Borax v. Comm'r of Internal Revenue

• Decision Date: 20 September 1963
• Docket Number: 92461,Docket Nos. 92309,92462.
• Citation: 40 T.C. 1001
• Parties: RUTH BORAX, ET AL.,1 PETITIONERS, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

40 T.C. 1001

RUTH BORAX, ET AL.,1 PETITIONERS, V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket Nos. 92309

92461

92462.

Tax Court of the United States.

Filed September 20, 1963.

[40 T.C. 1001]

Thomas Epstein, for the petitioner in Docket No. 92309.

Julius G. Hirsch, for the petitioners in Docket Nos. 92461 and 92462.

Arthur S. O'Neill, Jr., for the respondent.

Herman and Ruth were married in New York and resided together there until 1946 when they entered into a separation agreement which provided that Herman should pay Ruth a certain amount per month for her support and that of their child. In 1952 Herman procured a decree of divorce in Mexico, and thereafter married Hermine, first in Mexico and then in Connecticut, after which they returned to live in New York. In 1953 Ruth obtained a declaratory judgment in New York which decreed that the Mexican divorce was invalid and of no force and effect, that Ruth was still the wife of Herman, and that Herman and Hermine were not husband and wife. Held:

1. Payments made by Herman to Ruth subsequent to the Mexican divorce in the amounts specified in the separation agreement were not includable in the income of Ruth and were not deductible by Herman.

2. Herman and Hermine were not entitled to file joint returns for the years involved.

OPINION DRENNEN, Judge:

In these proceedings, which were consolidated for briefing and opinion, respondent determined deficiencies in income tax as follows:

+---------------------------------+
                ¦Docket¦Taxpayer ¦Year¦Deficiency¦
                +------+----------+----+----------¦
                ¦No. ¦ ¦ ¦ ¦
                +------+----------+----+----------¦
                ¦92309 ¦Ruth Borax¦1952¦$1,888.30 ¦
                +---------------------------------+
                

 1953 1,888.30
                 1954 1,688.50
                 1955 1,688.50
                 1957 1,688.50
                92461 Estate of Herman Borax, Deceased, Hermine H. Borax, Louis 1952 13,132.46
                 Borax
                 and Benjamin Borax, Executors.2 1953 13,191.42
                 1954 11,686.02
                 1955 12,493.89
                 1957 10,928.95
                92462 Hermine Borax 1952 13,132.46
                

 1953 13,191.42
                 1954 11,686.02
                 1955 12,493.89
                 1957 10,928.95
                

--------

Notes:

¹ Proceedings of the following petitioners are consolidated herewith: Estate of Herman Borax, Deceased, Hermine H. Borax, Louis Borax, and Benjamin Borax, Executors, Docket No. 92461, and Hermine Borax, Docket No. 92462.

2 Herman Borax, who filed the petition herein, died during the pendency of these proceedings. His executors have been substituted as parties in his stead. For simplicity references shall be made herein to Herman.

[40 T.C. 1002]

The issues for decision are:

(1) Whether there is includable in the gross income of Ruth Borax (hereafter called Ruth) amounts received by her in 1952, 1953, 1954, 1955, and 1957 from Herman Borax (hereafter called Herman), and conversely whether Herman is entitled to deductions for these amounts in computing his net or taxable income for those years.

(2) Whether Herman and Hermine Borax (hereafter called Hermine) were entitled to file joint Federal income tax returns for the taxable years 1952, 1953, 1954, 1955, and 1957.

(3) Whether, in computing the joint tax liability of Herman and Hermine for the taxable years 1952, 1953, 1954, 1955, and 1957, there are to be allowed exemptions for certain dependents, relations of Hermine.³

The case was submitted with all facts stipulated under Rule 30 of the Rules of Practice of this court, and the stipulated facts are found accordingly.

Herman and Hermine filed joint Federal income tax returns for the years 1952, 1953, 1954, 1955, and 1957 with the district director of internal revenue, Upper Manhattan District, New York, N.Y. Ruth filed no Federal income tax returns for those years.

Herman and Ruth were married on November 4, 1935, in New York City, where they lived together as husband and wife until about March 14, 1946, when they separated by mutual consent. A son, James, was born to them in 1937. On March 14, 1946, Herman and Ruth executed a written separation agreement providing, inter alia, as follows:

4. That, while both parties hereto shall remain alive, and so long as the Second Party (Ruth) shall fully keep, observe and perform the terms, provisions, covenants and conditions hereof to be kept, observed and performed by her, and so long as the marriage of the parties hereto shall not be dissolved by any order, judgment or decree entered against the Second Party, the First Party shall pay to the Second Party, as hereinbefore provided, the sum of Five hundred and seventy-five ($575.) Dollars per month, on the 15th day of each and every month, beginning with the month of March, 1946, as full, fair and reasonable provision for the Second Party and for the maintenance, education and support of said child, except as aforementioned, and in addition thereto, the First Party hereby gives and grants to the Second Party, so long as the Second Party shall be entitled to receive such allowance, the right to use all household furniture, furnishings and equipment heretofore used by the parties hereto in the apartment at No. 40 West 77th Street, Borough of Manhattan, City of New York, which may belong to the First Party, but not including, however, any wearing apparel, or other personal articles used by the First Party alone.

5. That the foregoing payments shall be in full satisfaction and discharge of any and all alimony, whether permanent or temporary, which the Second Party may claim, or be awarded, in any action that may hereafter be brought by either party against the other.

[40 T.C. 1003]

On or about November 22, 1946, as the result of a stipulation filed by Ruth and Herman, the Supreme Court of New York entered a consent decree whereby the separation agreement was reformed to increase Herman's payments to Ruth from $6,900 to $8,550 per year.

On or about August 7, 1952, Herman procured a decree of divorce in Mexico, city of Juarez, Chihuahua. The decree recited in part:⁴

CONSIDERING:.— * * * THIRD:— It having been stated in the complaint that there is one son of the marriage, named JAMES STEPHEN BORAX who is with its mother, and according to the opinion of the Agent for the State's Attorney's Office, said son shall remain under the same condition as he now is in, and since there exists and agreement of separation signed by and between the parties, this sentence shall not alter suchal particulars. * * * Now thereby * * * it is resolved:— FIRST.— The marriage of Herman Borax and Ruth Haber Borax * * * and all its legal consequences, is hereby dissolved, * * * THIRD.— The son of the marriage...