Court Opinion

ID: 9636682
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:38:57.110401+00
Date Added: 2024-06-11T18:04:55.926477
License: Public Domain

WILBUR, Circuit Judge (dissenting).
The petitioner is contending that after the tax is computed upon the aggregate income it must be apportioned to the husband and wife in accordance with their separate incomes. This, I think, is entirely inconsistent with the whole theory of a joint return and in direct conflict with the express terms of the statute which permits no such segregation. That question in a somewhat different form is submitted to the Circuit Court of Appeals for the Fifth Circuit in Anderson v. United States, 48 F.(2d) 201, 202, where it is said: “Appellant having elected to make a joint return, the Commissioner was under no obligation to change it and divide it into two separate returns. The mere fact that it was disclosed that appellant was living with his wife in a community property state was not sirfficient data upon which to divide the return equally. For all the Commissioner knew, the income might have been largely the separate income of the husband or wife or not community income at all. The contention is untenable.”
This case is directly in point. It is true that the court states that there was no method by which the Commissioner could divide the income, but the decision is that the Commissioner was under no obligation to change it and divide it into two separate returns.
It may be added with reference to the question of whether or not there is sufficient data in the return to permit the segregation of the tax that upon the joint return the item which is now involved was claimed to be exempt from taxation. Consequently, there is no occasion to show in the tax return how the item should be divided. The first petition filed before the Board of Tax Appeals was entirely upon the ground that the claim was barred by the statute of limitations as to this item. The amended petition is based upon the proposition that whatever deficiency might exist with reference to the joint return filed in 1929 was wholly attributable to the income of the wife. The stipulation shows that in the return filed by the husband and wife it is shown that “Louis M. Cole and Frida Heilman Cole parted with certain shares of stock of Merchants National Trust & Savings Bank and after certain intermediate steps acquired the shares of stock of Transamerica Corporation. The details of said transactions were fully disclosed in a memorandum attached to said return by the taxpayers who claimed therein that they constituted a nou-taxable reorganization.” That is to say, the taxpayers made a joint return showing the exchange of stock belonging to them for other stock and claimed, in effect, that although this was a transaction in which the husband and wife were jointly interested, it was nontaxable. It was stipulated that “a segregation of the amount of net income which the Commissioner has redetermined * * * will show a total net income for petitioner’s decedent of 89,614.-47 * * * and separate income of Frida Heilman Cole in the amount of $253,479.-41.” It should be noted it is not stated that the data from which this segregation could’ be made is incorporated in the return, nor is it so claimed. This question is disposed of by the Board of Tax Appeals in its opinion. I think this position is sound and well stated.
It will be observed that in the statement the board says: “In the first place *492the joint return contains no data upon which' the separate taxable income of the two spouses can be computed. There is no segregation of the amounts of gross income severally received or any designation of the deductions to which each would be entitled.”
While I think it is quite immaterial whether or not there is sufficient data in the return to form a basis for segregation of tax, it is clear that there was no such basis in this case, and the Board of Tax Appeals was right in sustaining the act of the Commissioner in assessing the tax as the law required upon the aggregate of the joint income, and that it is also right in refusing to segregate that tax, first, because the law neither requires nor permits it; second, because it was impossible to do so upon the facts returned by the party.