Court Opinion

ID: 4601875
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:28:31.246663+00
Date Added: 2024-06-11T07:59:23.844541
License: Public Domain

MARY H. WALTON, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Walton v. CommissionerDocket No. 90250.United States Board of Tax Appeals37 B.T.A. 620; 1938 BTA LEXIS 1012; April 5, 1938, Promulgated *1012  The taxpayer was a widow during each of the taxable years and on account of her advanced age required assistance and companionship.  Her son, who during the taxable years was around 40 years of age, able-bodied, sui juris, and employable, acted as petitioner's chauffeur, attended to petitioner's affairs at her direction, acted as companion, handyman, and general factotum, and resided in the household of petitioner.  Petitioner expended between $600 and $700 a year for the direct benefit of her son and in addition to this she disbursed to him in irregular amounts and at irregular times the sum of about $500 or $600 in each of the taxable years.  Held, petitioner's son was not dependent upon her for support and she was not the head of a family within the meaning of section 25(b)(1), Revenue Act of 1934.  W. E. Massey,14 B.T.A. 407">14 B.T.A. 407; affd., 51 Fed.(2d) 76, followed.  W. Richardson Blair, Jr., Esq., for the petitioner.  S. U. Hiken, Esq., for the respondent.  BLACK *621  The Commissioner determined deficiencies in income tax against petitioner of $130.89 for the year 1934 and $128.70 for the year 1935.  The sole*1013  issue in this proceeding is whether or not petitioner is entitled to the $2,500 personal exemption as the head of a family in each of the taxable years, provided by section 25(b)(1) of the Revenue Act of 1934.  FINDINGS OF FACT.  Petitioner is a widow, 75 years of age, who in 1934 and 1935 resided in Philadelphia, Pennsylvania.  Her son, Crawford, resided at the same address under the circumstances hereinafter set forth.  Petitioner filed her income tax returns for 1934 and 1935 with the collector of internal revenue for the first Pennsylvania district.  Petitioner's son, Crawford, is 43 years of age, able-bodied, sui juris, and employable.  Between 1919 and 1925 he was employed by the Midvale Steel Co., where he earned $125 a month.  Crawford acted as chauffeur, attended to petitioner's affairs at her direction, and acted as companion, handyman, and general factotum in the management of petitioner's household in 1934 and 1935.  Because of petitioner's advanced age and widowhood, she required assistance and companionship.  Petitioner expended between $600 and $700 a year for each of the years 1934 and 1935 for the direct benefit of her son, Crawford, exclusive of occasional*1014  bills for medical attention.  In addition to this expenditure she disbursed to him in each of those years the sum of about $500 or $600.  The latter sum was irregularly advanced.  Petitioner's demands upon her son and his willingness to comply with such demands resulted in the status that existed throughout the years 1934 and 1935.  Petitioner's son kept himself available to the petitioner throughout said years to perform the services and furnish the companionship hereinabove referred to.  Petitioner claimed exemption as the head of a family in her income tax returns for the years 1934 and 1935.  This claimed exemption has been denied by respondent and exemption of $1,000 was allowed by the respondent in lieu of the claimed exemption, resulting in the deficiencies shown above.  OPINION.  BLACK: Section 25(b)(1) of the Revenue Act of 1934 reads in part as follows: There shall be allowed for the purposes of the normal tax and the surtax the following credits against net income: (1) PERSONAL EXEMPTION. - In the case of a single person, a personal exemption of $1,000; or in the case of the head of a family or a married person living with husband or wife, a personal exemption*1015  of $2,500.  * * * *622  Congress has not defined "head of a family", but the Treasury in its various regulations promulgated under the several revenue acts has defined the term.  Regulations 86 (Revenue Act of 1934) is applicable to the taxable years under consideration.  Article 25-4 of those regulations reads in part as follows: A head of a family is an individual who actually supports and maintains in one household one or more individuals who are closely connected with him by blood relationship, relationship by marriage, or by adoption, and whose right to exercise family control and provide for these dependent individuals is based upon some moral or legal obligation.  * * * In support of her contention petitioner cites , whereas the Commissioner relies upon our decision in ; affirmed on this point, . We think the facts in the instant case bring it more within the scope of the Massey case than the Fuhlage case.  In the Massey case the facts briefly were these: During 1919, 1920, and 1921, the taxpayer was*1016  a single man and maintained a home.  During 1919 and a part of 1920 his mother lived with him, and during 1919, 1920, and 1921 his sister also lived with him and supervised the running of the household.  The taxpayer paid the expenses of the home and also his sister's expenses.  The sister was 42 or 43 years of age.  On these facts we held that the taxpayer, W. E. Massey, was not the head of a family within the meaning of the applicable statute.  The court in affirming our decision on this point, said: The Board of Tax Appeals took the view that the taxpayer's adult sister had the status of an employee rather than a dependent, and that contributions to her support were in return for the performance of the duties of a housekeeper rather than by reason of any legal or moral obligation of support.  Because of paucity of evidence upon this subject we are unable to say that the Board was wrong.  Its order is therefore affirmed.  We do not think it can be said that the support which petitioner's son, Crawford, received from her during the taxable years was due to the fact that he was dependent upon her for support.  Rather do we think it was because he felt that his mother, on account*1017  of her advanced age, required his assistance in attending to her affairs, acting as her chauffeur and as her companion.  Hence he placed himself at her service.  These duties and services which he performed for her were praiseworthy on his part, yet we do not think they put him in the status of a dependent but rather bring him within the rule announced by the Board and approved by the court in the Massey case.  A reading of the applicable regulation which we have quoted above shows that the individual or individuals whom the taxpayer *623  must maintain and support in one household in order to constitute him the "head of a family" must be dependent upon him for support.  The language of the regulation is, among other things, "and whose right to exercise family control and provide for these dependent individuals is based upon some moral or legal obligation." (Italics ours.) An identical regulation under the Revenue Act of 1928 was approved by us in  One who has independent means of his own or whose status is that of an employee earning his own support by his services is not classed as a dependent even though he is a member of*1018  the taxpayer's household and has a close blood relationship to the head of the household.  ; ; ; ; We sustain the Commissioner in his allowance to the petitioner of a credit of $1,000 personal exemption in each of the taxable years and in disallowing the claimed credit of $2,500 as the head of a family.  Decision will be entered for respondent.