Whitmore v. Commissioner

Paul Gordon Whitmore and Mary Clarissa Whitmore, Petitioners, v. Commissioner of Internal Revenue, Respondent. Paul Gordon Whitmore, Petitioner, v. Commissioner of Internal Revenue, Respondent Whitmore v. Commissioner Docket Nos. 50358, 50359 United States Tax Court 25 T.C. 293; 1955 U.S. Tax Ct. LEXIS 44; November 25, 1955, Filed *44 Decisions will be entered for the petitioners. Petitioner held, on the facts, to have been domiciled in Arizona during all the years in controversy; held, further, returns for certain years are to be treated as separate returns of the income of petitioner and his wife, they being clearly intended as such, notwithstanding they were combined on a single return form. Nicholas Callan, Esq., for the petitioners. James F. Hoge, Jr., Esq., for the respondent. Opper, Judge. OPPER *293 In these consolidated proceedings respondent has determined deficiencies, as follows: Petitioners Year Tax Deficiency Paul Gordon and Mary Clarissa Whitmore — 1943 — Income and Victory $ 379.41 Paul Gordon and Mary Clarissa Whitmore — 1944 — Income 385.57 Paul Gordon and Mary Clarissa Whitmore — 1945 — Income 307.85 Paul Gordon Whitmore — 1946 — Income 534.71 Paul Gordon Whitmore — 1947 — Income 536.95 *45 The issues are whether Paul Gordon Whitmore was domiciled during the years in question in Arizona, a community property State, and even so, whether for certain years, by reason of the form of the returns, he is entitled to report his income on a community property basis. *294 FINDINGS OF FACT. Paul Gordon Whitmore, hereafter referred to as petitioner, and Mary Clarissa Whitmore filed their individual returns on a single form for each year from 1943 through 1945 with the collector of internal revenue for the second district of New York. Petitioner filed individual returns with that collector for 1946 and 1947. All these returns were computed on the community property basis. He filed individual returns in Arizona for 1939 and 1940, and individual returns for 1941 and 1942 in New York. Petitioner was born in Arizona in 1904. His parents resided in Tucson, Arizona, from then until their deaths in 1940. In 1923, petitioner graduated, at the age of 19, from the University of Arizona, and he then obtained employment with Westinghouse Electric and Manufacturing Company at East Pittsburgh, Pennsylvania. From this position he hoped to gain experience in the engineering profession. *46 In March 1924, he changed his employment to the distribution engineering department of West Penn Power Company, at Pittsburgh. He remained with that employer until 1929, working at various tasks. While employed in the Pittsburgh area, petitioner sought other employment, both local and in other localities, including Detroit, New York, and San Juan, Puerto Rico. He referred to classified advertising and to an employment agency. Prior to his marriage in West Virginia in 1925, petitioner resided in Y. M. C. A.'s. Thereafter, he and his wife resided in rented apartments in East Liberty, Wilkinsburg, and Carrick, Pennsylvania, and a rented house in Carrick. He had an account with a Pittsburgh bank from 1924 until 1929. During the years he resided in Pennsylvania, he never returned to Arizona because he felt he could not afford to. He affiliated with no clubs or churches in Pennsylvania, nor did he vote or participate in any political activity. He owned no property there. Petitioner answered a blind advertisement in 1929, and as a result he secured employment with Electric Bond and Share Company. After 2 weeks at its New York headquarters his new employer assigned him to Mexico, *47 where he remained on assignments for 9 years, until 1938. His wife and two sons lived with him until 1936, when they returned to the United States for educational reasons. They returned to Tucson where they lived with petitioner's parents and in rented houses. Petitioner visited his family during his 2-week vacation, the only time available to him for that purpose. Petitioner left Mexico because he thought he could improve his position. Petitioner returned to New York where he stayed in a hotel for 3 or 4 months, until about February 1939. Beginning at this time he *295 was employed by Ebasco Services, Inc., a service subsidiary of Electric Bond and Share Company, also with headquarters in New York City. In 1939, petitioner worked 4 to 6 months in Mississippi, where he had been assigned by Ebasco to a job with Mississippi Power and Light Company. He was assigned for the remainder of 1939 and the early part of 1940 to the Louisiana Power and Light Company in New Orleans, Louisiana. From there he proceeded to similar work in Arkansas with the Arkansas Power and Light Company, another assignment by Ebasco. During 1940 and 1941, he was occupied with jobs in these three States, *48 the length of each stay dependent on the specific work assigned. When a job was completed he would notify Ebasco, which would find another task for him. Throughout these years, his wife and children lived in Tucson, except for summer vacations spent with him. In 1941 and years following, petitioner's children attended Castle Heights Military Academy in Lebanon, Tennessee. The children left Tucson after petitioner's parents died and they were placed in this school because its proximity to petitioner's work allowed more frequent visits. From 1942 through 1947, petitioner traveled through the same three States performing various jobs for Ebasco clients, in a manner similar to that of the preceding years. The only exceptions were two assignments in 1945, each of several weeks' duration, in Arizona with power companies. He did not visit Arizona on any other occasion. His wife did not then reside in Arizona. Petitioner lived in hotels while in Arkansas, Louisiana, and Mississippi and never voted, owned property, nor participated in civic life in any of those States. He was required to and did register for the draft in Little Rock, Arkansas. During part of 1943 and 1944, petitioner's*49 wife lived in a rented house and a rooming house in Lebanon, Tennessee. She visited her parents in Florida for a short time. For most of 1945 the family lived in New Orleans, but later moved to Jackson, Mississippi, where they lived until at least 1951. During the years in question, petitioner had no banking connections in Arizona, although a Tucson bank had a trust account for his sons. He owned no real property except his parents' home which was inherited in 1940 and disposed of in 1941. He owned some furnishings from that home which were stored in Tucson. From his departure in 1923 through 1949, he had never voted or participated in any political activity in Arizona, or filed any Arizona State income tax returns, or belonged to any clubs there. Petitioner has resided in New York City at least since 1952. He went there in 1950 in connection with a 2-year undertaking in Greece. In 1952, he was again assigned to work in Arkansas, Louisiana, and *296 Mississippi. He divorced his wife in 1952 and remarried. He has revealed no plans to resign his job or to change his life's work. He was a nonresident member of the Downtown Athletic Club of New York City from 1946 or 1947*50 until 1951, when he became a resident member. He became a member of the American Institute of Electric Engineers and of its New York section in 1940, but he never attended a meeting of the local chapter to which members are assigned automatically. He voted in New York in the 1952 and 1954 elections. He filed New York State income tax returns for years beginning with 1952. He has considered himself a resident of New York since 1952. Most of the income reported on the returns in question came from Ebasco Services, Inc., and was earned by petitioner. In the 1943 return, "On Community Prop. State Basis" was written on line 9 of the Computation of Income and Victory Tax following the printed words "Surtax on amount in line 4." The 1944 return had "JOINT RETURN -- COMMUNITY PROPERTY STATE" typed at the top of the front page over the names of petitioner and his wife. An attached schedule referred to the propriety of a deduction when reporting on the community property basis. Half of the total income reported in item 5 on the front page of the 1945 return was allocated to each spouse under the written caption "community property." Respondent determined that petitioner was not domiciled*51 in Arizona during any of these years, and that all income is taxable only to petitioner. Petitioner and his wife were domiciled in Arizona from 1943 through 1947. In their returns for 1943 through 1945, petitioners intended to report their income on the community property basis. OPINION. I. The parties are in virtual agreement as to the legal principles to be applied. They differ, of course, as to the factual conclusion. Respondent contends that petitioner was domiciled either in Pennsylvania or in New York during the years in issue and that consequently he may not avail himself of the community property provisions of the law of Arizona, which he claims as his domicile. There seems to us little doubt that petitioner never acquired a New York domicile until after the period with which we are concerned. He visited New York first for a 2-week period during which he was being interviewed for new employment, and stayed at a hotel. His periods of physical presence in New York thereafter were sparse and short; *297 he became a "nonresident" member of a New York club; and we find nothing to indicate even residence, much less domicile in that State. With respect to Pennsylvania, *52 the evidence is much less conclusive. It may be that prior to 1929 petitioner might have been considered to have been domiciled in that State. But we find it unnecessary to decide that question. On the evidence petitioner seems to us to have reacquired a domicile in Arizona in any event. where there is any doubt on a domicile, the domicile of origin always reverts. * * * 1 In re Norton, Surrogate's Court, New York County, 96 Misc. 152, 159 N. Y. Supp. 619, 622, affd. 162 N. Y. Supp. 1133. See also Johnson v. Harvey, 261 Ky. 522, 88 S. W. 2d 42; Petition of Oganesoff, (S. D., Cal.) 20 F. 2d 978; 28 C. J. S. 33. *53 Petitioner's wife and children returned to Arizona in 1936 and remained there until 1940. Petitioner's business required traveling from place to place, and the only periods in which he was free to choose his place of sojourn were for his vacations. These he spent with his family in Arizona. While statements as to domicilary intention tend to be self-serving and may not always be conclusive, see Texas v. Florida, 306 U.S. 398, in this case petitioner's income tax return for 1940, several years prior to the period in dispute, although giving his business address as New York City, lists under name and address: "Tucson, Pima, Arizona." The stamp on the return indicates that it was filed with the collector for Arizona. The form also declares that the return for the prior year was filed with the collector at Tucson, Arizona. Whether or not he was entitled to it under the law, petitioner claimed no community property benefits in that return -- an indication that the statement was not made with an eye to its tax consequences. On the entire record we think the conclusion warranted that at least after 1936 petitioner was domiciled in Arizona. Nor do*54 we find evidence that any other domicile was acquired thereafter and prior to 1950. A domicile once acquired is presumed to continue until it is shown to have been changed. Where a change of domicile is alleged the burden of proving it rests upon the person making the allegation. To constitute the new domicile two things are indispensable: First, residence in the new locality; and, second, the intention to remain there. The change cannot be made except facto et animo. Both are alike necessary. * * * [Mitchell v. United States, 88 U.S. 350, 21 Wall. 350.] The fact that in 1941 and subsequent years petitioner filed his income tax returns with the collector at New York does not seem to us, without more, to indicate any change in domicile. In fact, in 1942 and each year thereafter, although the return was filed in New York, petitioner *298 again gave Arizona as his address and New York only as his place of business. It seems to be conceded that New York was the home office of his employer during all these years. The question is not, as respondent seems to suggest, whether petitioner intended to*55 comply with section 53 (b) (1), Internal Revenue Code of 1939, but whether he intended to be domiciled in New York. That section, 2 referring as it does to "legal residence or principal place of business," seems to us in the light of the facts to be wholly irrelevant. Cf. Pietro Crespi, 44 B. T. A. 670, 674. We have accordingly made the dispositive finding that petitioner, during the years involved, was a resident of Arizona. II. Respondent further insists that even though petitioner might have been entitled to claim the benefits of community property reporting, he has not fulfilled*56 the necessary prerequisites for the years 1943 through 1945; this is because for each of those years petitioner and his then wife filed a single return. Respondent's own rulings, however, set forth what we regard as the correct principle in such situations. Whether or not a return, even though combined in form in a single document, is intended to be joint or separate is a matter of the intention of the taxpayers adequately manifested on the return. Zabelle Emerzian, 20 T. C. 825. The principle is stated in O. D. 960, 4 C. B. 255: Where husband and wife clearly indicate on a single return form the net income of each, such a return does not necessarily constitute a joint return. It is a matter of intent. * * * As to a marital community -- In determining whether the return should be treated as separate returns on one form or as a joint return, the real intent of the taxpayers should govern. Such intent may be disclosed by the return or by an affidavit subsequently filed clearly showing that the taxpayers intended to file on a community property basis. * * * Where the incomes are separated or can be clearly identified and*57 the tax has been computed on the separate net incomes, the return should be treated as separate returns on one form. * * * [I. T. 1530, I-2 C. B. 174.] In 1943, in his computation of the tax, petitioner stated that the surtax was "On Community Prop. State Basis." In 1944, he stated on the face of the return, "JOINT RETURN -- COMMUNITY PROPERTY STATE," and, in a schedule annexed, asserted: The 3%, not to exceed $ 15.00, deduction allowed for joint returns is not claimed, nor deducted, as it is understood that such deduction was not intended to apply to Community Property returns. *299 And in 1945, on the line beginning -- If item 5 includes incomes of both husband and wife * * * the statement is "Community property" with a figure for husband's and wife's income of one-half each of the total income shown. On these facts it seems to us shown by the face of the returns that the requirements of respondent's rulings were complied with, and we have found as a fact that for all 3 years it was petitioner's intention to file in the form of a separate community property return. Decisions will be entered for the petitioners. Footnotes 1. "a. I somewhat fear that these decisions are going to defeat the state from the collection of much well-earned revenue, for while a man may have many 'residences' he can have only one domicile. So where there is any doubt on a domicile, the domicile of origin always reverts. * * *"↩ 2. SEC. 53. TIME AND PLACE FOR FILING RETURNS. (b) To Whom Returns Made. -- (1) Individuals. -- Returns (other than corporation returns) shall be made to the collector for the district in which is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal place of business in the United States, then to the collector at Baltimore, Maryland.↩