Court Opinion

ID: 4609965
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:45:50.587938+00
Date Added: 2024-06-11T07:53:58.867831
License: Public Domain

HOWARD C. HICKMAN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Hickman v. CommissionerDocket No. 37369.United States Board of Tax Appeals27 B.T.A. 807; 1933 BTA LEXIS 1301; February 27, 1933, Promulgated *1301  An agreement dxisted between the petitioner and his wife, residents of California, that compensation received by her for personal services should be her separate income and separate property.  She made a separate income tax return of such compensation received.  Held, that the compensation may not be treated as community income and taxed to the husband.  Lynden Bowring, Esq., for the petitioner.  J. M. Leinenkugel, Esq., for the respondent.  SMITH *807  The Commissioner determined a deficiency of $831.21 in the petitioner's income tax for 1923.  The petitioner alleges that the Commissioner erred in treating the earnings of his wife as community income taxable to the petitioner.  FINDINGS OF FACT.  The petitioner and his wife, Bessie Barriscale Hickman, have been residents of California since their marriage in 1906.  At the time of their marriage, and for some time prior thereto, both the petitioner and his wife were professional actors, earning their livelihood by appearances upon the stage.  Shortly thereafter, the petitioner was engaged as an actor at the Alcazar Theatre, San Francisco, at a salary of $75 per week.  The petitioner's*1302  wife did not appear upon the stage after her marriage until some time in 1907, when she was also engaged as an actress at the same theatre at a salary of $85 per week.  At some time in 1907, the petitioner and his wife orally agreed that the earnings of each were to be and remain the sole and separate property of the spouse earning the same, free of any community right, claim, or interest of the other, and that each would pay his or her own professional expenses, etc.  Since 1907 the petitioner and his wife have adhered to their agreement and each separately received, kept and disposed of the funds derived from their respective employments, maintaining separate bank accounts, making separate investments for their separate accounts, and paying their own professional bills and expenses from their separate earnings.  None of the earnings of the petitioner's wife were ever turned over to or received by him, nor did he ever in any way exercise or attempt to exercise any rights, dominion, or control over the same.  During the taxable year 1923 Mrs. Hickman was employed as an actress by *808  the Joe Hart Enterprises of New York City, under the name of Bessie Barriscale, and received*1303  from the latter for her professional services rendered in that taxable year the sum of $14,850, which was paid directly to her, deposited in her separate bank account, reported as income upon her separate income tax return for that year, and which was used and disposed of by her without any interference, dominion, or control on the part of the petitioner.  The petitioner received no part of this sum which was earned by his wife and which was handled in accordance with their agreement as her separate property.  The Commissioner has determined that the said $14,850 was income to the community, taxable to the petitioner.  OPINION.  SMITH: We have heretofore had occasion to discuss and apply the decisions of the Supreme Court (; ; ), regarding the taxability of income of spouses domiciled in California, and in proceedings presenting facts sufficient to sustain the existence of a prior agreement between the spouses that the earnings of either were to remain the separate property of the one whose labor produced the earnings, *1304  the Board has held that such earnings were not to be taxed to the husband as community property.  The facts of record show that the petitioner and his wife had, for many years, abided by their agreement respecting the earnings of each, and the compensation here in controversy was clearly the income of the wife.  Following those decisions, we hold that the respondent erred in taxing to the petitioner the separate earnings of his wife.  ; ; . See also . Judgment will be entered for the petitioner.