45 T.C. 555 (1966), 78518, Stanley v. C. I. R.

Docket Nº:78518.
Citation:45 T.C. 555
Opinion Judge:FORRESTER, Judge:
Party Name:HAZEL STANLEY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Attorney:Richard W. Wallach, for the petitioner. Leon M. Kerry and Arnold Y. Kapiloff, for the respondent.
Judge Panel:BRUCE, J., concurs in the result.
Case Date:March 17, 1966
Court:United States Tax Court
 
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Page 555

45 T.C. 555 (1966)

HAZEL STANLEY, PETITIONER,

v.

COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

No. 78518.

United States Tax Court.

March 17, 1966

         

Richard W. Wallach, for the petitioner.

         Leon M. Kerry and Arnold Y. Kapiloff, for the respondent.

         Petitioner, unhappily married to a domineering and sometimes violent man, signed joint income tax returns at his direction, but, held, since she has failed to prove that she did so unwillingly, she is jointly and severally liable with him under section 51(b)(1), I.R.C. 1939, and section 6013(d)(3), I.R.C. 1954, and held, the question of whether a ‘ joint return is made’ within the meaning of section 6013(d)(3) is to be determined under a uniform, Federal standard.

          FORRESTER, Judge:

         Respondent has determined deficiencies in income tax and additions to the tax against petitioner as follows:

Year Income Sec. 293(b), Sec. 6653(b), Sec. 294 (d)(2),

tax 1939 Code 1954 Code 1939 Code

1952 $6,267.82 $3,133.91 $395.50

1953 4,942.48 2,471.24 300.96

1954 9,236.94 $4,618.47 552.18

1955 4,097.91 2,048.96

1956 6,065.72 3,032.86

         The parties are agreed that the only issue to be decided is whether petitioner made joint returns with Joseph D. Berke for the years in issue. Page 556           Some of the facts were stipulated pursuant to our order to show cause under Rule 31(b)(5), Tax Court Rules of Practice. Such facts are found accordingly.          Hazel Stanley, the petitioner herein, formerly was known as Hazel Berke. During the years in issue she resided in Jamaica, N.Y., with her then husband, Joseph D. Berke (hereinafter referred to as Berke). The returns for the years 1952-56 were in form the joint returns of petitioner and Berke and were filed with the district director of internal revenue, Brooklyn, N.Y. Similar returns were filed for the years 1948-51.          Petitioner and Berke were married in July 1944 after a 2-week courtship. Berke was a dentist, specializing in orthodontia. He also invented a number of devices for use in the practice of orthodontia. The couple had two children, Roger, born in August 1945, and Andrea, born in April 1947.          Petitioner found life with Berke to be less than tranquil. During the years she was married to him she received several beatings at his hands. He frequently criticized her, accused her of various inadequacies, and threatened her.[1] Berke told petitioner that he intended to subjugate her completely to his will.           In 1950 Berke and petitioner moved to a fine house in Jamaica, N.Y. In about 1952 Berke moved his parents into this same house. His mother was suffering from incurable cancer, and his father was partially blind. After her in-laws moved into the house, the mental strain on petitioner greatly increased. She complained of severe migraine headaches[2] and other symptoms. Finally, in the latter part of 1952, petitioner sought help from Kilton Stewart, a qualified psychologist. From petitioner's descriptions of Berke's behavior and from Stewart's own interviews with Berke, Stewart concluded that Berke was a psychopathic personality with violent paranoid tendencies, which at any time could, under stress, turn into paranoia.[3] He feared, and he so informed petitioner, that Berke might at any time, under stress, go berserk and possibly even kill petitioner and the children. Stewart told petitioner that he would continue to treat her only if she agreed Page 557 not to argue with or disobey Berke, or do anything else that might upset or anger him. Stewart hoped that petitioner, by following his advice, might be able to avoid causing Berke's complete and violent breakdown and at the same time be able to recover her own mental health. Petitioner agreed to Stewart's condition. After treating petitioner for about 3 years Stewart finally concluded that it would be advisable for her to leave Berke. Petitioner agreed that this would be desirable, but she was afraid that Berke would pursue and inflict bodily injury upon her and the children. Petitioner did not at this time- around 1955-leave Berke.          Stewart, now confident that petitioner would not suffer a mental breakdown, nevertheless believed that she required further therapy of a kind he could not give. Accordingly he recommended that she go to Alexander Lowen, a licensed psychiatrist. Stewart did not see petitioner very often after 1955. Petitioner first consulted Lowen in October 1956. She described her marital difficulties to him. During the course of treatment she also related her fear of Berke, particularly the fear that he would pursue and kill her if she ever tried to leave him. Lowen treated petitioner regularly for about 4 years and occasionally thereafter.          Despite her martial and emotional difficulties, petitioner got along adequately. To friends and neighbors, her marriage did not appear to be particularly abnormal. For the most part she followed Stewart's advice to avoid any clashes with her husband and in this way lived what was in most respects a normal life. Except for occasional complaints about the difficulty of having Berke's parents live with her, petitioner kept her problems largely to herself.          Petitioner's martial problems came to a climax in 1957. In October of that year she removed herself and her children from the family home and moved into her sister's house, which was a few blocks away. Shortly thereafter petitioner instituted an action in Supreme Court of the State of New York, Queens County, for a legal separation from Berke. On April 1, 1958, the court granted petitioner's motion for temporary alimony, attorney's fees, and custody of the children. Berke did not comply with this order. Petitioner divorced Berke in January 1959 and later that year married Richard Stanley.           Prior to 1952, the first year in issue, Berke had begun accumulating funds, primarily in savings accounts with banks located in various parts of the United States and in U.S. Government Series E bonds. He continued this practice throughout the taxable years and until October 1957. A portion of the savings bonds and number of the savings accounts were held in the names of Berke and petitioner jointly, despite petitioner's failure to contribute and significant amount to these joint holdings. At Berke's direction, petitioner signed the Page 558 signature cards required to open the joint savings accounts, of which there were at least 50. Petitioner endorsed and negotiated a substantial number of checks representing interest paid on the various joint savings accounts. The interest earned on such accounts for each of the years 1952-56 totaled, respectively, $1,917.25, $2,311.39, $2,637.83, $2,908.14, and $3,583.69. Throughout the taxable years, Berke gave petitioner $200 per week for household expenses.          When petitioner first consulted her lawyer about her marital problems in 1956, she was not fully cognizant of the extent to which Berke had been accumulating funds in savings accounts and U.S. Government bonds. At the direction of her attorney, she found the books in which Berke recorded his financial transactions. Petitioner copied the figures in these books and gave them to the lawyer, who was able to derive sufficient information therefrom to form the basis of allegations in the separation action concerning Berke's income and assets.          The income tax returns of petitioner and Berke for the taxable years in issue were prepared by Joseph Jasner, a professional tax adviser, on the basis of information supplied by Berke. Such information consisted, for each year, of an amount of gross receipts and lists of deductible expenditures. The lists of expenditures were complied by petitioner at Berke's direction. Except for the figure, furnished to petitioner by Berke, representing the amount of gross receipts, the papers prepared by petitioner contained no reference to items of income. The following table shows, for each of the taxable years, the figure furnished to petitioner by Berke as representing his gross receipts and the approximate total of the expenditures appearing on the lists prepared by petitioner:

Year Gross Total

receipts expenditures [4]

1952 $16,175 $7,031

1953 15,680 9,161

1954 18,327 12,955

1955 18,512 11,825

1956 18,917 10,288

          After Jasner prepared the returns, Berke presented them to petitioner for her signature. Petitioner signed each of the returns . She signed them without question and without examining them. In short, she complied with Berke's directions to sign the tax returns just as she would comply with any other directions he gave her. The returns as filed contained substantial understatements of income. ,o interest income was reported. Petitioner suspected that not all income was Page 559 being reported. She did not, however, comprehend the full significance of this fact; nor did she realize the extent of the understatements.          Respondent commenced his investigation of the tax affairs of petitioner and her husband in January 1958. Petitioner filed her petition herein on January 26, 1959. On March 4, 1959, two of respondent's agents met with petitioner and her attorney at the latter's office. At this conference petitioner answered various questions about the income, assets, and expenses of Berke and herself. As to the returns themselves, she stated that she signed without examining them. Petitioner repeated this assertion in an affidavit executed on April 20, 1959, and submitted to one of respondent's agents. Neither at the conference nor in her affidavit did petitioner claim that she was forced to sign the returns or that...

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