RATLIFF v. COMMISSIONER

C. C. RATLIFF, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. RATLIFF v. COMMISSIONER Docket No. 14135. United States Board of Tax Appeals 13 B.T.A. 644; 1928 BTA LEXIS 3210; September 28, 1928, Promulgated *3210 For the year 1922 the petitioner filed a return of all income of his wife and himself, believing when he did so that net taxable income was less than $4,000, and that no saving in tax could be affected by the filing of separate returns by each of them. Held, that this was an election to file a joint return even though it was influenced by a misapprehension of fact, and that petitioner and his wife can not subsequently file separate returns under the community properly law of Texas. R. Downes, Jr.,5 B.T.A. 1029, cited and followed. C. C. Ratliff pro se. Philip M. Clark, Esq., for the respondent. LOVE *645 This is a proceeding for the redetermination of a deficiency in income tax for the year 1922 in the amount of $172.40, of which approximately $92 is in controversy. The petitioner alleges error in the respondent's refusal to compute the tax on the basis of separate returns for himself and his wife rather than on a joint return. FINDINGS OF FACT. During the year 1922 the petitioner and his wife, Lola M. Ratliff, were citizens and residents of Breckinridge, Stephens County, Tex. The petitioner, during the taxable*3211 year involved, was engaged in the operation of a mercantile business at Breckinridge. February 23, 1923, the petitioner entered a sanitarium at Dallas, Tex., for a major operation, and he remained there until March 7, 1923. March 8, 1923, the petitioner visited an office of the Bureau of Internal Revenue in the Federal Building at Dallas, for the purpose of obtaining assistance in the preparation of his income-tax return for the year 1922. An internal revenue agent was delegated to assist him, and the petitioner furnished this agent information relative to gross income, deductions, credits, etc. The revenue agent was also advised of the petitioner's marital status, and that in 1920 and 1921 separate income-tax returns had been filed for petitioner exemption of $2,000, left a net taxable income at the normal rate of The revenue agent thereupon prepared a return of the petitioner's income upon Form 1040. Schedule A of this return indicated total gross income and deductions arising from business operations as $27,638.14 and $19,066.86, respectively, and erroneously stated the net income from this source as $6,571.28. Additional income from interest, rents and royalties totaled*3212 $268.89. Additional deductions, consisting of a loss on the sale of real estate, bad debts, and contributions, totaled $1,010. Total net income was thus determined as $5,830.17, which, subject to a personal exemption of ,000, left a net taxable income at the normal rate of 4 per cent in the amount of $3,830.17. It appearing from the revenue agent's computation of taxable income, as above detailed in part, that no saving in tax would be derived from the filing of separate returns by the petitioner and his wife, the petitioner, on suggestion of the revenue agent, decided to file a joint return. Answers to certain of the preliminary questions on the return show alterations as follows: Question 3. "Is this a joint return of husband and wife?" The answer "Yes" to this question was stricken out by lines running through it. *646 Question 4. "If not, is a separate return being filed by your husband or wife?" The word "No" was superimposed on the word "Yes" as the answer to this question. Question 5. "If so, state: (a) Name and address entered at head of that return." The name "Lola M. Ratliff" entered following this request was stricken out by lines*3213 running through it. The petitioner then signed and swore to the return before the revenue agent, filed the return with the collector at Dallas, and paid the total tax shown due thereon in the amount of $153.21. The petitioner was not furnished a copy of the return. Because of his weakened physical condition the petitioner did not check over the revenue agent's computations nor otherwise inspect the return as prepared for him. By letter dated April 21, 1925, the petitioner was advised that errors had been discovered in the computation of net income in Schedule A of the return herein described, and that net income should, therefore, be increased in the amount of $2,010. Net income was therefore properly $7,840.17. These errors were mathematical, and are not disputed by the petitioner. As a result of the increase of the petitioner's taxable income the deficiency herein involved was determined, consisting of additional normal taxes of 4 per cent and 8 per cent on the amounts of $163.83 and $1,840.17, respectively, and a surtax of 1 per cent on the net income in excess of $6,000, i.e., on $1,840.17. When advised of the proposed deficiency the petitioner and*3214 his wife each filed separate amended returns reporting equal shares of the total income involved. The respondent rejected these returns. Neither the petitioner nor his wife were possessed of separate estates or income during the year 1922. OPINION. LOVE: The Board has heretofore held that where a joint return is filed for a husband and wife under the Revenue Act of 1921, they may not elect after the passage of the date for filing of a return to file separate returns and have their tax liability computed upon the basis of such separate returns. ; ; and . See also . While the answers to questions 3 and 4 on the return, as altered, are contradictory, it is apparent from the record that the petitioner intended to include what he believed to be all income of himself and his wife in the return filed March 8, 1923, his belief being at that time that the total amount of such income was $5,830.17, subject to a personal exemption of $2,000. *647 The petitioner seeks to escape*3215 the effect of the authorities above cited, and numerous others of similar import, by the contention that he did not elect to file a joint return, but was led to do so by the revenue agent's error in computation of net income. While we may concede that, had the petitioner realized that a saving could have been effected by the filing of separate returns for his wife and himself, such returns would have been filed, the fact remains, as revealed by our findings, that he consciously and intentionally filed a joint return. This was induced, it is true, by a belief that the total tax would not be greater than it would be under separate returns by himself and wife, but it was a freely elected act and the petitioner is bound by it. , is distinguishable, the issue therein having been the taxpayer's right to file originally so-called community property returns for his wife and himself, while the issue herein is whether or not a taxpayer, having elected to file a joint return, can substitute the alternative after the passage of the date for filing of the return, upon discovery that his original choice was an unfortunate one. *3216 There is no question of mala fides on the part of the revenue agent, and, as we see it, no necessity for discussion of his possible status as an agent of the petitioner in the preparation of the return. Judgment will be entered for the respondent.