Barr v. Commissioner

Charles Edward Barr, Jr., Petitioner, v. Commissioner of Internal Revenue, Respondent Barr v. Commissioner Docket No. 9973 United States Tax Court 10 T.C. 1288; 1948 U.S. Tax Ct. LEXIS 138; June 30, 1948, Promulgated *138 Decision will be entered for the respondent. Marriage of petitioner in 1939 having been void and ultimately annulled in 1945, by reason of existing valid marriage of his supposed wife, held, petitioner is not entitled to return any part of his 1943 income as California community property. Robert M. Himrod, Esq., for the petitioner. A. J. Hurley, Esq., for the respondent. Opper, Judge. OPPER *1288 This proceeding was brought for a redetermination of a deficiency of $ 803.36 in petitioner's income tax for 1943. By amended petition petitioner claims an overpayment of $ 884.62. A controlling issue of the case at bar relating to petitioner's foreign residence is stipulated to be substantially identical with the case of , and the parties have agreed that the final disposition of that issue on appeal will be controlling here. Petitioner has two alternative contentions which he also presses. He urges that his income for the year in question was community income, notwithstanding the annulment of his 1939 marriage to Barbara Lee Roberts. He further urges that the moneys used by her created a debt to him which*139 became worthless in the taxable year, thus giving rise to a deduction from his gross income. FINDINGS OF FACT. Petitioner, an individual residing in Los Angeles, California, filed his income tax return for the calendar year 1943 with the collector *1289 of internal revenue for the sixth district of California. The return was filed upon a community property basis and disclosed gross earnings of $ 5,509.82 from Lockheed Overseas Corporation, of which amount petitioner reported one-half, or $ 2,754.91, as his community share. On February 16, 1939, petitioner purported to marry Barbara Lee Roberts of Santa Anna, California, who told him that she divorced her previous husband in Nevada in 1931, and that he died in 1935. At the time of the purported marriage and until shortly before the California court granted him an annulment, petitioner believed that Barbara was his lawful wife. Petitioner and Barbara cohabited as man and wife until some time in May 1942, when petitioner entered the employ of Lockheed Overseas Corporation and left for duty in England and Ireland. He remained employed abroad until some time in the month of February 1944. Prior to petitioner's departure from the*140 United States in 1942, it was arranged between him and Lockheed that Lockheed would pay petitioner 20 per cent of his gross pay and deposit the balance to the joint account of petitioner and Barbara in the Bank of America at Slauson and Vermont Avenues, Los Angeles, California. Both petitioner and Barbara had access by check to this account, and petitioner purposely made this arrangement so that the money deposited in his absence would be available for her support. During the taxable year petitioner received $ 5,509.82 from Lockheed, $ 1,040 of which was paid to him overseas, and the balance was deposited to the joint account at the Bank of America. Besides the 20 per cent of his pay which petitioner received overseas, he drew checks upon the joint account in the aggregate amount of $ 2,884.85. In addition, during petitioner's absence he requested Barbara from time to time to purchase and send to him various items of clothing and apparel. She sent him whatever he wrote for, expending at least $ 366 for this purpose, making a total withdrawn by him or at his instructions of $ 3,250.85. The joint account, which was entitled "Charles E. Barr, Jr., or Barbara Lee, Jr.," disclosed total*141 deposits during 1943 of $ 4,901.25; total withdrawals of $ 4,010.36; an opening balance for 1943 of $ 326.98; and a closing balance of $ 1,086.62. Petitioner returned to California in February 1944, and shortly thereafter Barbara turned over to him the sum of $ 900. Upon his return domestic difficulties arose, Barbara left their residence, and petitioner filed a divorce action in the spring of 1944, in which he also sought an accounting. Petitioner dropped this proceeding and they again lived together. He later brought another *1290 action for divorce in 1944. While the divorce proceeding was pending, petitioner located and phoned Claude Roberts of San Gabriel, the brother of Barbara's husband, Fain Roberts, and was informed that Fain Roberts was alive. He also ascertained from Las Vegas, Nevada, court records that Barbara had sued Fain for a divorce, which he had contested, and in which no further proceedings were had. On the basis of this information, petitioner's attorney advised him to drop the divorce suit and action for accounting, and to seek an annulment. The attorney had been told by Barbara's attorney that Barbara had no money, and stated to petitioner that he *142 believed this to be so. Suit for an annulment was filed, and on July 18, 1945, the Superior Court of California, on the basis of information above recited, annulled the marriage and declared it void on the grounds that Barbara, at the time of the marriage, was lawfully married to Fain Roberts. Respondent determined that petitioner had the tax status of a single man during 1943, and that his earnings were his separate income. The full amount of petitioner's earnings for 1943 constituted his income for that year. In 1943 no debt owing to petitioner from Barbara became worthless. OPINION. Apart from the issue concededly controlled by Michael Downs, and which must accordingly now 1 be decided in favor of respondent, this proceeding presents the unusual factual background of a bigamous marriage innocently contracted by petitioner. Although he was subsequently granted an annulment, this had not yet occurred in the year in controversy, and the issues are whether petitioner is entitled to treat his salary as community income and to return and pay tax upon the half interest only; and whether in the alternative he is entitled to deduct as a bad debt sums assertedly acquired by the putative*143 wife out of their joint bank account. Even the cases relied upon by petitioner do not extend to such a situation as this. The most that they hold is that the innocent party to an invalid marriage may insist upon an equitable division of property as though the marital community had in fact existed, ; ; ; ; or in exceptional situations that the bigamous spouse may similarly demand a share of the marital property, provided she innocently assumed in good faith at the time that she was free to contract another marriage. ; .*144 *1291 Even if that principle be accepted, the record is devoid of any showing that petitioner's putative wife entered the marriage in good faith, or thought that she was free to do so. See ; ; ; . On the contrary, throughout his brief petitioner refers to her "fraudulent misrepresentations," a phrase which must presuppose her guilty knowledge. It follows that the factual basis for the application even of the authorities relied on by petitioner is lacking, and that we are hence under no necessity to consider the legal question as to whether these authorities would otherwise be applicable to the tax liability of a California taxpayer. We conclude that petitioner has not shown any ground for treating his salary as community income. As to the bad debt contention, according to petitioner's bank statement, the total withdrawals from the joint account during 1943, which is the year in controversy, were $ 4,010. As our findings show, *145 of this amount $ 3,250.85 was withdrawn by petitioner himself or for his account. The balance of $ 759 almost exactly equals the excess of the closing over the opening balance, and is less than the $ 900 which he testified he recovered in the following year. It is accordingly impossible to find from this record that petitioner did not eventually receive all of these funds due him. There could thus be no debt, at least in 1943, for the worthlessness of which a deduction would be permissible. We find no error in respondent's determination. Decision will be entered for the respondent. Footnotes 1. ; affd. (C. C. A., 9th Cir.), ; certiorari denied, .↩