Graske v. Commissioner

Theodore Wesley Graske, Petitioner, v. Commissioner of Internal Revenue, Respondent Graske v. Commissioner Docket No. 38702 United States Tax Court 20 T.C. 418; 1953 U.S. Tax Ct. LEXIS 153; May 21, 1953, Promulgated *153 Decision will be entered for the respondent. Where wife has gross income, husband filing separate return cannot claim exemption of $ 600 for wife and his optional standard deduction cannot exceed $ 500. Theodore Wesley Graske, pro se. John James O'Toole, Esq., for the respondent. Arundell, Judge. ARUNDELL *418 The respondent has determined that a deficiency in the amount of $ 132.16 exists in petitioner's income tax for the taxable year 1950. The two issues presented are as follows: (1) Was respondent correct in disallowing an exemption credit of $ 600 against net income for petitioner's spouse when petitioner filed a separate return and his spouse had gross income*154 during the taxable year in question? (2) Was respondent correct in disallowing that portion of the standard deduction in excess of $ 500? FINDINGS OF FACT. Theodore Wesley Graske, hereinafter referred to as petitioner, filed his income tax return for the calendar year 1950 with the collector of internal revenue for the third district of New York. Throughout the period here involved petitioner was the husband of Lee M. Graske. In the calendar year 1950 Lee M. Graske's total income amounted to $ 478.80. She did not claim her own or any other exemption on her withholding exemption certificate filed with her employer in 1950. On or about January 21, 1951, she mailed a form 1040 to the collector for the third district of New York, in which no exemptions or deductions were claimed. That form was intended as a claim for refund *419 rather than as a formal return. In due course Lee M. Graske received a check refunding $ 85.60, the total amount withheld from her earnings. Petitioner's return for 1950 did not include the income earned by Lee M. Graske, was signed only by petitioner, and made no use of the split-income provisions of the Internal Revenue Code. Petitioner did not intend*155 it as a joint return. In computing his tax, he used that section of the return which should be used "ONLY by a single person or a married person making a separate return." The amount of $ 585.71 was claimed under the standard deduction provisions, section 23 (aa) (1) (A), as 10 per cent of adjusted gross income. The return filed by petitioner was a separate return as contemplated by the Internal Revenue Code. He was not entitled to an exemption credit for his wife and was not entitled to an optional standard deduction in excess of $ 500. OPINION. The issues in this case involve the exemptions and deductions which may be taken by a married taxpayer filing a separate income tax return. Respondent has held that petitioner could not claim an exemption credit for his wife, nor could he take an optional standard deduction in excess of $ 500. Petitioner's contentions are based on two misconceptions of the meaning of the pertinent provisions of the Internal Revenue Code. His first error lies in his insistence that his form 1040 for 1950 was neither a separate return nor a joint return, but rather an individual return. As we understand that term, an individual return is one on which personal*156 income is reported, as distinguished from a corporate or other return. An individual return may be the joint return of a married couple, the separate return of a married person, or the separate return of a single person. It is clear from the facts set forth above that petitioner was married and that no joint return was intended or filed. There can be no question, then, that the form 1040 filed by petitioner for the calendar year 1950 was a separate return filed by a married person. Whether the form 1040 filed by Lee M. Graske was a return or a mere claim for refund has no bearing on the nature of petitioner's return, although he apparently attached some importance to that question. Section 23 (aa) (1) (A) 1 of the Internal *420 Revenue Code expressly provides that in the case of a married individual with adjusted gross income of $ 5,000 or more filing a separate return, the standard deduction shall be $ 500. Therefore, respondent was entirely correct in disallowing that portion of the standard deduction in excess of $ 500. *157 Petitioner's second error is his interpretation of sections 35 2 and 1622 (h) (1) (D) 3*158 as authorization for an exemption credit of $ 600 for his spouse. Section 1622 (h) serves only to guide employers in determining the amounts to be withheld from an employee's wages. It is designed to cause the withholding from wages of the approximate amount of taxes for which the average employee will ultimately be liable. It does not purport to determine the exemptions which a taxpayer may take against net income in his return, that being the function of section 25. 4 Section 35 does not help petitioner. It provides that "The amount deducted and withheld * * * shall be allowed as a credit * * * against the tax imposed * * *." Petitioner does not contend that the full amount withheld was not allowed as a credit. It follows that respondent properly disallowed the claimed exemption credit for petitioner's spouse. Decision will be entered for the respondent. Footnotes 1. SEC. 23. DEDUCTIONS FROM GROSS INCOME. (aa) Optional Standard Deduction for Individuals. -- (1) Allowance. -- In the case of an individual, at his election a standard deduction as follows: (A) Adjusted Gross Income $ 5,000 or More. -- If his adjusted gross income is $ 5,000 or more, the standard deduction shall be $ 1,000 or an amount equal to 10 per centum of the adjusted gross income, whichever is the lesser, except that in the case of a separate return by a married individual, the standard deduction shall be $ 500.↩ 2. SEC. 35. CREDIT FOR TAX WITHHELD ON WAGES. The amount deducted and withheld as tax * * * during any calendar year upon the wages of any individual shall be allowed as a credit to the recipient of the income against the tax imposed by this chapter for the taxable year beginning in such calendar year. * * *↩ 3. SEC. 1622. INCOME TAX COLLECTED AT SOURCE. (h) Withholding Exemptions. -- (1) In General. -- An employee receiving wages shall on any day be entitled to the following withholding exemptions: * * * * (D) If the employee is married, any exemption to which his spouse is entitled, * * * but only if such spouse does not have in effect a withholding exemption certificate claiming such exemption.↩ 4. SEC. 25. CREDITS OF INDIVIDUAL AGAINST NET INCOME. * * * * (b) Credits for Both Normal Tax and Surtax. -- (1) Credits. -- There shall be allowed for the purposes of both the normal tax and the surtax, the following credits against net income: (A) An exemption of $ 600 for the taxpayer; and an additional exemption of $ 600 for the spouse of the taxpayer if a separate return is made by the taxpayer, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer;↩