McMicken v. Commissioner

LAURA RUMSEY MCMICKEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. EMMA P. CHADWICK, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. McMicken v. Commissioner Docket Nos. 5027, 6917. United States Board of Tax Appeals 10 B.T.A. 302; 1928 BTA LEXIS 4141; January 27, 1928, Promulgated *4141 Husband and wife, domiciled in the community property State of Washington, each returned half the income earned from professional services performed by the husband, and each computed an earned income credit on the net income reported. Held that the earnings of the husband are not earned income of the wife. Maurice R. McMicken, Esq., for the petitioners. Henry Ravenel, Esq., for the respondent. MORRIS *302 These proceedings are for the redetermination of deficiencies in income tax of $6.97 for Laura Rumsey McMicken and $6.71 for Emma P. Chadwick, for 1924. The proceedings were consolidated for decision, and submitted on the pleadings, since the same question of law is raised by each, viz, whether a wife residing in the State of Washington, who reports one-half of the earned income received by the husband, is entitled to the earned income credit on that portion of the earned income reported by her. FINDINGS OF FACT. The petitioners are residents of Seattle, Wash., and during 1924 their husbands were members of and were actively engaged in the law practice of the partnership of Chadwick, McMicken, Rumsey & Rupp. For 1924 the share*4142 of the net proceeds of the partnership accruing to McMicken was $12,669.32, while Chadwick's share was $12,682.37. In addition to the above income McMicken received $220 as fees for attending directors' meetings, making his total income $12,889.32. *303 Separate returns were filed by husband and wife in each case and the total income was equally divided, Laura Rumsey McMicken reporting $6,444.66 as her one-half, and Emma P. Chadwick reporting $6,341.19 as her one-half. Each of the wives computed her earned-income credit on the total income which she returned, the credits being $19.47 and $19.21, respectively. The respondent held in each case that $5,000 of such income may be treated as earned net income, resulting in a reduction of the earned income credit to $12.50. OPINION. MORRIS: Counsel for the petitioners in his brief states that this proceeding is a test case brought for the purpose of having the Board construe the "earned income" provision of section 209 of the Revenue Act of 1924 and that the sole question for determination is whether a wife in a community property State is entitled to an "earned income" credit based upon one-half of the total community*4143 "earned income," regardless of which spouse rendered the service. However desirous the petitioner may be to secure a decision on a general question, we deem it our function to decide only those issues which are specifically presented to us on the facts of record, and on those facts in the instant proceedings the only question for our determination is whether a wife, living in the State of Washington, is entitled to the earned income credit under section 209 of the Revenue Act of 1924 on the one-half of her husband's earnings from personal services which she reported in her separate return. In the case of , we held: The income-tax statute here under consideration defines earned income to mean "amounts received as compensation for personal services actually rendered." We find no basis in the facts here shown to hold that one-half of the income from the services rendered by petitioner's husband was in fact, or in contemplation of the laws of the State of petitioner's domicile [Texas], received as compensation for personal services actually rendered by this petitioner. That decision is controlling of the*4144 issue herein presented. Judgment will be entered for the respondent.