Weatherwax v. Commissioner , 21 B.T.A. 861 ( 1930 )

C. M. WEATHERWAX, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Weatherwax v. Commissioner

Docket No. 40625.

United States Board of Tax Appeals

21 B.T.A. 861; 1930 BTA LEXIS 1781;

December 22, 1930, Promulgated

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">*1781 Petitioner is held to have been domiciled in the State of Washington in 1924 and 1925 and it was proper for him and his wife to file separate returns, each reporting one-half of the community income.

John C. Hogan, Esq., for the petitioner.

L. A. Luce, Esq., for the respondent.

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ARUNDELL

">*861 For the years 1924 and 1925 the respondent determined deficiencies in the respective amounts of $94,612.48 and $52,469.15. In the petition filed several errors were alleged, but at the hearing all were abandoned except one, namely, that respondent erred in taxing all of the community income to the petitioner instead of taxing one-half ">*862 each to petitioner and his wife. By amended answer the respondent alleged that he erred in taxing as income of the wife $8,001.06, representing rentals from property in the State of Washington, and that said amount should be added to petitioner's income.

Since the submission of this case the Supreme Court has decided, in , that husband and wife who are citizens and residents of Washington may file separate returns, each reporting one-half of the community">*1782 income. That decision must govern the present case if petitioner and his wife were domiciled in the State of Washington, which is the only question left for us to decide.

FINDINGS OF FACT.

Petitioner went to Aberdeen, Wash., in 1891, when he was a boy thirteen years old. He attended the Aberdeen public schools and afterwards the Universities of Washington, Stanford, and Harvard. He inherited some property on the death of his father in 1896, but spent the proceeds of that in attending college.

Petitioner was married in 1902 at Seattle, his wife being at that time a resident of that city. After his marriage, petitioner acquired various business properties in Aberdeen and became interested in several business enterprises. In 1909 he acquired a one-fourth interest in and became manager and treasurer of the Aberdeen Lumber & Shingle Co. at Aberdeen. He also constructed a residence at Aberdeen, which he occupied until 1919, when he went to San Francisco, Calif., and established an export sales office for the Aberdeen Lumber & Shingle Co. For about two years the export business was handled by a partnership organized by the petitioner. The partnership proved an unprofitable">*1783 venture and was dissolved in 1921 since which time the petitioner has operated the export office himself. Upon going to San Francisco petitioner rented living quarters for himself and wife until August 28, 1925, when he purchased a residence in San Mateo County, Calif., which he gave and had deeded to his wife.

In 1922 he sold his Aberdeen residence to the assistant manager of the Aberdeen Lumber & Shingle Co., with the understanding that he and his wife would make their home there when in Aberdeen. The house at that time was old and had been enlarged several times and petitioner and his wife had in mind the construction of a new residence when they returned to Aberdeen.

Petitioner's duties as manager of the export business of the Aberdeen Lumber & Shingle Co. have required him to travel abroad considerably and he has also been abroad on trips not connected with his business. However, since opening the export office he has continued ">*863 to act as manager of the Aberdeen Lumber & Shingle Co. When in San Francisco he communicates with the company's office at Aberdeen by long distance telephone and telegraph at least five times a week. He maintains an office and some">*1784 of his books and records at Aberdeen. He spends about 25 per cent of his time at Aberdeen, going there five or six times a year and remaining for two or three weeks. Until 1924, when the purchaser of his former residence died, petitioner occupied quarters in that house without payment of rent. Since that time he has had a room at an Aberdeen hotel.

Petitioner's household furniture was stored in Aberdeen in the taxable years and is still stored there, and petitioner carries insurance on it. Petitioner continues to own and manage business property in Aberdeen which he acquired before going to San Francisco in 1919. He is a member of several clubs in both the States of Washington and California. In 1921 he borrowed $75,000 on a parcel of community real estate in Aberdeen and invested it in an oil venture in California. To secure the loan petitioner and his wife deeded the real estate to one Patterson and it was deeded back to the petitioner in 1924.

During the taxable years petitioner maintained bank accounts at both Aberdeen and San Francisco. His Aberdeen account was active and was carried in a bank in which he owned stock until the bank failed in 1927.

In the taxable">*1785 years, and prior and subsequent thereto, petitioner was a registered voter in Aberdeen. He has never intended to abandon his residence at Aberdeen, but, on the contrary, has always intended to return there.

For 1924 and 1925 petitioner and his wife filed separate returns and reported one-half of the community income as the income of each.

OPINION.

ARUNDELL: The facts above set out establish to our satisfaction that in 1924 and 1925 petitioner and his wife were residents of and had their domicile in the State of Washington. They are accordingly entitled to each report one-half of the community income. The funds invested in an oil venture in California, and from which it appears that income was received in the taxable years, were community funds and the interests of petitioner therein and in the income therefrom is governed by the law of the domicile. See . Respondent's claim for an increase in the deficiency on account of rentals from real estate in the State of Washington is denied. ">*1786

Decision will be entered under Rule 50.