Dec. No. 388, Docket No. 1801; Appeal of Bonta Narragansett Realty Corporation, 1 B. T. A. 208, Dec. No. 85, Docket No. 34; Appeal of Bank of Watertown, Dec. No. 456, Docket No. 812. Other numerous decisions of the Board dismissing appeals for lack of evidence are not cited here since they are primarily concerned with the substantive law. See also following paragraph.

13 See Appeal of Cleveland Home Brewing Company, 1 B. T. A. 87, Dec. No. 47, Docket No. 73 (A); Appeal of J. M. Lyon, 1 B. T. A. 378, Dec. No. 141, Docket No. 81. As stated in Chapter III the original nature of the Board's jurisdiction requires that the evidence introduced before any other department of the Government must be reintroduced before the Board in order that it may be given consideration. Compare the decision in the case in Appeal of Bruce & Human Drug Company, 1 B. T. A. 342, Dec. No. 131, Docket No. 129 (A). In that case although the Board stated that both an audit made for taxpayer and submitted by it together with supporting depositions and the audit of the examining revenue agent submitted by the Commissioner, which apparently was the only evidence before it, were both inadequate and unreliable, it was satisfied from the entire record that the proposed deficiency should be disallowed.

What constitutes proof of fact is a matter beyond exhaustive treatment in this book. It has, however, been pointed out13a that the following do not constitute such evidence: (1) The petition; (2) statement of counsel; (3) unidentified and unauthenticated documents and letters; (4) rulings of the Bureau of Internal Revenue; (5) affidavits which have not been submitted to the Solicitor and agreed by him to be submitted as evidence; (6) balance sheets, valuation appraisals and mathematical computations of various kinds, unsupported by proof of the facts they contain. Introduction of such evidence carries with it the right of the opposing party to cross-examine a witness to test his qualifications to testify, and to establish the facts on which such conclusion and opinion is predicated; (7) Briefs and written argument filed by taxpayer.

While the above enumeration does not, of course, exhaust the matters which do not properly constitute evidence, they represent items which the Board has found in its experience to be most generally misunderstood.

Continuance of Hearing. Cases may be continued and returned for further evidence on particular points and a reexamination of taxpayer's books when circumstances warrant.14 Decisions may be suspended temporarily to permit the parties to adjust, recompute or compromise issues in accordance with the Board's

13 The following references were made in the very instructive address of Chairman Korner of the Board of Tax Appeals before the American Institute of Accountants on May 23, 1925.

14 Appeal of Harry and Kate Canaan, 1 B. T. A. 720, Dec. No. 268, Docket No. 304 (A).

directions,15 or to permit the Commissioner to pass on the question of special assessment where opportunity was not previously afforded.16 Thus, the Board has held that it will determine the deficiency, if any, to be assessed upon revised computation by the Internal Revenue Bureau which should be submitted by the Commissioner after due notice to the taxpayer or upon stipulation or upon rehearing to be set upon motion of either party."7

In this connection, however, it should be noted that the Board is becoming more reluctant to continue cases for further evidence, and that its present inclination is to take the case under submission and then rule against the petitioner for failure to prove its allegations, granting no continuances after the opening of the case.

Submission Without Argument. Where the taxpayer or his counsel fail to appear at the hearing or submit any evidence to substantiate the allegations of the petition, the appeal may be decided upon the facts alleged in the petition and admitted in the answer.18 Pleadings do not constitute evidence, and

15 Appeal of Oppenstein Bros., 1 B. T. A. 259, Dec. No. 103, Docket No. 117. Where decision is thus suspended the Board will, if necessary, upon motion, receive further evidence on the phase of the case causing the suspension; see Appeal of Winthrop Ames, 1 B. T. A. 63, Dec. No. 39, Docket No. 12. Where one continuance has been granted to enable the taxpayer to submit additional evidence, a second extension will not generally be granted; see Appeal of Bonta Narragansett Realty Corporation, 1 B. T. A. 208, Dec. No. 85, Docket No. 34.

16 Appeal of Producers' Fuel Co., 1 B. T. A. 202, Dec. No. 84, Docket No. 159. See also Section 41, "Amended and Supplemental Pleadings." But see Chapter IV, Sec. 48.

17 Appeal of William C. Sampson, 1 B. T. A. 73, Dec. No. 41, Docket No. 204 (A); Appeal of Dwight & Lloyd Sintering Company, Inc., 1 B. T. A. 179, Dec. No. 77, Docket No. 120.

18 Appeal of Mrs. Charles F. Dean, Executrix, 1 B. T. A. 27, Dec. No. 19, Docket No. 88.

where issues of fact are joined, failure to support the pleadings by proper or sufficient evidence will be taken as a ground for dismissal.19

Special Assessment Cases. The Board stated, in discussing a case before it requesting special relief, that while it takes jurisdiction of such cases, it does not follow that the "relief sections" of the statute are to be applied any more loosely or with any greater laxity of proof than any other provisions of the statute.20 A number of petitions asking for special relief under Section 210 of the Revenue Act of 1917 and Sections 327 and 328 of the Revenue Acts of 1918 and 1921 have been dismissed for lack of evidence in support of claim for such relief. The Board has held that the abnormalities entitling to special relief must be proven by competent evidence. It must also be evidenced that consideration under the section above cited would afford relief.2

Several cases, have also arisen in which the taxpayer has objected to special relief claiming that its

19 Rule 18 of "Rules of Practice"; see Appendix, p. 138. See also discussion of this subject in Chapter IV, Sec. 48.

20 Appeal of Chalmers Publishing Company, 1 B. T. A. 629, Dec. No. 237, Docket No. 839. In this case the Board stated that it will not countenance the practice of seeking special assessment as a last resort, the taxpayer hoping thereby to secure a reduction not otherwise available, and not proving clearly the existence of factors under Section 327. Insley Manufacturing Company, 1 B. T. A. 1029, Dec. No. 389, Docket No. 443.

21 Appeal of M. Kline, 1 B. T. A. 102, Dec. No. 53, Docket No. 282; Appeal of S. & G. Hotel Supply Company, 1 B. T. A. 200, Dec. No. 82, Docket No. 175; Appeal of Lowell Cotton Mills, 1 B. T. A. 303, Dec. No. 120, Docket No. 453; Appeal of Huff, Andrews & Thomas, 1 B. T. A. 542, Dec. No. 197, Docket No. 336 (A); Appeal of Winifrede Coal Company, et al., 1 B. T. A. 566, Dec. No. 209, Docket No. 311; Appeal of Gaukler & Stewart, 1 B. T. A. 578, Dec. No. 213, Docket No. 62; Appeal of Jamestown Worsted Mills, 1 B. T. A. 659, Dec. No. 247, Docket No. 92 (A); Appeal of Gottlieb Bros., 1 B. T. A. 684, Dec. No. 257, Docket No. 887 (A). The Commissioner is not estopped by the fact that he had previously allowed special assessment, since such allowance may have been entirely unfounded; see Appeal of Chalmers Publishing Company, 1 B. T. A. 629, Dec. No. 237, Docket No. 839.

invested capital could be satisfactorily determined, which claim the Treasury Department denied. In two cases where considerable evidence of value of intangible assets was offered by the taxpayer for the purpose of determining invested capital, the Treasury Department having stated its inability to satisfactorily compute it, it has been held that the taxpayer had at least established a prima facie case, as to the values claimed by it, especially where the Commissioner has offered no evidence.22

Section 63. Stipulations. Wherever possible, it has been the practice to stipulate the facts and reserve only questions of law for presentation before the Board. Stipulations should be in writing and filed with the Board,23 but with the Board's permission may be presented orally at the hearing. The Board desires that facts be thus stipulated in so far as and whenever practicable. Each stipulation should be complete and should not leave essential points to conjecture. Where a stipulation of fact has been entered into, oral testimony in contradiction thereof will be disregarded. The Commissioner and the taxpayer have in many cases entered stipulations of record, showing an agreed deficiency in tax which the Board has accepted as the basis of its decision. Likewise where the Commissioner files an admission that no deficiency is due the appeal will be sustained.25

24

22 Appeal of Brownsville & Matamoros Bridge Co., 1 B. T. A. 320, Dec. No. 126, Docket No. 93; see also Appeal of Whitney-Roth Shoe Co., 1 B. T. A. 453, Dec. No. 173, Docket No. 89 (A).

23 Rule 30 of "Rules of Practice"; see Appendix, p. 140.

24 Appeal of Consolidated Asphalt Company, 1 B. T. A. 79, Dec. No. 44, Docket No. 124; Appeal of Union Metal Mfg. Co., 1 B. T. A. 395, Dec. No. 147, Docket No. 35 (A).

25 Appeal of Fitchburg Steam Engine Company, 1 B. T. A. 242, Dec. No. 95, Docket No. 433 (A); Appeal of Proprietors of Locks