Barrett v. United States

• Decision Date: 29 November 1961
• Docket Number: No. 18945.,18945.
• Citation: 296 F.2d 309
• Parties: Evelyn BARRETT, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

296 F.2d 309 (1961)

Evelyn BARRETT, Appellant, v. UNITED STATES of America, Appellee.

No. 18945.

United States Court of Appeals Fifth Circuit.

November 29, 1961.

M. Terry McNab, Mabry, Reaves, Carlton, Fields & Ward, Tampa, Fla., for appellant.

Don M. Stichter, Asst. U. S. Atty., Tampa, Fla., Paul E. Gifford, Asst. U. S. Atty., Edward F. Boardman, U. S. Atty., S. D. of Florida, Miami, Fla., for appellee.

Before JONES and BELL, Circuit Judges, and SIMPSON, District Judge.

BELL, Circuit Judge.

Appellant was convicted on all four counts of an information charging her with willful failure to file an income tax return for the years 1954 through 1957 in violation of Section 7203 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 7203. It is undisputed that she failed to file the returns.

Appellant and her husband were divorced in 1948 and under the terms of an agreement made a part of the divorce decree the husband agreed to pay appellant $750.00 per month for five years and $500.00 per month thereafter until the death or remarriage of appellant. No principal or total sum of money or property was specified to be paid. It was agreed that the residence in the name of the husband and wife jointly with right of survivorship would remain the property of the husband and that the wife would sign any documents necessary to vest legal title in the husband in any property which the parties might own. Appellant agreed to assign and transfer to the husband certificates representing five hundred shares of stock in a named corporation. Both waived all claims in and to the estate of the other, including all claims for maintenance and support, dower, homestead or distributable shares in the real or personal estate of the other, and represented that the agreement settled all property rights between the parties. It provided that appellant accepted the same as constituting a waiver by her of all rights to alimony or otherwise, and of any debt or obligation for which the husband might be liable. The undisputed evidence was that the husband paid for the corporate stock and all other property accumulated during the marriage and that appellant had no property. It was also undisputed that the payments under the agreement were made during the tax years in question, and it is the taxability of these payments to appellant that forms the crux of this appeal, she having no other income.

The substantial questions are first, did the court err in failing to submit to the jury the question of whether the payments pursuant to the agreement were periodic payments within the meaning of section 71(a) (1) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 71(a) (1) on which appellant would be liable for taxes, or installment payments within the meaning of section 71(c) (1) of the same statute on which no taxes would be due by appellant; and second, was there sufficient evidence to sustain a finding of willful failure to file the returns.

As to the first, section 71(a) (1) of the statute provides that the gross income of a wife, legally separated from her husband under a decree of divorce, includes periodic payments received after the decree in discharge of a legal obligation imposed on or incurred by the husband under the decree, or a written instrument incident thereto. However, section 71(c) (1) provides that for the purposes of subsection (a) of the statute, installment payments discharging a part of an obligation the principal sum of which is, either in terms of money or property, specified in the decree, shall not be treated as periodic payments.

It has been many times held that the payments are periodic within the meaning of the statute where the monthly payments pursuant to such a decree are contingent and uncertain and may be reduced or terminated upon the happening of certain events, such as the death or remarriage of a wife, and a principal sum payable in money or property is not specified. Birdwell v. Commissioner of Internal Revenue, 5 Cir., 1956, 235 F.2d 112; Baker v. Commissioner of Internal Revenue, 2 Cir., 1953, 205 F.2d 369, $300.00 per month for one year and $200.00 per month for five years with payments to cease if wife died or remarried; Davidson v. Commissioner, 9 Cir., 1955, 219 F.2d 147, $250.00 per month for five years but to be reduced to $125.00 per month for the children if the wife remarried; Prewett v. Commissioner of Internal Revenue, 8 Cir., 221 F.2d 250, $270.00 per month alimony for two years, payment to cease in event of remarriage of wife; Myers v. Commissioner of Internal Revenue, 9 Cir., 1954, 212 F.2d 448, $250.00 per month for six years whether...