Flaherty v. Commissioner

ELLA T. FLAHERTY, EXECUTRIX UNDER THE WILL OF WILLIAM FLAHERTY, AND ELLA T. FLAHERTY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Flaherty v. Commissioner Docket No. 79397. United States Board of Tax Appeals 35 B.T.A. 1131; 1937 BTA LEXIS 794; May 20, 1937, Promulgated *794 Under a joint income tax return of husband and wife, the wife is not individually liable for any part of the deficiency where no part of her income contributed to the deficiency. A. J. Aldridge, Esq., and J. F. Brennan, Esq., for the petitioner. Hartford Allen, Esq., for the respondent. HARRON *1131 This proceeding involves a deficiency upon a joint income tax return assessed against Ella T. Flaherty both as executrix of the will of her husband, William Flaherty, deceased, and as an individual. The deficiency arises out of additions to the gross income of William Flaherty, deceased, unreported, giving rise to a deficiency of $37,434.43 for the year 1932. The petitioner, as executrix, does not contest the validity of the respondent's correction of the taxable income of the decedent, but denies individual liability for the deficiency on the ground that no part of her individual income contributed to the deficiency. FINDINGS OF FACT. In the year 1932 William Flaherty and Ella T. Flaherty were married and living together, residing in Boston. William Flaherty was an attorney engaged in the pratice of his profession and deriving his*795 income therefrom. Ella T. Flaherty's separate income was not more than $182, interest from bank deposits received during the taxable year. William Flaherty filed an income tax return on form 1040 and filled in the word "Yes" in answer to the question printed on the form, "Is this a joint return of husband and wife?" On this return he reported "Income from Business or Profession" $19,631.14 and "Interest on bank deposits" $182; total income, $20,813.14. The item of $19,631.14 was the income of William Flaherty, deceased, and not the income of Ella T. Flaherty. All additions to taxable income determined by the respondent are the personal income of William Flaherty, deceased. Ella T. Flaherty is the executrix under the will of William Flaherty, deceased. *1132 OPINION. HARRON: The notice of deficiency, having been mailed to Ella T. Flaherty both as executrix and as an individual, seeks to impose liability upon Ella T. Flaherty as an individual for the entire amount of the deficiency assessed by respondent, and Ella T. Flaherty, as an individual, denies such liability. This Board has held that the filing of a joint return by husband and wife does not thereby make them*796 a single taxing entity. . The revenue act provides that "There shall be levied, collected and paid for each taxable year upon the net income of every individual a normal tax * * *." Sec. 11, Revenue Act of 1932. Section 51 of the same act requires that individuals in various classes file income tax returns and if a husband and wife are living together they may elect either to file an individual or a joint return. The taxing statute clearly seeks to tax the income of each individual and the provision for filing joint returns is a convenience. It has been held that "spouses are not jointly and severally liable for a deficiency arising entirely out of the separate income of one of them." ; . Since none of the deficiency is attributable to the income of Ella T. Flaherty she is not individually liable for any part of the deficiency. It is held that there is no deficiency in the case of Ella T. Flaherty as an individual. William Flaherty, deceased, failed to report income from his law practice in the net amount of $98,530.19. *797 All of the other corrections made by the respondent also relate to the taxable net income of William Flaherty, deceased, and no evidence has been presented to overcome the respondent's determination. The estate of William Flaherty, deceased, is therefore liable for the deficiency assessed. Decision will be entered under Rule 50.