Opinion
Docket No. 51294.
1956-05-31
JOYCE PRIMROSE LANE (FORMERLY JOYCE PRIMROSE BOOZER), PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Dermot R. Long, Esq., for the petitioner. Arthur Clark, Jr., Esq., for the respondent.
Dermot R. Long, Esq., for the petitioner. Arthur Clark, Jr., Esq., for the respondent.
Petitioner and Edward Francis Boozer executed a property settlement agreement in November 1950 which provided, in part, that he would receive $12,500 in lieu of all claims for support and maintenance from petitioner and agreed with petitioner that he would sign a joint Federal income tax return with her for the year 1950. Petitioner secured an interlocutory decree of divorce from Boozer in December 1950, which became a final decree of divorce in December 1951. The property settlement agreement was incorporated in the interlocutory decree. Petitioner filed a joint Federal income tax return for the year 1950 signed only by herself. After the preparation of the return, Boozer agreed over the phone, at least twice, to go to his attorney's office to sign it but failed to keep the appointments. Held, petitioner and Boozer were entitled to file a joint Federal income tax return for the year 1950. Marriner S. Eccles, 19 T.C. 1049 (1953), affd. 208 F.2d 796 (C.A. 4, 1953). Held, further, the return which petitioner filed was, in fact, intended to be and was a joint return for herself and her husband.
This proceeding involves a deficiency in income tax in the amount of $9,591.45 and an addition to tax under section 294(d)(2) in the amount of $1,266.20 for the year 1950.
The issues to be decided are: (1) Whether petitioner was entitled to file a joint return with her deceased husband for the year 1950; and (2) if so, whether the return which she filed as a joint return but signed only by her was, in fact, a joint return.
Some of the facts were stipulated.
FINDINGS OF FACT.
The stipulated facts are so found and are incorporated herein by this reference.
Petitioner was a resident of Los Angeles, California, during the year in issue. The return filed by her for such year was filed with the former collector of internal revenue for the sixth district of California.
Petitioner and Edward Francis Boozer were married on September 23, 1948. Boozer had served in the United States Marine Corps during World War II, and had received serious head injuries in such service. He received 100 per cent disability compensation from the Veterans' Administration. Boozer was addicted to the excessive use of alcohol which continued during the course of his marriage to petitioner.
Petitioner secured an interlocutory decree of divorce from Boozer on December 12, 1950; a final decree of divorce was entered on December 18, 1951. Incident to such divorce proceedings, petitioner and Boozer, on November 10, 1950, entered into a property settlement agreement which was incorporated into such interlocutory decree. Petitioner was the beneficiary of five trust funds, the income from which in 1950 was approximately $80,000, and the settlement agreement provided that Boozer waived any claim previously asserted by him against the income from such trusts. The agreement also provided that petitioner pay Boozer the sum of $12,500 in lieu of all claims made by him against her for support and maintenance.
Petitioner and Boozer filed joint Federal income tax returns for the years 1948 and 1949. It was the understanding of petitioner, Boozer, and their respective attorneys that he would sign a joint Federal income tax return for 1950 when such return had been prepared. With reference to such returns, the agreement provided, in part, as follows:
SIXTH: Wife does hereby acknowledge that all Income Tax Returns filed by husband and wife jointly during the years of 1948 and 1949, and any income tax return that wife might in the future file for the year 1950, had to do with income received solely by the wife, namely, from a Trust Estate wherein she is a beneficiary. Wife does hereby agree to hold husband free and harmless and agrees to indemnify him from any claims made by the United States Treasury Department against husband, if any, resulting from the Returns hereinabove mentioned, and along these lines does hereby agree to indemnify husband against any reasonable expenses or reasonable attorneys' fees in the event he has to defend himself if any such claims should arise.
Prior to March 15, 1951, petitioner's accountant prepared a joint Federal income tax return for her and Boozer for the year 1950. Petitioner's attorney made a request through Boozer's attorney that Boozer sign such return. Boozer's attorney made at least two appointments with him for the return to be signed but Boozer never kept the appointments. Petitioner's accountant secured two extensions of time within which the return might be filed, and, on May 15, 1951, the return as prepared was filed with the collector still unsigned by Boozer.
Boozer had no taxable income in 1950. He subsequently left the State of California, and died in New Orleans, Louisiana, on November 16, 1952. The certified copy of his death record states that the cause of death was ‘Broncho Pneumonia; Myocardial Degeneration Alcoholism, Acute & Chronic.’
Petitioner, between April 3, 1950, and February 9, 1951, paid $18,000 as payments on estimated tax for 1950. The return filed for 1950 showed a total tax liability for such year of $29,511.94. The difference in such total tax liability and the amounts paid on declarations of estimated tax— $11,511.94—was paid on May 15, 1951, when the return was filed.
The respondent determined that the return which petitioner filed was her separate return since it was signed only by her and contained a report only of her separate income and deductions. The return which petitioner filed for 1950 was a joint income tax return for herself and her husband, Edward Francis Boozer.
OPINION.
RICE, Judge:
In support of his determination that the return in question was the individual return of petitioner rather than a joint return, respondent argues that petitioner and Boozer, in any event, were precluded from filing a joint return for 1950 because of the interlocutory decree of divorce granted during such year. The petitioner on the other hand, argues that our decision in Marriner S. Eccles, 19 T.C. 1049 (1953), affd. 208 F.2d 806 (C.A. 4, 1953), holds that an interlocutory decree of divorce does not constitute a legal separation under a decree of divorce or separate maintenance within the meaning of section 51(b) (5)(B) of the 1939 Code.
SEC. 51. INDIVIDUAL RETURNS.(b) HUSBAND AND WIFE.—(5) DETERMINATION OF STATUS.— For the purposes of this section—(B) an individual who is legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married.
We agree with the petitioner that our decision in the Eccles case, while it dealt with an interlocutory decree of divorce granted by the courts of Utah, is equally controlling in the case before us here involving a similar California decree.
A case with facts almost identical to the one before us here was recently decided by the United States District Court for the Northern District of California. In Holcomb v. United States, 137 F.Supp. 619 (N.D., Calif. 1955), a husband and wife were separated in June 1950 and at that time executed a property settlement agreement which, similar to the one before us here, contained no provision for alimony or support, temporary or otherwise. In August 1951, the wife was awarded an interlocutory decree which incorporated such settlement agreement. The interlocutory decree became final in August 1952. The parties filed a joint return for 1951 which the Government contended they could not do because of the interlocutory decree. The District Court said:
Admittedly the parties herein were not divorced in 1951. It is elementary that in California an interlocutory decree of divorce does not destroy the marriage. Brown v. Brown, 170 Cal. 1, 147 P. 1168. Nor were they legally separated by what is commonly known as a decree of separate maintenance. It is pertinent in this connection to stress the fact that the property settlement did not provide for support payments and none in fact were ever received by the wife with the exception of $4,840 worth of alimony pendente lite. Defendant however contends that the section in question also applies to persons who, while still legally married for other purposes, were ‘legally separated * * * under a decree of divorce’. This contention has been made before and has been rejected. The identical issue was raised in Marriner S. Eccles v. Commissioner of Internal Revenue, 19 T.C. 1049, affirmed, 4 Cir., 208 F.2d 796, which held that since an interlocutory decree under Utah law did not dissolve the marriage, a joint return was proper. In the case of William G. Oster v. Commissioner, Docket No. 52185, T.C. Memo 1955— 207, filed 7/25/55, the same result was reached on the same issue under California law.
We think the conclusion reached by the District Court in the Holcomb case was correct and that the petitioner and her husband here were entitled to file a joint Federal income tax return for 1950.
We note that Revenue Ruling 178, 1955-1 C.B. 322, announces that the Internal Revenue Service considers an interlocutory decree of divorce as being a decree of divorce within the meaning of section 51(b)(5)(B) despite our decision in the Eccles case and its affirmance by the Court of Appeals. We think that ruling is wrong.
Having determined that petitioner and Boozer were entitled to file a joint return for the year 1950, we turn to the question of whether the return which petitioner filed for such year was, in fact, a joint return.
Whether married taxpayers intend to file joint or separate returns is a question of fact. Myrtle O. Calhoun, 23 T.C. 4 (1954); and Hyman B. Stone, 22 T.C. 893 (1954). The fact that the return in issue was not signed by Boozer would seem to lend support to the respondent's determination that it was not a joint return; but, the fact that one spouse does not sign the return does not conclusively establish the intent of the parties that the return as filed with only one signature was a separate rather than a joint return. Myrtle O. Calhoun, supra; Hyman B. Stone, supra; Zabelle Emerzian, 20 T.C. 825 (1953); W. L. Kann, 18 T.C. 1032 (1952), affd. 210 F.2d 247 (C.A. 3, 1953), certiorari denied 347 U.S. 967 (1954); Myrna S. Howell, 10 T.C. 859 (1948) affd. 175 F.2d 240 (C.A. 6, 1949); and Joseph Carroro, 29 B.T.A. 646 (1933).
We appreciate the difficult burden which the petitioner faced in this case of trying to establish the intent of a party, now deceased, at the time this return was filed in 1951. However, we think from all the evidence before us that petitioner has made a sufficient showing to overcome the presumptive correctness of the respondent's determination. We think the sixth paragraph of the settlement agreement which petitioner and Boozer signed in 1950, together with her testimony and that of both her own attorney and Boozer's attorney, clearly establishes that Boozer agreed to sign a joint Federal income tax return for the year 1950 as a part of the property settlement agreement by which he received $12,500. Boozer's attorney also testified that when he made appointments for Boozer to sign the return, Boozer agreed to do so but failed to keep the appointments. The fact that he did so fail and did not, in fact, sign the return is understandable in the light of his physical handicap and his excessive use of alcohol. We therefore conclude, in accordance with our findings, that the return which the petitioner filed for 1950 was a joint return for herself and her then husband, Edward Francis Boozer, and that the respondent erred in failing to compute her correct liability on the basis of a joint return.
We understand that petitioner does not now contest the imposition of the addition to tax for substantial underestimate of estimated tax determined by the respondent under the provisions of section 294(d)(2).
Reviewed by the Court.
Decision will be entered under Rule 50.