19 T.C. 1027">*1027 1953 U.S. Tax Ct. LEXIS 224">*226 Respondent determined deficiencies in income tax and additions to tax for fraud under section 293 (b) of the Internal Revenue Code against petitioner, as follows:

19 T.C. 1027">*1028 Certain of the issues raised as to 1943 have been conceded by the respondent. The issues remaining for decision are whether an item of $ 3,600 was the income of petitioner or that of his daughter; if there is a deficiency, whether any part thereof was due to fraud with intent to evade tax; and whether the assessment of such deficiency for 1943 is barred by the statute of limitations.

The same question as to the $ 3,600 item above is also in issue for 1944, 1945, and 1946. Also presented for decision are the questions whether petitioner received income in those years from payoffs and the like under the guise of political contributions and whether the deficiencies, if any, were due, in whole or in part, to fraud.

FINDINGS OF FACT.

Petitioner is an individual and resides in Evansville, Indiana. He filed his income tax returns for the years involved with the collector1953 U.S. Tax Ct. LEXIS 224">*227 of internal revenue for the district of Indiana.

Prior to the tax years herein, petitioner had been in the business of farming and street repairing. He had participated in Republican party politics in Evansville and in Vanderburgh County for some time. He was one of the county committeemen elected in the May 1942 Republican primary and shortly thereafter, at the organization of the Republican County Central Committee of Vanderburgh County, he was elected or appointed chairman. At the same time a vice chairman, secretary, and treasurer were elected or appointed by the committee. Clarence Maasberg, a teller at the Old National Bank, was treasurer of the committee from 1942 through 1946. Petitioner held the chairmanship of the county committee until May 29, 1948. He was elected mayor of Evansville on November 3, 1942, took the oath of office on January 1, 1943, and served as mayor until December 31, 1947.

Part of petitioner's duties as chairman of the County Central Committee was to supervise the solicitation of funds and contributions for the aid of the party, particularly in the general election campaigns. The state organization of the Republican Party provided a method for 1953 U.S. Tax Ct. LEXIS 224">*228 the solicitation of funds for local, state, and other political campaigns in order to avoid the overlapping of such campaigns. At its state headquarters, the party had a committee known as the Republican United Finance Committee through which it conducted its campaigns for finances. This committee would enter into contracts for the conduct of those campaigns with district or county central committees.

For the campaigns in 1944 and 1946, the Republican United Finance Committee of Indiana had agreements with the Republican County Central Committee of Vanderburgh County covering and governing 19 T.C. 1027">*1029 the campaigns for funds. For 1946 the period of the contract was from September 1, 1946, through December 31, 1946. The purpose of the campaigns was to obtain funds for the support of the various committees of the Republican Party. The agreement provided, inter alia, that 65 per cent of the proceeds from the campaign in Vanderburgh County was to be returned to the county committee and 35 per cent was to be allocated to the state committee; that all remittances were to be made as rapidly as possible to the Republican United Finance Committee, with pledge cards and/or transmittal1953 U.S. Tax Ct. LEXIS 224">*229 sheets, and that that committee would then return to the county committee 65 per cent of the remittances as soon as they were cleared with the treasurer of the state committee; that the treasurer of the Republican United Finance Committee would issue an official receipt to each contributor; and that all solicitations by or for the party in Vanderburgh County during the designated period should be through the Republican United Finance Committee of Indiana, Vanderburgh County Division, and under the terms of the agreement. The agreement was signed on behalf of the state party organization by the chairman of the Republican United Finance Committee, the treasurer of the Indiana Republican United Finance Committee, and the chairman of the Indiana Republican State Central Committee; and on behalf of the Republican County Central Committee of Vanderburgh County by petitioner, as chairman.

As a result of the 1946 party finance campaign in Vanderburgh County, $ 26,955 was remitted to the Republican United Finance Committee and $ 16,221.04 was returned to the county committee. In 1944, $ 44,717.80 was sent in by the Vanderburgh county committee and the state committee returned $ 28,811.78. 1953 U.S. Tax Ct. LEXIS 224">*230 The treasurer of the county committee made a report to the treasurer of the state committee, covering the respective elections, the amounts contributed, and the names and addresses of the contributors. It was permissible to send in "groups of contributions from other people." As to Vanderburgh County, the lists purported to be a full and complete list of all contributors in that county. 1945 was an off year for elections and no contributions were solicited through the state committee. Had any contributions been made, however, they should have been remitted to the state committee's treasurer. No contributions were transmitted to the state committee in 1945 from Vanderburgh County.

The Republican United Finance Committee, through its treasurer, kept individual index cards which showed the names of the contributors, the amounts of their contributions, and the year in which the contributions were made. Official receipts were mailed from the state committee to each contributor. The names of the solicitors were not kept in the state committee's records.

19 T.C. 1027">*1030 Petitioner appointed his brother-in-law, Julius Ritter, as subtreasurer of the Republican County Central Committee. 1953 U.S. Tax Ct. LEXIS 224">*231 Under the Corrupt Practices Act of Indiana, the authority to appoint a subtreasurer is in the committee treasurer who, under his bond, is responsible for the acts of the subtreasurer. The Act also provides that all funds or contributions collected or received by the subtreasurer must be turned over to the treasurer. Ritter also served under petitioner as comptroller for the city of Evansville. As comptroller, he occupied an office near that occupied by petitioner as mayor.

For some time petitioner had been associated in party politics in Evansville and Vanderburgh County with Benjamin H. Bartlett. Bartlett was employed by a brewery, and was known as a "beer spender," due to the fact that at various times in the taverns of the area he would treat the tavern customers to the product of his employer. He became a close personal friend of petitioner, politically and socially. He was petitioner's right-hand man in politics, and the friendship of Bartlett and petitioner was well known. After petitioner was elected mayor of Evansville in November 1942, petitioner and Bartlett discussed the appointment of Bartlett as manager of the Motor Vehicle License Bureau located in Evansville.

1953 U.S. Tax Ct. LEXIS 224">*232 The State of Indiana sold and issued motor vehicle license plates, certificates of title and transfers thereof, and driver's licenses and renewals through branch offices in the respective counties. The managers of the branches were appointed by the Secretary of State, usually on the recommendations of the respective county central committee chairmen. It was understood that the individual recommended by petitioner for that position in Vanderburgh County would automatically be appointed.

The salary of the mayor of Evansville was then $ 5,200 a year and petitioner thought it would be unfair for Bartlett to be paid more money than the mayor. Bartlett ascertained from some former managers of the bureau that the position paid $ 10,000 or more a year. Such compensation and costs of operation of the office were derived from fees charged for services rendered or added to the cost of licenses issued.

Bartlett agreed that he and petitioner should receive comparable annual compensation, and was willing to share part of the manager's income with petitioner, but did not wish to pay the income tax on the portion petitioner was to receive. They concluded that Bartlett should put petitioner's1953 U.S. Tax Ct. LEXIS 224">*233 daughter, Maybelle, on the payroll at a salary of $ 3,600 a year. Bartlett received the appointment, took charge of the office in December 1943, and put petitioner's daughter on his payroll at the salary of $ 3,600 a year, which compensation began on January 1, 1943. Bartlett retained his position with the brewery and did not spend much time at the automobile license office.

19 T.C. 1027">*1031 Maybelle, in December 1942, was engaged to be married. Her fiance, Don Davis, had entered the Navy in September 1942. They were married in February 1943. She continued to live at the home of her parents. She received the usual government allotment during her husband's period in the service.

The Motor Vehicle License Bureau had a rush season from January 1 to March 31, as motor vehicle owners were required to buy their licenses by the latter date. Maybelle did very little work. During the rush period she went to the office from time to time but was seldom there before 10:00 a. m. She did not know what the office hours were or that the office was open Saturday mornings. Many days she did not report at all. After the rush season, there was a normal flow of business and there were sometimes weeks1953 U.S. Tax Ct. LEXIS 224">*234 when she did not go to the office. The office hours for the other employees were from 8:00 a. m. to 5:00 p. m., 5 days a week, and from 8:00 a. m. to 12:00 noon on Saturdays. Other girls were paid from $ 30 to $ 35 a week for doing the kind of work Maybelle was supposed to do. The woman in charge of the office was paid $ 50 a week. Maybelle considered and treated her appointment in the Motor Vehicle License Bureau as a "snap" job and made appearances at various times for the purpose of giving color to her employment.

Maybelle's business experience was limited. She graduated from high school in 1936 and had taken a course in typing there. She attended collage until her junior year, when she became engaged to marry, and thereupon, in 1939, left college. She had not taken any business course and did not know shorthand. Prior to her alleged employment by Bartlett her business experience consisted of working as a salesclerk for a jewelry store on two separate "Dollar Days" or bargain sales days and helping in the local Republican headquarters during several election campaigns, and then, she worked only as she wished or when she was available, and seldom received any compensation1953 U.S. Tax Ct. LEXIS 224">*235 for her services.

Maybelle kept no checking account, although in 1944 she had a small savings account to which she added nothing in later years. During the years in question, her father prepared her income tax returns.

Bartlett delivered some of the checks made out to Maybelle to petitioner and some to Maybelle. He made out and signed most of them. Except for the first two checks issued for January and February 1943 in the amounts of $ 300 each, there was a withholding from all salary checks for Federal income tax. Bartlett paid the employees' social security taxes. In July or early August 1946, Bartlett took approximately $ 1,377.50 in cash to petitioner to cover the 5-month period between July 1 and December 1, 1946. This amount represented $ 1,500, less withholding tax.

19 T.C. 1027">*1032 Maybelle gave birth to a baby in May 1946. She did not report to the office at any time during 1946.

Of the payments made by Bartlett as "salary to Maybelle," $ 100 in each of the years 1943, 1944, and 1945 was paid to Maybelle for services rendered. She did no work and earned no compensation at the Motor Vehicle License Bureau in 1946. The remainder of the payments for 1943, 1944, and 1945 and1953 U.S. Tax Ct. LEXIS 224">*236 all of the payments in 1946, though under the guise of salary to Maybelle, were paid to petitioner or his nominee for the assistance he had given in procuring Bartlett's appointment.

Bartlett, in his income tax returns, claimed deductions for the money paid out as salary in Maybelle's name. These ductions were eventually disallowed by respondent and Bartlett paid income tax on them.

During petitioner's administration as mayor in the years 1944, 1945, and 1946, there were from 35 to 40 "bookies" in Evansville. Bartlett knew who they were and where they operated.

Prior to the May primary in 1944, Bartlett was instructed by petitioner to raise some money. He usually solicited the tavern keepers and the "bookies," and was assisted by a George Coogan and a Gilbert Minton, the latter controlling the news service which gave information to the "bookies." Approximately $ 10,300 was obtained from the tavern keepers and "bookies" in the 1944 spring solicitations. Bartlett took the money to petitioner at his office in the city hall, who in turn gave the money to Ritter, as custodian. Ritter was to obtain $ 1 bills which were to be disbursed among precinct committeemen and workers on the 1953 U.S. Tax Ct. LEXIS 224">*237 night before the election and on election day. According to that plan and during the evening before the primary, petitioner, Bartlett, and Ritter, with Joe Bastion and Harold Ziss assisting, passed out about $ 6,000 at the mayor's office, and on election day petitioner and Bartlett personally delivered in the various precincts more cash to those who had used the money received the night before.

Bartlett, with the assistance of Gilbert Minton and Clarence Coogan, now deceased and who was the brother of George Coogan, solicited the tavern keepers and "bookies" again in the fall of 1944 just prior to the general election, and obtained about $ 18,600 in cash, which was delivered to petitioner at his office by Bartlett and Coogan. Petitioner turned the money over to Ritter and requested him to get some $ 1 bills. Ritter, through Herman J. Volke, a vice president of the Old National Bank, exchanged large denomination bills for 20,000 old $ 1 bills, in November 1944. $ 1 bills were distributed to various individuals on the night before the general election by Bartlett and others at the McCurdy Hotel, which money was to be used in various precincts.

19 T.C. 1027">*1033 In the spring of 1946 petitioner1953 U.S. Tax Ct. LEXIS 224">*238 told Bartlett to get some money before the primary, and Bartlett and Clarence Coogan solicited the tavern keepers and "bookies," obtaining about $ 6,800 in cash. Coogan and Bartlett took the money to the mayor's office and delivered it to petitioner in the presence of Harold Ziss and Julius Ritter. Petitioner gave the money to Ritter to put in the safe in the comptroller's office. In the discussion of what should be done with the money, it was concluded that it should be held until the general election, as there was not much opposition in the primary.

Jesse George Patterson, a tavern operator since 1939, made a contribution of $ 500 cash to petitioner in the spring of 1944 and gave petitioner another contribution in the fall, in the amount of $ 1,000. Both contributions were turned over to petitioner at his office, the first being made in the presence of Clarence Coogan and Bartlett, and the latter in the presence of Bartlett. In each instance, petitioner took the money, thanked Patterson, and put the money in his pocket. Bartlett and Patterson had been friends for a long time.

Albert A. Bradford, a retail lumber dealer who did some real estate business, made a contribution 1953 U.S. Tax Ct. LEXIS 224">*239 of $ 75 cash in 1944 to petitioner.

Petitioner passed on all applications for renewal of wholesale liquor distributors' licenses in Vanderburgh County, and made recommendations to the state Republican organization which in turn usually passed the recommendations on to the Indiana Alcoholic Beverage Control Commission, and in accordance with the practice at that time, the commission renewed the licenses as recommended.

One of such liquor distributors in Evansville was the Conard Company, a corporation. In 1945, from the time that had elapsed since application for renewal had been made, it appeared that the company's license might not be renewed by the commission. An officer and stockholder of the company, Alvin R. Brown, requested petitioner to assist him in procuring a renewal of the company's wholesale liquor license and offered to give petitioner a $ 3,000 contribution if a renewal of the license could be obtained. Petitioner indicated that that was not enough, whereupon Brown and petitioner concluded that $ 5,000 would do. After petitioner had the matter under consideration a few weeks, Brown contacted petitioner again, and in June 1945, gave petitioner $ 5,000 cash in $ 1001953 U.S. Tax Ct. LEXIS 224">*240 bills. The money was delivered to petitioner at the mayor's office. Petitioner placed the money in a drawer in his desk. Shortly thereafter, petitioner addressed a letter to the Alcoholic Beverage Control Commission, over his signature, recommending the renewal of the Conard Company's license. Petitioner gave the letter to Brown and it was later presented to the commission in Indianapolis by one of the officer-stockholders of Conard Company. The commission issued the company its license.

19 T.C. 1027">*1034 Brown gave a contribution of $ 400 to the campaign fund in 1946 and was told that was not enough. The three stockholders of the Conard Company, through Brown, then gave petitioner $ 1,100 in cash at the mayor's office. No receipts for any of the three contributions were given by petitioner to Brown.

Brown had been in the liquor business in Evansville since 1934. He favored the Republican Party before prohibition. After repeal, he leaned toward the Democratic Party because it had put him back in business.

The treasurer of the Republican United Finance Committee of Indiana was also the treasurer of the State Republican Committee of Indiana. In neither organization did the records1953 U.S. Tax Ct. LEXIS 224">*241 show any contributions from Bartlett for 1944 or 1946; they showed no contributions from Jesse Patterson for 1944 or 1946, and none from Alvin R. Brown for 1945 or 1946. The records of the United Finance Committee showed that A. A. Bradford contributed $ 50 on November 3, 1944, but made no contributions for 1946. His records also showed contributions from petitioner on November 2, 1944, in the amount of $ 2,500; on October 21, 1946, $ 1,500; on October 29, 1946, $ 500; and, on November 1, 1946, $ 1,000. Julius Ritter was shown to have contributed $ 500 on November 2, 1944, $ 200 on October 21, 1946, and $ 100 on November 1, 1946.

Petitioner, in his income tax returns for 1943 to 1946, inclusive, reported net income as follows: 1943, $ 6,208.52; 1944, $ 3,602.78; 1945, $ 6,283.91; and 1946, $ 7,684.51.

In return for political favors rendered by him, the petitioner received the following amounts which he did not report in his income tax returns:

A part of the deficiency1953 U.S. Tax Ct. LEXIS 224">*242 for each of the taxable years is due to fraud with intent to evade tax.

OPINION.

The respondent has determined that the petitioner received additional income from specific sources, and contends that such income was either a "pay off" for political favors rendered or the "sale of political influence." The burden of proving respondent erred in determining the deficiencies is on the petitioner.

In the main, the issues here involve transactions of which no record was made. In some instances, as in the case of the Republican United Finance Committee, reference is made to records and documents 19 T.C. 1027">*1035 for the purpose of showing the absence of entries which should have been found, if some of the testimony given is to be believed. In numerous instances there were direct conflicts and contradictions in testimony herein and all of it cannot represent the truth. We have seen and heard the witnesses and, after hearing their testimony and on the basis of the impressions received of those witnesses at the trial, we have re-examined such testimony as it appears of record, and in our findings have arrived at what we regard as the facts in the various situations.

For the purposes of our discussion1953 U.S. Tax Ct. LEXIS 224">*243 of the income items, the issues may be divided into two parts, one having to do with the purported employment of petitioner's daughter Maybelle by Benjamin H. Bartlett, and the other having to do with amounts received by petitioner under the guise of political contributions but which, according to respondent's determination, were received by petitioner as political "pay offs" or in the sale of political influence.

The question whether the petitioner is taxable on payments made by Bartlett under the guise of salary to Maybelle and, if so, to what extent he is taxable is common to all the years before us. The respondent has determined that the full amounts of $ 3,600 for each of the years 1943, 1944, and 1945, and of $ 3,300 for the year 1946 were payments to petitioner and constituted income to him. While the record is not very clear on the point, it appears that Bartlett's tenure as manager of the motor vehicle branch at Evansville terminated on December 1, 1946, and if so, that accounts for the fact that the payments for 1946 were only $ 3,300 instead of $ 3,600, as in each of the first 3 years.

While petitioner and Bartlett, who was called as a witness by the respondent, did contradict1953 U.S. Tax Ct. LEXIS 224">*244 each other in much of their testimony, they were in agreement on the following matters: They had worked together in politics and had been close political and social friends; that petitioner was appointed chairman of the Republican County Central Committee of Vanderburgh County in May 1942, and served as such through the period herein; that Bartlett had helped petitioner to be elected mayor of Evansville in 1942; that as chairman of the County Central Committee petitioner could, in effect, name the manager of the local motor vehicle license branch; that petitioner had Bartlett appointed to that position; that petitioner's daughter Maybelle was placed on Bartlett's payroll at a salary of $ 3,600 a year for all but 1 month of Bartlett's tenure; that some checks issued in Maybelle's name were delivered by Bartlett to petitioner; and that Bartlett paid to petitioner in July or August 1946, cash, less withholding tax, representing the last 5 months of Bartlett's last year as manager of the bureau, which payment was for services Maybelle had not rendered.

19 T.C. 1027">*1036 Admitting that he had Bartlett appointed manager of the local branch, it was petitioner's testimony that Bartlett had asked1953 U.S. Tax Ct. LEXIS 224">*245 for the position and he gave it to him because Bartlett had worked in the organization when petitioner was elected mayor. As to the placing of his daughter on Bartlett's payroll, his only explanation or justification seems to be that it was Bartlett's idea and suggestion. We are convinced, however, that it was understood that Maybelle was to do little, if any, work and that her name was placed on the payroll to cover the payments Bartlett was to make to petitioner and that Bartlett was telling the truth when he testified that his interest in putting Maybelle on the payroll was so that he would have a basis for claiming deduction of the payments in reporting his income tax, whereas payments to petitioner of the amounts in question, without some such arrangement, would not.

Maybelle had never really been employed prior to this so-called employment, she was inexperienced in the type of work to be done, and she was planning to be married within the immediate future, her marriage taking place in February after she had purportedly gone to work in January. Presumably, it had not been necessary for her to work, since her father was a man of some means. She acknowledged that she considered1953 U.S. Tax Ct. LEXIS 224">*246 the position as a "snap" that she was inexperienced, and that under the arrangement she could go to work when she pleased. And yet, she also testified that Bartlett was in desperate need for help and prevailed upon her to take the position. Most of the work she did was in the "rush season" between January 1 and March 31, but when she did report to work, it was not before 10:00 a. m. Had she considered herself a regular employee, she would, in reason, have expected to work as such, and certainly would have known what the office hours were and that a week's work was 5 1/2 days, instead of 5 days. Nor would she have been paid a salary that was not only more than was paid other girls doing comparable work, but was in excess of the compensation received by Bartlett's experienced office manager.

As to the recipient of the final payment of Maybelle's so-called salary, there is a pointed contradiction in Maybelle's testimony and that of petitioner. Petitioner and Bartlett testified that Bartlett took the salary for the last 5 months of 1946 in cash, less withholding tax, to petitioner at his office, while Maybelle was positive in her testimony that the cash was delivered to her in person1953 U.S. Tax Ct. LEXIS 224">*247 by Bartlett at her home. Maybelle had not been present in the court room when her father testified, but had heard Bartlett's testimony. It is of little consequence, however, whether petitioner or his daughter received the allotted salary payments from Bartlett. The arrangement was for petitioner to share with Bartlett some of the income Bartlett was to receive as manager of the bureau. Except to the extent hereafter stated, the 19 T.C. 1027">*1037 payments pursuant thereto, whether to petitioner or Maybelle, were petitioner's. If petitioner chose to let all the money go to his daughter, he would be no less taxable on it, and that would be true whether or not she knew of the arrangement between her father and Bartlett. We are convinced that Bartlett would not have received the appointment otherwise and that the salary arrangement was a subterfuge to hide the true facts. We do think that Maybelle did actually do a limited amount of work at the office during the first 3 months of 1943, 1944, and 1945, and she may have done some few jobs at her home, and to the extent of work so done, the payments received by her as salary were her income. Applying the rule laid down in Cohan v. Commissioner, 39 F.2d 540,1953 U.S. Tax Ct. LEXIS 224">*248 we have carefully examined the evidence of record and bearing heavily against petitioner for failure to bear his burden of proof, we have concluded and found as a fact that Maybelle earned on work done for Bartlett $ 100 in each of the years 1943, 1944, and 1945. The remainder of the amounts paid in those years under the guise of salary to Maybelle was the income of petitioner. In 1946, the evidence fails to show that Maybelle did any work and the entire $ 3,300 paid in that year under the guise of salary to her was petitioner's income.

The remaining issues as to the receipt of income not reported raise the question of whether or not certain amounts brought in by Bartlett, Alvin R. Brown, Jesse Patterson, and Albert A. Bradford were received by petitioner as his own, in return for political favors but under the guise of political contributions.

Petitioner in his testimony categorically denied that he received any payments such as those involved herein, as political contributions or otherwise, from the individuals named, and further, that all contributions which he did receive were transmitted, along with the names of the contributors, to the Republican United Finance Committee, 1953 U.S. Tax Ct. LEXIS 224">*249 as required by the contract and agreement between that committee and the Republican Central Committee for Vanderburgh County. As to his receipt of money from individuals named, his testimony and theirs are in direct contradiction. Each of them testified that he did deliver the money in question to petitioner, and after seeing and hearing them on the witness stand and giving careful consideration to their testimony, we believe they were telling the truth.

As to the amounts received by petitioner from Bartlett as contributions from tavern keepers and "bookies," in 1944 and 1946, we do not believe that petitioner received such funds as his own. While they were delivered to petitioner in his office, we think that the true picture was that they were received by him as campaign contributions for use in Evansville and that they were used, as indicated by the testimony of witnesses, as "pay offs" to precinct committeemen and precinct 19 T.C. 1027">*1038 workers. In each instance the money was not retained by petitioner but was immediately turned over to Julius Ritter, who served under the designation of subtreasurer of the county committee, and with respect to money brought in in 1944, Ritter, 1953 U.S. Tax Ct. LEXIS 224">*250 in turn, on the eve of the elections had the currency received changed into $ 1 bills and in that form the money was distributed, the major portions being distributed on the eves of the elections, in one instance from the mayor's office, and in the other from a room in a local hotel. The remainder was dispensed on election day in the precincts themselves. When the $ 6,800 was brought in in the spring of 1946, it was concluded that Ritter should hold the money for use in the general election, since there was not much opposition in the primary. While it may be true that the manner of soliciting the funds in question and the method in which they were used were in conflict with the contract between the county committee and the Republican United Finance Committee and in violation of the Corrupt Practices Act of Indiana, the enforcement of that contract and the Indiana Corrupt Practices Act is not within our province. The funds in question were not delivered to petitioner, received by him as his own, or appropriated to his own uses. To the contrary, they were received by him to be used for political campaign purposes and they were so used or turned over to Ritter for such use at a later1953 U.S. Tax Ct. LEXIS 224">*251 election. They did not become the gross income of the petitioner.

As to the amounts paid to petitioner by Alvin R. Brown, the facts are different and we have so found. The first contribution was $ 5,000 in 1945. Brown's company was in the wholesale liquor business. When the company's license was up for renewal, the renewal was not granted in ordinary course, and word was passed on to Brown that a "contribution" would probably serve to eliminate the difficulty. Brown saw petitioner and offered $ 3,000, but was told the amount was not adequate. A $ 5,000 payment was finally agreed upon and paid. No part of this amount was ever reported to the state organization. It is our opinion, and we have concluded, that it was not paid as a political party contribution and that it was not so intended, but that petitioner received it as recompense for removing the obstacles from the renewal of the license. The payment was made in 1945, which was not an election year. Brown and his associates made another "contribution" in 1946. That amount was not reported by petitioner to the state headquarters, and he denied that he received it. We have concluded that the character of this payment 1953 U.S. Tax Ct. LEXIS 224">*252 was the same as that made in the prior year.

As to the payments by Jesse Patterson and Albert A. Bradford, the record is not so clear. Patterson was a tavern keeper. He was a 19 T.C. 1027">*1039 Republican and his testimony was that he paid $ 500 in cash to petitioner in the spring of 1944 and made another payment of $ 1,000 in the fall, as contributions to the campaign fund. In each instance, petitioner took the money and, thanking Patterson, put the money in his pocket. With that testimony, the record of the $ 1,500 ends. The petitioner categorically denied that he ever received any amounts from Patterson, although Patterson had testified that the payments were made in petitioner's office, the first in the presence of Clarence Coogan and Bartlett and the second in the presence of Bartlett. Neither of these "contributions" was reported by petitioner to the state organization, and since petitioner denied receipt of the moneys in the first instance, there is no basis for any conclusion that he turned the money over to Ritter or anyone else for use in the campaign, as was true of the funds solicited and brought in by Bartlett. For failure of proof, the respondent is sustained in his inclusion1953 U.S. Tax Ct. LEXIS 224">*253 of the $ 1,500 paid by Patterson to petitioner as petitioner's income. Similarly, the respondent's determination is sustained, for lack of proof, with respect to $ 25 of the $ 75 contributed by Albert A. Bradford. The picture there is substantially comparable to that in the case of the money paid over by Patterson. Petitioner denied that he received any amount, although a contribution of $ 50 from Bradford was later reported to the state organization. For failure of proof, the respondent is sustained to the extent of the $ 25, which petitioner received but did not transmit to the state organization.

On the fraud issue, it is our conclusion that the respondent has amply met his burden of proof. We are convinced, and our findings indicate, that petitioner well knew that the payments by Bartlett under the guise of salary to Maybelle were being made in return for petitioner's influence in obtaining Bartlett's appointment as director of the automobile license bureau for Vanderburgh County. We are also convinced that petitioner was well aware of the income tax implications and that his idea was comparable to that of Bartlett, namely, that by putting Maybelle on Bartlett's payroll 1953 U.S. Tax Ct. LEXIS 224">*254 the arrangement would have an outward appearance of respectability and that he would receive and retain such portions of the moneys as pleased him, without the income tax consequences. He also well knew and understood that little, if any, services were to be expected of his daughter. Part of the deficiency in each of the years before us was due to fraud on the part of petitioner with intent to evade tax.

Having concluded that there was fraud in each of the years in question, the decision is also for the respondent on the statute of limitations issue with respect to 1943.

Decisions will be entered under Rule 50.