McCann v. Commissioner

Russell Sanners McCann, Petitioner, v. Commissioner of Internal Revenue, Respondent McCann v. Commissioner Docket Nos. 16972, 16973 United States Tax Court 12 T.C. 239; 1949 U.S. Tax Ct. LEXIS 262; February 28, 1949, Promulgated *262 Decision will be entered for the respondent. Credit for Dependents. -- A taxpayer filing separate rather than joint returns in 1944 and 1945 is not entitled to dependency credits in those years under section 25 (b) for the support of his wife's niece, whom he and his wife had not legally adopted. T. J. Griffin, Esq., for the petitioner. Edward L. Potter, Esq., for the respondent. Murdock, Judge. MURDOCK *239 The Commissioner determined deficiencies in income tax of $ 100 for 1944 and $ 121 for 1945. The only issue for decision is whether the petitioner is entitled to a credit for a dependent. FINDINGS OF FACT. The*263 petitioner filed a separate individual income tax return for each of the years 1944 and 1945 with the collector of internal revenue for the district of Tennessee. His wife had no income and was not entitled to any deduction for either year. She did not join in the returns filed by the petitioner. There is no evidence that she authorized him to file a return, joint or separate, upon her behalf for either year. *240 The petitioner listed on his returns for 1944 and 1945, under exemptions, the name of Carolyn A. Hoye, described under "Relationship" as "Ward." He did that with his wife's knowledge and consent. Carolyn A. Hoye is the daughter of a sister of the petitioner's wife. She is no blood relation to the petitioner. The sister died and later, in 1940, her husband, the father of Carolyn, died. The petitioner and his wife then went to Washington County, Oklahoma, where Carolyn was. The judge of the Juvenile Division of the County Court of Washington County, Oklahoma, entered the following order in the matter of Carolyn Ann Hoye, a dependent child: Now on this 21 day of March, 1940, the above cause came on for hearing upon the petition of Caroline M. Corley, Child Welfare*264 Worker, a reputable person and a resident of said County, to have the Juvenile, Carolyn Ann Hoye, a female child under the age of sixteen years, to-wit, of the age of eight years, adjudged a dependent child and dealt with according to law. There appearing in Court the said child, also the petitioner, Caroline M. Corley, Russell S. McCann and Grace McCann, uncle and maternal aunt of said child and the Court being well and fully advised in the premises finds that Homer Hoye, the father of said child departed this life at Bartlesville, Oklahoma and the mother of said child, Pearl Crosby Hoye, died June 5, 1934, at Heber Springs, Arkansas and that the said child has no relatives, other than the said Mr. and Mrs. Russell S. McCann who are willing and able to give her the proper care and education. The Court further finds that it would be to the best interest of said child that she be given into the care and custody of Russell S. McCann and Grace McCann, to the end that they may adopt her. It Is Therefore by the Court, Ordered, Adjudged and Decreed, that the said Carolyn Ann Hoye be, and she is hereby adjudged a dependent child and made a ward of this Court. It Is Further Ordered, That*265 the care, custody and control of said child, be placed with Russell S. McCann and Grace McCann, of Memphis, Tennessee, to the end that they may adopt her as their own. Carolyn was never legally adopted by the petitioner or his wife, but she has lived with them since March 21, 1940, and the petitioner has supplied all of her support. Carolyn had no income of her own at any time material hereto. The Commissioner, in determining the deficiencies, held that the petitioner was not entitled to credit for a dependent on account of Carolyn, since the relationship was between the child and the wife and no joint return had been filed. OPINION. The credit for a dependent was allowed prior to 1944 for each person under 18 years of age dependent upon and receiving his chief support from the taxpayer. That was changed for the years 1944 and 1945. Section 25 (b) (1) (C), as applicable to the years 1944 and 1945, allowed a surtax exemption of $ 500 for an unmarried *241 dependent whose gross income was less than $ 500. Dependent was defined in section 25 (b) (3) to include a daughter of a sister of a taxpayer, over half of whose support was received from the taxpayer. The petitioner in *266 the present case had been receiving credits for Carolyn as a dependent on his separate returns filed for years prior to 1944. If he had filed joint returns for 1944 and 1945 he could still have obtained the credit because section 29.25-3 (b) of Regulations 111 provided that where a joint return was filed it was sufficient, for the purpose of an exemption based upon a dependent, that the prescribed relationship existed with respect to either spouse, regardless of which spouse furnished the support. The petitioner could just as well have filed joint returns for 1944 and 1945, but he did not do so. Section 51 (b) permitted a husband and wife to make a "single return jointly" even though one spouse had no income or deductions, but it made the tax liability on such a return joint and several. Section 29.51-1 (b) of Regulations 111 provides that a joint return must be signed by both spouses or by one spouse individually and also as agent for the other, in which case authorization for the agency must accompany the return. Similar regulations had been in effect since 1934. The evidence shows and it has been found as a fact that the return filed by this petitioner was a separate return. *267 It was not intended to be a joint return. The evidence fails to show any intention on the part of the wife to have the petitioner file a joint return upon her behalf or that the petitioner had any authority whatsoever to file a return on behalf of his wife. The Commissioner did not err in holding that the credit can not be allowed since the return was not a joint return, and Carolyn was a daughter of a sister of the wife, but not related by blood to the petitioner. It also provided in section 25 (b) (3) that "a legally adopted child of a person shall be considered a child of such person by blood" for the purpose of determining whether any of the relationships mentioned in defining a dependent exist. The definition of a dependent includes a daughter of the taxpayer over half of whose support was received from the taxpayer. The petitioner contends that Carolyn was "legally adopted" within the meaning of those provisions. It is interesting to note that the counsel for the petitioner, in making his opening statement, said "Admittedly, the dependent for whom this exemption was claimed was not legally adopted, but we believe we can establish to the satisfaction of the Court that the*268 care, custody and control of this child was held by the petitioner under such circumstances as brings him within the purview of the Internal Revenue Code." That admission was not inadvertently made, since the evidence shows *242 that the petitioner never legally adopted Carolyn. The order set forth in the findings of fact shows that he and his wife were awarded her care and custody, "to the end that they may adopt her." The evidence fails to show that they ever took any steps to adopt her, and a fair conclusion from all of the evidence is that they never took any such steps and never legally adopted her. The statute means what it says, "legally adopted." The limitations which prevent this petitioner from obtaining this credit were placed in the law by Congress. They can not be obviated by this Court in order to aid this petitioner, no matter how simple it would have been for him to obtain the credit by having his wife join him in a return. Desio Barbetti, 9 T. C. 1097. Decision will be entered for the respondent.