DUKE

v.

COMMISSIONER OF INTERNAL REVENUE

FRANK, -Circuit Judge.

The Commissioner determined that the value on the dates of the gifts aggregated $104,400. The taxpayer, who had the burden of proving the error of this figure, failed to discharge it. The sole evidence consisted of the cost to the taxpayer of obtaining the jewelry, in both instances a short time before the gift. He did not show, by introducing an expert’s testimony or otherwise, that the amounts he paid for the jewelry exceeded the jewelry’s worth. Absent any proof except what it cost the taxpayer, the Commissioner reasonably measured the value by that cost. The taxpayer contends, however, that but a part of that cost should be the value-measure, i. e., the cost to taxpayer minus the amount of the retailer’s excise tax. We cannot agree. We think that the amount of that tax represents part of the cost — of the price paid — by the purchaser'.1

Affirmed.

. Section 2409 forbids a seller to represent that “the price of the article does not include the tax”.

In Estate of Gould v. Commissioner, 14 T.C. 414, the Tax Court said: “The petitioner argues that the seller was able to keep only $58,000 for himself out of the total of $63,800 paid by the decedent, since the seller had to turn over the difference of $5,800 to the collector of internal revenue. The petitioner might go further and point out that the seller could not retain all of the' $58,000 for himself. There were other items, like this excise tax, which he would pay and which he could deduct in computing his profit. There might have been a commission on the sale and a customs duty on the ring. He undoubtedly had overhead and other expenses, including, perhaps, other taxes, yet it is not suggested that any of those items should be deducted in determining the value of the ring for gift tax purposes. The purchase prices of many articles nowadays include taxes which the man on tbe street, if be thinks of them at all, regards as part of tho cost or purchase price of the article. For example, over one-half of the current price of cigarettes is charged because of taxes which the seller must pay. Yet, if one friend gives another a carton of cigarettes, both probably would regard the gift as having a value equal to the cost of the cigarettes, including whatever taxes were involved. They probably would not even know the price exclusive of tax.

Thus, although the entire deficiency represents the gift tax on that portion of the total value represented by the excise tax, it is likewise probably true that a part of the total tax represents a tax upon other amounts which the seller cannot retain for himself and which add no inherent value to the ring itself. In short, the net amount which the seller can retain for his very own does not necessarily establish the value here in question.”

In the Gould case, six of the fourteen judges dissented.