Court Opinion

ID: 4476796
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:12.27519+00
Date Added: 2024-06-11T14:53:54.318260
License: Public Domain

HarRon, /., dissenting: It has been stated repeatedly that whether a taxpayer is a bona fide resident of a foreign country during an entire taxable year is a question of fact. Because of the view that decisions of questions of fact are peculiarly within the judgment of the trier of the facts, I hesitate to disagree with the author of the view which has received the approval of the majority of the Court. But I feel obliged to say that upon the facts of this case I would sustain the Commissioner’s determination. Furthermore, as I read the facts in the cases of Herman Frederick Baehre, 15 T. C. 236, and Charles F. Bouldin, 8 T. C. 959, I conclude that those cases are distinguishable, clearly, from this case, and, also, I find almost nothing to distinguish the facts here from those in Michael Downs, 7 T. C. 1053. The Downs case followed Arthur J. H. Johnson, 7 T. C. 1040. In the Johnson case, this Court gave the most careful consideration to the legislative history of section 148 (a) of the Revenue Act of 1942, by the enactment of which the Congress plainly imposed a new test, bona fide residence in a foreign country, in amending section 116 (a) of the Code. We observed that the Congress had believed that under the former law there had been “unjust discrimination favoring individuals receiving their compensation for services abroad from nongovernmental sources; that it had‘suffered considerable abuse’ * * We observed, also, that “Clearly, the idea [of the new test] was associated with unjust duplication of income taxes upon American citizens abroad” (p. 1046). And we noted that the term “resident” has so many shades of meaning that the word must be considered in the light of its use in the particular statute. Indeed, other courts have been wary of the word as was pointed out in Downs v. Commissioner, 166 F. 2d 504, 508, affirming 7 T. C. 1053. It is to be regretted that in this case the Court appears to be less concerned with the legislative intent underlying the adoption of the new test in section 116 (a), than it has been in the past. In Downs v. Commissioner, supra, the Court of Appeals for the Ninth Circuit rejected the idea that “mere presence other than sojourning in the foreign lands for the full tax year ripens the right to the exemption” p. 508, and expressed the view that the Commissioner’s regulations on the subject mean that unless the United States citizen abroad “makes his home temporarily” in the foreign country, that is, as we see it, identifies himself in some degree with its customs and lives under and within such customs, he is not a resident of the foreign country in which he is staying temporarily. * * * [p. 508] Applying the analysis of legislative intent of this Court in the Johnson case and of the Court of Appeals for the Ninth Circuit in the Downs case to the facts here, I would conclude that the petitioner was not a bona fide resident of Iceland and, therefore, does not qualify for exemption from income tax. The petitioner, during the time he was in Iceland, lived in quarters provided by his employer. His salary, after deductions for certain expenses incurred in Iceland, was deposited to his account in a New York bank. There was no certainty that petitioner could establish a ¿orne in Iceland, and he did not do so. He did not pay income tax to the Government of Iceland. There is no evidence that the petitioner so established himself in Iceland as to become a bona fide resident within the meaning of section 116 (a). Indeed, the fact that petitioner’s wife could not join him, in Iceland, albeit housing accommodations were not available, makes it difficult to find in petitioner’s situation during his presence in Iceland that element of stability which is ordinarily satisfied where a married person establishes a bona fide residence in a particular place. These facts do not satisfy the explicit legislative purpose of the amendment to section 116 (a) but, rather, establish that the petitioner was no more than a “transient or sojourner” for a specific purpose in Iceland. The rule, or view, expressed in the Johnson and Downs cases has stood since 1946, and has been applied by this Court in many cases which have been decided adversely to taxpayers in unreported Memorandum decisions. More recently, in 1952, this Court, in a reported decision, reaffirmed its understanding of the “explicit legislative purpose” of the enactment of the new test in section 116 (a), as amended. See Ernest Rudolf Hertig, 19 T. C. 109. The Hertig case has since been followed, reaching the same result, by this Court in unreported Memorandum decisions. It seems to me that the result reached here is sharply in conflict with the holding in the Hertig case, and represents such a liberalization of our construction of the meaning of the test set forth in section 116 (a) that a great deal of uncertainty must inevitably result. I regret exceedingly this pulling away from the touchstone which earlier decisions have provided, and, accordingly, respectfully note my dissent. KeRN, Murdock, Turner, and Opper, JJ., agree with this dissent.