Case Name: LEON SALOMON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1926-09-27
Citations: 4 B.T.A. 1109
Docket Number: Docket No. 3725
Parties: LEON SALOMON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Judges: 
Reporter: Reports of the United States Board of Tax Appeals
Volume: 4
Pages: 1109–1112

Head Matter:
LEON SALOMON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Docket No. 3725.
Decided September 27, 1926.
Jerome H. Bayer, Esq., for the petitioner.
D. D. Shepard, Esq., for the respondent.

Opinion:
opinion.
Artjndell:
In adding to the income of the husband the salary reported by the wife as her separate earnings, the Commissioner proceeded on the theory that the services of the wife are a part of the earning power of the community and the earnings received from her services constitute community property as much as do the earnings received from the services of the husband. This theory finds support in some California cases. See Martin v. Southern Pacific Co., 130 Cal. 285; 62 Pac. 515; Smith v. Furnish, 70 Cal. 424; 12 Pac. 392. There are also in support of the Commissioner's position the presumptions that all property acquired after marriage is community property, Jordan v. Fay, 98 Cal. 264; 33 Pac. 95, 96; In re Rolls' Estate, 226 Pac. 608; and that all property in the possession of either spouse during marriage is community property until the contrary is shown. In re Jolly's Estate, 238 Pac. 353. These presumptions arise under sections 164 and 68T of the Civil Code of California. That they are rebuttable presumptions has been repeatedly held by the courts of California and follows from sections 158, 159 and 160 of the Civil Code giving a husband and wife the right to alter their legal relations as to property.. In Wren v. Wren, 100 Cal. 276; 34 Pac. 775, it is said:
Under these sections [158, 159 and 160], there can be no doubt that a husband and wife may agree between themselves, without any other consideration than their mutual consent, that money earned by the wife in performing any work or service which does not devolve upon her by reason of the marriage relation shall belong to her as her own, and, when money has been earned by the wife under such an understanding or agreement with the husband, it is her separate property.
This decision has been cited with approval in a long line of California cases. See Kaltschmidt v. Weber, 145 Cal. 596; 79 Pac. 272; Perkins v. Sunset Tel. & Tel. Co., 103 Pac. 190; Smith v. Smith, 47 Cal. App. 650; 191 Pac. 60; Gray v. Perlis, 245 Pac. 221.
The case of Moore v. Crandall, 124 C. C. A. 11; 205 Fed. 689, a California case, involved a claim by the wife against the estate of her husband in bankruptcy for wages due to her for services as clerk in the store of the husband, which, according to the proof in support of the claim, were due under an agreement entered into between the husband and wife at the time of opening the business whereby she was to receive a weekly wage for her services, the wages to be her own separate property. After quoting at some length from Wren v. Wren, supra, including the part we have quoted above, it is held:
This being the law in California, we can perceive no reason why the wife may not perform services for the husband under a contract for money, provided such service is for work outside of the family relation. Nuding et al. v. Urich, 169 Pa. 289, 32 Atl. 409; Roche v. Union Trust Co. (Ind. App.) 52 N. E. 612.
This case seems to us to be decisive of the question here involved. See also Appeal of Estate of George W. Randall, 4 B. T. A. 679. We are accordingly of the opinion that the Commissioner erred in including in the income of the petitoner the salary of the petitioner's wife in the amount of $3,600 for the year 1922.
Order of redetermination will be entered on 15 days' notice, wider Rule 50.