Pentland v. Commissioner

Robert Pentland, Jr., Petitioner, v. Commissioner of Internal Revenue, Respondent Pentland v. Commissioner Docket No. 12925 United States Tax Court 11 T.C. 116; 1948 U.S. Tax Ct. LEXIS 117; July 30, 1948, Promulgated *117 Decision will be entered under Rule 50. Petitioner, domiciled in Florida, in April 1942 entered the military service of the United States. Early in 1943 he was transferred from his post of duty in Washington, D. C., to an air command located near Fort Worth, Texas. He established his family and otherwise pursued a domestic life in the latter city. Upon being discharged from active military duty in October 1944, petitioner claimed the right to be and was paid by the Federal Government the cost of his transportation back to Miami, Florida. Prior to and during his military service, the principal businesses in which petitioner engaged were located in the State of Florida. Held, where one is serving in the armed forces of the United States, his intention to take up a new residence must be established by clear and convincing evidence. The record does not thus indicate that petitioner had a bona fide intention to establish his legal domicile in the State of Texas. Consequently, the respondent properly determined that petitioner was not entitled to report his income for the taxable year 1943 on a community tax basis. Albert B. Bernstein, Esq., for the petitioner. Bernard D. Hathcock, Esq., for the respondent. Leech, Judge. LEECH *116 This proceeding involves a deficiency in income tax for the calendar year 1943 in the amount of $ 15,168.02. The sole issue is whether the respondent erred in determining that petitioner was not entitled to file his return for the taxable year on the community income basis. FINDINGS OF FACT. Petitioner is an individual. His income tax return for the year 1943 was filed with the collector of internal revenue at Dallas, Texas. In April 1942 petitioner, a resident of Miami, Florida, volunteered to enter the United States Army. Petitioner was commissioned as an officer and first assigned to Washington, D. C. In the early*119 part of 1943, petitioner's superiors determined to transfer him to one of the other air bases located throughout the United States. Petitioner was given the privilege of selecting the particular base to which to be transferred, and he chose the one located near Fort Worth, Texas. Petitioner arrived at the latter city about April 8, 1943. He promptly opened a checking account and later rented a safety vault at the Continental National Bank of Forth Worth. In May 1943 petitioner was joined in Fort Worth by his wife and daughter. Petitioner rented living quarters, consisting of three bedrooms, living room, dining room and bath. He employed one full time and one part time servant, *117 for whom he secured living quarters across the street. The daughter attended school in Fort Worth. Petitioner and his wife inspected several houses, with the thought of buying, but did not purchase. Petitioner borrowed $ 45,000 from the Continental National Bank of Fort Worth to repay outstanding bank loans in various parts of the country where he had business interests. He transferred his securities to the vault of the Continental National Bank of Fort Worth. Petitioner also purchased an*120 interest in some oil properties in Fort Worth. When he became qualified, he voted once or twice in elections held in Fort Worth. At the time petitioner entered the Army, he was a member of certain social clubs in Florida. He did not resign from these clubs, since membership fees were waived to those members serving in the military forces. During the time petitioner lived in Fort Worth he joined three social clubs, and he and his wife participated in the activities of those clubs. During this period charge accounts were also opened with several Fort Worth merchants. When petitioner entered the Army he was a certified public accountant and senior member of the firm of Pentland, Purvis, Keller & Milton, of Miami, Florida. He was also chairman of the board of directors of Margaret Ann Grocery Stores, a Florida corporation. He owned approximately 42 or 43 per cent of the capital stock of that corporation. Margaret Ann Grocery Stores continued to pay salaries to its officers who were active in the military service of the United States. The accounting firm of which petitioner was the senior member likewise distributed to him, while on active military duty, a percentage of the firm's*121 earnings, although in a reduced amount. While on active duty in Fort Worth petitioner, through conferences and by correspondence, was able to give to these two businesses the benefit of his advice and guidance. While on active military duty in Texas, petitioner suffered a recurrence of an old eye ailment, and received a medical discharge from the Army in October 1944. In November 1944 the household goods and personal effects of petitioner and his wife were placed in storage, and they left to go to Miami to spend the Christmas season with petitioner's mother. Petitioner made claim for and was paid by the United States Government his travel expenses from Fort Worth back to Miami on the ground that he had a right on his discharge "to go back where you came from." While in Miami petitioner was influenced by his business associates to remain in Florida and to take up his positions with the various businesses with which he was associated when he entered the military service. In February 1945 petitioner purchased a home in Miami, Florida, and has since remained there. Sometime in July 1943, the exact date not appearing, petitioner addressed *118 a letter to the tax assessor of Dade*122 County, Miami, Florida, containing in part the following: Van I am trying to buy a home in Ft. Worth. Rents are so high that I can buy one in three or four years instead of paying rent $ 2,500 to $ 3,000. a year for a place to live. I figure I will go to foreign [sic] service sometime and as you know Mother owns the home in Coral Gables so I do not own one now, except North Carolina and I believe I will sell that. I am going to make my legal residence in Texas and will file my intangible tax returns here, also income tax returns. The Intangible tax here is a humdinger, much higher than Florida. So will file my Intangible Return and Margaret Ann,,s. [sic] [Margaret Ann apparently refers to the wife of petitioner.] Under date of July 21, 1943, he received a reply to such letter from the acting county tax assessor which contains the following pertinent paragraph: I certainly am sorry to see you giving up your residence here and I am marking our records accordingly and am returning yours and Margaret Ann's intangible and personal property tax returns. * * * No testimony was offered as to whether petitioner filed an intangible property tax return in Texas. Petitioner was a*123 party defendant in a suit brought in the District Court for the Southern District of Florida. Substituted service of the summons was attempted to be made on him by leaving a copy of the summons with his mother at her home in Coral Gables, Florida. Attorneys for petitioner moved to vacate the service on the ground petitioner was not a resident of the State of Florida. In support of the motion, petitioner filed an affidavit, sworn to the 20th day of May 1943, in which, among other facts, he stated: * * * that he [petitioner] was at one time a resident of the State of Florida, his last place of abode and residence being at 817 Harrison Street, Hollywood, Florida, but that at the time of his entry into the military service of the United States of America his domicile, residence and usual place of abode was Blowing Rock, North Carolina, at which place he owned his home and lived therein; that, subsequent to his entry into the armed forces of the United States of America, he has made Fort Worth, Texas, his home, domicile and legal residence; that on the 8th day of April, A. D. 1943, he was not in the City of Coral Gables, nor has he subsequently been there. Petitioner was not legally*124 domiciled in the State of Texas during the taxable year 1943. OPINION. The determination of the only issue submitted rests upon whether petitioner was domiciled in Texas during the taxable year 1943. If the answer is in the affirmative, then petitioner was entitled to report his income on a community tax basis. ; . The question *119 must be determined by the application of rules established for ascertaining one's domicile. In , the Supreme Court said: "A domicile once acquired is presumed to continue until it is shown to have been changed. * * * Until the new one is acquired, the old one remains. * * *" In , the rule is amplified in the following language: [Quoting from "Conflict of Laws" (Story) 7th Ed., § 46, p. 41.] "If a person has actually removed to another place, with an intention of remaining there for an indefinite time, and as a place of fixed present domicile, it is to be deemed his place *125 of domicile, notwithstanding he may entertain a floating intention to return at some future period." [Quoting from .] "The requisite animus is the present intention of permanent or indefinite residence in a given place or country, or, negatively expressed, the absence of any present intention of not residing there permanently or indefinitely." Petitioner was a member of the armed forces of the United States. His domicile at the time he volunteered for military duty in April 1942 was in the State of Florida, although the record discloses a discrepancy in this respect. In his affidavit sworn to on May 20, 1943, in support of his motion to quash the substituted service of a summons, he stated that his legal residence and domicile were at Blowing Rock, North Carolina. At the hearing had herein, he testified that Blowing Rock was a summer home, which was occupied by his wife and daughter while he was on duty in Washington, D. C., so as to be near to him. In his petition filed herein petitioner alleges under oath that at the time he entered the military forces he was a resident of Florida. Upon his discharge from*126 military duty in October 1944, petitioner received Government transportation back to Florida under a claim that his residence was in Florida. Furthermore, the principal businesses and social interests were in Florida. For the purposes of determining the question presented, we conclude that petitioner was a resident of Florida at the time of his entry into the military service of the United States. In Corpus Juris Secundum, vol. 28, "Domicile," § 12, p. 28, it is said: The domicile of a soldier or sailor in the military or naval service of his country generally remains unchanged, domicile being neither gained nor lost by being temporarily stationed in the line of duty at a particular place, even for a period of years, and even though he establishes his family where he is stationed. A new domicile may, however, be acquired if both the fact and the intent concur. Upon petitioner's entry into the military service he was stationed at Washington, D. C. It was determined to distribute a part of the *120 air command stationed in Washington, D. C., to various air bases located throughout the United States. Petitioner was given the privilege of selecting the air base to which he preferred*127 to be transferred. He expressed a preference to go to the State of Texas, and was transferred to the base near Fort Worth. In , the Texas court was required to determine the legal residence of a soldier. It there appears that the soldier at the time of his enlistment was a resident of Illinois. He was given a choice of going to Biloxi, Mississippi, or Sheppard Field, Texas. He chose the latter. In the course of its opinion the court laid down some rules relative to the residence of persons in the military service which we find pertinent here. The court there said: A review of the law pertaining to the residence of a soldier who is sent to Texas from another state under military orders properly begins with the case of . It is there held that the words "inhabitant," "citizen" and "resident" mean substantially the same thing. In order to be an inhabitant one must acquire a domicile or home, and it must have the stamp of permanency on it. There must not only be an intention to establish a permanent *128 domicile or home, but the intention must be accompanied by some act done in the execution of the intent. A soldier can abandon his domicile of origin and select another, yet, in order to show a new domicile during the term of enlistment, there must be the clearest and most unequivocal proof. * * * * * * * [Quoting from ] "Ordinarily it is a presumption of law that where a person actually lives is his domicile, such presumption of course being rebuttable; but no such presumption could arise in the case of a soldier in active service, who has no choice of domicile, but must ordinarily cling to his domicile of origin. Ordinarily, an act of removal to a certain location, coupled with the intent to make a permanent residence there, might be sufficient to fix a domicile, but that is because the removal is voluntarily made, which could not occur in the case of a soldier in active service." To the same effect, see . Applying the established principles of law as to domicile to the essentially undisputed facts here, *129 we find a situation which may be briefly summarized as follows: Petitioner, while serving in the military forces of the United States, was detailed for duty at a military air base near Fort Worth, Texas; he rented a house and established his family in the latter city; he opened a checking account, rented a safe deposit vault, where he kept his securities, established credit accounts with local merchants, joined social clubs, made some investments in oil properties, and voted at least once, in an election in 1944 when he became qualified to do so. All of such facts, with the exception of voting, evidence a conduct both natural and consistent with temporary residence. The more so, since petitioner was financially *121 well off and enjoyed a large annual income. Of course, the self-serving declarations of petitioner that he intended to change his domicile to Forth Worth are to be weighed in the light of all the circumstances. Petitioner testified that it was his intention to remain in Fort Worth indefinitely. Petitioner's presence in the State of Texas was not voluntary, but was dependent upon the will of his superiors. His stay there was indefinite, since many incalculable*130 factors were involved, i. e., the duration of the war, a possible transfer to another air command, or to foreign service, which petitioner contemplated as shown in his letter to the tax assessor in Florida, or his discharge for medical reasons, which, in fact, did occur in October 1944. Important here, we think, is the fact that the major source of petitioner's income in 1943 was from his principal business interests in Florida, to wit, his share of the profits from the accounting firm of which he was senior partner, and his salary as chairman of the board of directors of the Margaret Ann Grocery Stores. The evidence establishes that these payments were not merely made because of the actual services rendered by petitioner, which were substantially reduced by reason of his physical absence, but because of the fact that petitioner was serving in the military forces. It is common knowledge that it was not unusual for business concerns to make such payments to personnel whose absence was due to military service. We think it would be unnatural, however, to assume that such payments would have been continued if petitioner had definitely decided to remain permanently in Fort Worth, Texas. *131 There is no evidence that he had ever informed his business associates that he had established or decided to establish a permanent home in Fort Worth, Texas. Petitioner belonged to several social clubs in Florida. He did not resign his membership. The reason given was that membership fees were waived in the case of members who were in the military service. Even so, we think that, if petitioner intended to abandon his established domicile in Florida, the natural impulse would have been to so inform his social associates. Other evidence which we think has an important bearing on petitioner's intention is the fact that within two weeks of his discharge from the military service he placed his household goods and personal effects in storage and left for Florida; he claimed and received from the Government the expense of his transportation back to Florida; and, having returned to Florida, he remained there. Earlier in this opinion we referred to the fact that petitioner, on at least one occasion, voted in the election while living in Fort Worth. Although "voting" is important evidence on the issue of domicile, it *122 is not decisive if all the circumstances lead to an opposite*132 conclusion. . The intention to establish a new domicile must be bona fide and not merely claimed. Weighing all the circumstances, we are convinced that petitioner never, in fact or in law, abandoned his legal domicile in Florida or established a new one in Texas. We, therefore, conclude that the respondent's determination that, in the taxable year 1943, petitioner was not entitled to report his income on a community tax basis must be sustained. Certain concessions having been made by the respondent at the hearing, Decision will be entered under Rule 50.