Kizer v. Commissioner

B. H. KIZER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. MABEL A. KIZER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Kizer v. Commissioner Docket Nos. 6758, 6759. United States Board of Tax Appeals 13 B.T.A. 395; 1928 BTA LEXIS 3252; September 19, 1928, Promulgated *3252 A member of a marital community in the State of Washington whose duties are solely those of housewife and housekeeper is not engaged in carrying on a trade or business within the meaning of the Revenue Act of 1921, and it is held that a loss sustained in connection with the purchase of household supplies is not deductible from the income of the members of the community. B. H. Kizer, Esq., for the petitioners. J. E. Marshall, esq., for the respondent. LITTLETON *395 The Commissioner determined a deficiency in income tax for the year 1921 as to each of the petitioners in the amount of $82.57. The *396 issue is whether a certain alleged loss is deductible in the taxable year from the income of a marital community resident in the State of Washington. By agreement of the parties, the two proceedings were consolidated for hearing and decision. FINDINGS OF FACT. The petitioners reside in Washington, and constitute a marital community under the laws of that State. B. H. Kizer is a lawyer and derives the income of the community from the practice of his profession. In the taxable year Mabel A. Kizer was not engaged in any gainful*3253 occupation that resulted in income for the community other than the performance of her duties as housewife and housekeeper. April 25, 1921, an electrically propelled automobile driven by Mabel A. Kizer accidentally struck and seriously injured one Gertrude Pierson. Resulting from such accident and injury Gertrude Pierson claimed damages in a large amount. After some negotiation the claim was settled by compromise and payment to Gertrude Pierson in the amount of $6,500. Of this amount $5,000 was paid by an insurance company which carried a liability policy on the automobile involved in the accident, and $1,500 by the marital community composed of the petitioners in this proceeding. It is expressly stated in the release signed by Gertrude Pierson and her husband that the Kizers deny all legal liability for damages. At the time of the accident Mabel A. Kizer was using the automobile in going about the City of Spokane for the purpose of purchasing household supplies for herself and husband. She discharged the duties of housewife and housekeeper. In their separate income-tax returns for the taxable year each of the petitioners deducted from gross income one-half on the loss*3254 sustained, or $750. Upon audit of such returns the Commissioner disallowed such deductions and determined the deficiencies here in question. OPINION. LITTLETON: Petitioners contend that under section 214(a)(4) of the Revenue Act of 1921 providing for the deduction from gross income of "losses sustained during the taxable year and not compensated by insurance or otherwise, if incurred in trade or business," each one is entitled to deduct from gross income for the year in question one-half of the loss sustained, or $750. In support of their contention petitioners take the position that under the laws of Washington one-half of the community income, even when all results from the labor of the husband, goes to the wife *397 as her earnings, and, therefore, that any duty which the wife discharges as a member of the community is "trade or business" within the meaning of the taxing statute. We are unable to agree with the petitioners in this respect. Irrespective of the community property laws of the State of Washington, Mabel A. Kizer, who was, as the facts show, engaged only in attending to her household duties, was not carrying on a trade or business within the meaning*3255 of the taxing statute. The petitioners, constituting the marital community, are not, therefore, entitled to deduct the amounts in question, for to hold otherwise would permit the deduction of personal or living expenses, which are, as is well settled, not deductible in determining net income. Reviewed by the Board. Judgment will be entered for the respondent.