Pentland v. Comm'r of Internal Revenue

• Decision Date: 30 July 1948
• Docket Number: Docket No. 12925.
• Citation: 11 T.C. 116
• Parties: ROBERT PENTLAND, JR., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

11 T.C. 116

ROBERT PENTLAND, JR., PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 12925.

Tax Court of the United States.

Promulgated July 30, 1948.

Petitioner, domiciled in Florida, in April 1942 entered the military service of the United States. Early in 1943 he was transferred from his post of duty in Washington, D.C., to an air command located near Fort Worth, Texas. He established his family and otherwise pursued a domestic life in the latter city. Upon being discharged from active military duty in October 1944, petitioner claimed the right to be and was paid by the Federal Government the cost of his transportation back to Miami, Florida. Prior to and during his military service, the principal businesses in which petitioner engaged were located in the State of Florida. Held, where one is serving in the armed forces of the United States, his intention to take up a new residence must be established by clear and convincing evidence. The record does not thus indicate that petitioner had a bona fide intention to establish his legal domicile in the State of Texas. Consequently, the respondent properly determined that petitioner was not entitled to report his income for the taxable year 1943 on a community tax basis. Albert B. Bernstein, Esq., for the petitioner.

Bernard D. Hathcock, Esq., for the respondent.

This proceeding involves a deficiency in income tax for the calendar year 1943 in the amount of $15,168.02.

The sole issue is whether the respondent erred in determining that petitioner was not entitled to file his return for the taxable year on the community income basis.

FINDINGS OF FACT.

Petitioner is an individual. His income tax return for the year 1943 was filed with the collector of internal revenue at Dallas, Texas.

In April 1942 petitioner, a resident of Miami, Florida, volunteered to enter the United States Army. Petitioner was commissioned as an officer and first assigned to Washington, D.C. In the early part of 1943, petitioner's superiors determined to transfer him to one of the other air bases located throughout the United States. Petitioner was given the privilege of selecting the particular base to which to be transferred, and he chose the one located near Fort Worth, Texas. Petitioner arrived at the latter city about April 8, 1943. He promptly opened a checking account and later rented a safety vault at the Continental National Bank of Fort Worth. In May 1943 petitioner was joined in Fort Worth by his wife and daughter. Petitioner rented living quarters, consisting of three bedrooms, living room, dining room and bath. He employed one full time and one part time servant, for whom he secured living quarters across the street. Petitioner and his wife inspected several houses, with the thought of buying, but did not purchase. Petitioner borrowed $45,000 from the Continental National Bank of Fort Worth to repay outstanding bank loans in various parts of the country where he had business interests. He transferred his securities to the vault of the Continental National Bank of Fort Worth. Petitioner also purchased an interest in some oil properties in Fort Worth. When he became qualified, he voted once or twice in elections held in Fort Worth.

At the time petitioner entered the Army, he was a member of certain social clubs in Florida. He did not resign from these clubs, since membership fees were waived to those members serving in the military forces. During the time petitioner lived in Fort Worth he joined three social clubs, and he and his wife participated in the activities of those clubs. During this period charge accounts were also opened with several Fort Worth merchants.

When petitioner entered the Army he was a certified public account and senior member of the firm of Pentland, Purvis, Keller & Milton, of Miami, Florida. He was also chairman of the board of directors of Margaret Ann Grocery Stores, a Florida corporation. He owned approximately 42 or 43 per cent of the capital stock of that corporation. Margaret Ann Grocery Stores continued to pay salaries to its officers who were active in the military service of the United States. The accounting firm of which petitioner was the senior member likewise distributed to him, while on active military duty, a percentage of the firm's earnings, although in a reduced amount. While on active duty in Fort Worth petitioner, through conferences and by correspondence, was able to give to these two businesses the benefit of his advice and guidance.

While on active military duty in Texas, petitioner suffered a recurrence of an old eye ailment, and received a medical discharge from the Army in October 1944. In November 1944 the household goods and personal effects of petitioner and his wife were placed in storage, and they left to go to Miami to spend the Christmas season with petitioner's mother. Petitioner made claim for and was paid by the United States Government his travel expenses from Fort Worth back to Miami on the ground that he had a right on his discharge ‘to go back where you came from.‘ While in Miami petitioner was influenced by his business associates to remain in Florida and to take up his positions with the various businesses with which he was associated when he entered the military service. In February 1945 petitioner purchased a home in Miami, Florida, and has since remained there.

Sometime in July 1943, the exact date not appearing, petitioner addressed a letter to the tax assessor of Dade County, Miami, Florida, containing in part the following:

Van I am trying to buy a home in Ft. Worth. Rents are so high that I can buy one in three or four years instead of paying rent $2,500 to $3,000 a year for a place to live. I figure I will go to foreign (sic) service sometime and as you know Mother owns the home in Coral Gables so I do not own one now, except North Carolina and I believe I will sell that.

I am going to make my legal residence in Texas and will file my intangible tax returns here, also income tax returns. The Intangible tax here is a humdinger; much higher than Florida. So will file my Intangible Return and Margaret Ann's. (sic) (Margaret Ann apparently refers to the wife of petitioner.)

Under date of July 21, 1943, he received a reply to such letter from the acting county tax assessor which contains the following pertinent paragraph:

I certainly am sorry to see you giving up your residence here and I am marking our records accordingly and am returning yours and Margaret Ann's intangible and personal property tax returns. * * *

No testimony was offered as to whether petitioner filed an intangible property tax return in Texas.

Petitioner was a party defendant in a suit brought in the District Court for the Southern District of Florida. Substituted service of the summons was attempted to be made on him by leaving a copy of the summons with his mother at her home in Coral Gables, Florida. Attorneys for petitioner moved to vacate the service on the ground petitioner was not a resident of the State of Florida. In support of the motion, petitioner filed an affidavit, sworn to the 20th day of May 1943, in which, among other facts, he stated:

* * * that the (petitioner) was at one time a resident of the State of Florida, his last place of abode and residence being at 817 Harrison Street, Hollywood, Florida, but that at the time of his entry into the military service of the United State of America his domicile, residence and usual place of abode was Blowing Rock, North Carolina, at which place he owned his home and lived therein; that, subsequent to his entry into the armed forces of the United States of America, he has made Fort Worth, Texas, his home, domicile and legal residence; that on the 8th day of April, A.D. 1943, he was not in the City of Coral Gables, nor has he subsequently been there.

Petitioner was not legally domiciled in the State of Texas during the taxable year 1943.

OPINION.

LEECH, Judge:

The determination of the only issue submitted rests upon whether petitioner was domiciled in Texas during the taxable year 1943. If the answer is in the affirmative, then petitioner was entitled to report his income on a community tax basis. Poe v. Seaborn, 282 U.S. 101; Hopkins v. Bacon, 282 U.S. 122. The question must be determined by the application of rules established for ascertaining one's domicile.

In Mitchell v. United States, 21 Wall. 350, 353, the Supreme Court said: ‘A domicile once acquired is presumed to continue until it is shown to have been changed. * * * Until the new one is acquired, the old one remains. * * * ‘

In Gilbert v. David, 235 U.S. 561, 569, the rule is amplified in the following language:

(Quoting from ‘Conflict of Laws‘ (Story) 7th Ed., Sec. 46, pg. 41.) ‘If a person has actually removed to another place, with an intention of...