Blair v. Comm'r of Internal Revenue

• Decision Date: 18 November 1974
• Docket Number: Docket No. 5701-72.
• Citation: 63 T.C. 214
• Parties: ALLAN L. BLAIR AND JOCELYN BLAIR, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

63 T.C. 214

ALLAN L. BLAIR AND JOCELYN BLAIR, PETITIONERS

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 5701-72.

United States Tax Court

Filed November 18, 1974.

Milton A. Levenfeld and Donald A. Statland, for the petitioners.

Allan E. Lang, for the respondent.

1. The petitioner resided in an apartment in which he maintained a room for his son to occupy when not away at school. Held, the petitioner was the head of a household within the meaning of sec. 1(b)(2), I.R.C. 1954, because his household was the principal place of abode of his son.

2. The petitioner, who had acquired a tax deed to land condemned by the university, asserted that the university had not given proper notice of the condemnation proceedings and that he had a right to the land; nevertheless, he transferred his interest to the university and claimed a charitable contribution for the value of the land. Held, under Illinois law, the petitioner's right was limited to his claim for taxes and interest paid with respect to the land, and his charitable contribution is similarly limited.

SIMPSON, Judge:

The Commissioner determined deficiencies in Federal income taxes of $2,624.45 for Allan L. Blair for 1967 and $5,842.58 for Allan L. and Jocelyn Blair for 1968. Due to concessions. two issues remain for decision: (1) Whether, during 1967, Lawrence Blair had his principal place of abode with his father, and (2) whether Mr. and Mrs. Blair made a charitable contribution during 1968 when they transferred to the University of Illinois title to the property which had been acquired by means of a tax deed.

FINDINGS OF FACT

Some of the facts have been stipulated, and those facts are so found.

The petitioners, Allan L. and Jocelyn Blair, are husband and wife who maintained their legal residence in Chicago, Ill., at the time of filing their petition herein. He filed his individual Federal income tax return for the year 1967 with the district directory of internal revenue, Chicago, Ill. Mr. Blair will sometimes be referred to as the petitioner.

Until April 10, 1967, the petitioner was married to Judith K. Blair. They had three children: Lawrence, Janice, and Elizabeth. In 1964, upon the advice of a psychiatrist, Lawrence was first enrolled in Grove School, Madison, Conn., which is a prep school for emotionally disturbed children. Lawrence continued to be enrolled there from 1964 through 1967, receiving treatment for emotional problems. Lawrence and his mother had a highly antagonistic relationship which at least contributed to his emotional problems.

On March 16, 1967, the petitioner and Judith Blair signed a property settlement agreement. The petitioner is himself an attorney and was represented by counsel in the drafting of the property settlement. The lengthy agreement provided a comprehensive plan for the separation of the parties. Among other things, the petitioner agreed to make payments to Judith for the support of their children. The agreement also provided:

(5)CUSTODY AND VISITATION

5.1 JUDITH shall have the care, custody and control of the minor children of the parties hereto.

5.2 The parties hereto shall at all times confer with each other with respect to the continuation of enrollment of LAWRENCE M. BLAIR at Grove School, or any other educational institution; however, it is agreed that in all cases of dispute, ALLAN shall have full and final discretion and control as to LAWRENCE's placement in Grove School or any other educational institution.

The petitioner was allowed reasonable visitation rights, including middle-of-the-week evenings, overnight visitations, and residency during part of the summer and other school vacations. The agreement also provided that Judith and the children were to occupy the marital home. The petitioner signed the property settlement agreement and swore under oath that he had read it and understood its contents.

On April 10, 1967, a decree of divorce was entered in the Circuit Court of Cook County, Ill., dissolving the marriage of the petitioner and Judith Blair. The court incorporated the terms of the property settlement agreement into the divorce decree. It also made the following finding of fact:

10. Two of the minor children of the parties hereto, namely: JANICE L. BLAIR and ELIZABETH A. BLAIR, reside with * * * (Judith Blair), and LAWRENCE M. BLAIR, the minor child of the parties hereto, is enrolled and in residency in Grove School, Madison, Connecticut, and the above mentioned Property Settlement Agreement has proper and adequate provision for LAWRENCE's renewal of residency with * * * (Judith Blair).

The petitioner remained unmarried for the balance of 1967. During that year, he furnished the entire cost of maintaining an apartment in Chicago which was his actual home. A separate room in the apartment was maintained for his son, Lawrence, who kept his at-home clothing at that apartment. During those periods when Lawrence was on vacation from Grove School, he actually resided with the petitioner in his apartment. The only exception was when Lawrence and the petitioner took a trip together for a week. The petitioner furnished all of Lawrence's support during 1967, including tuition at Grove School which was approximately $16,000. Lawrence resided with the petitioner on his vacations because of his antagonistic relationship with his mother.

In early 1968, while preparing the petitioner's 1967 Federal income tax return, his accountant, after examining the petitioner's divorce decree, questioned his filing as a head of household. The petitioner met with his former wife to discuss the custody of Lawrence, and an agreement was reached to change the decree.

On March 26, 1968, an order was entered in the Circuit Court of Cook County, Ill., upon stipulation of the parties, that the first paragraph of paragraph 5 of the decree of divorce entered April 10, 1967, be amended to read as follows:

(Judith Blair) shall have the care, custody and control of the minor children of the parties hereto, JANICE L. BLAIR and ELIZABETH A. BLAIR, and * * * (Allan Blair) shall have the care, custody and control of the minor child of the parties hereto, LAWRENCE M. BLAIR, so long as the said LAWRENCE M. BLAIR shall be enrolled at Grove School, or such other and similar educational institution requiring his residency away from the County of Cook; provided, however, that in the event said child shall resume full time physical residency in the County of Cook, * * * (Judith Blair) shall thereafter have the care, custody and control of said minor child, in accordance with the provisions of said Decree. Nothing herein provided shall in any way change, modify or alter any of the provisions of said Decree, including but not limited to Paragraphs 2, 3 and 7.

In a handwritten notation at the end of the order, initialed by the petitioner and Judith Blair, was this statement: ‘This order is enter nunc pro tunc as of April 10, 1967.’

On July 14, 1965, the board of trustees of the University of Illinois, a public corporation (the university), filed a petition for condemnation in the Circuit Court of the Sixth Judicial District, Champaign County, Ill. (the Circuit Court). The university sought to acquire property in the city of Urbana described as ‘Lot Twenty-two (22) in University Addition to the City of Urbana, situated in the City of Urbana, in the County of Champaign and State of Illinois' (lot 22). It needed the property as part of a tract it was acquiring upon which a center for the performing arts was to be constructed. The project was to cost in excess of $20 million. The defendants named in the condemnation petition were: the record owners, Lawrence and Dorothy Ostema; the mortgagees, First Federal Savings & Loan Association of Champaign and the University of Illinois Employees' Credit Union; the holder of a deed of trust on the property, E. E. Latowsky; and various tenants. The county collector of Champaign County (the county collector) was not made a party to the action. The university filed a lis pendens notice in the office of the recorder of Champaign County at the same time the condemnation petition was filed.

Some or all of the real estate taxes assessed against lot 22 for 1964 were not paid and became delinquent in 1965. On October 13, 1965, lot 22 was sold by the county collector at public auction to Interstate Bond Co. (Interstate). Interstate paid the county collector the unpaid taxes and received a certificate of purchase. Interstate is a corporation whose principal business is purchasing delinquent property at tax sales.

On June 30, 1966, the Circuit Court entered a judgment order granting the university's petition for condemnation. The property was valued at $62,000. The university deposited this amount with the county treasurer of Champaign County (the county treasurer) by July 18, 1966, thereby obtaining title to lot 22.

On July 18, 1966, the Circuit Court entered an order directing disbursement of the money held by the county treasurer as follows: (1) To First Federal Savings & Loan Association of Champaign, $17,884.02, (2) to E. E. Latowsky, trustee, $19,133.28; (3) to the county collector, 1965 real estate taxes on lot 22 and a pro rata share of 1966 real estate taxes prorated as of July 18, 1966; and (4) to Lawrence and Dorothy Ostema, the balance of the proceeds.

On April 29, 1968, Interstate filed a petition in the Circuit Court seeking to have its certificate of purchase converted into a tax deed if redemption was not made on or before August 26, 1968. No redemption was made. On or about August 26, 1968, Interstate transferred the certificate of purchase to the petitioner, who paid $630.97 for it on October 1, 1968. The petitioner and Interstate had had frequent business dealings in the past. Those dealings included the petitioner purchasing unredeemed certificates of purchase from it for the redemption price. He also had performed legal services for Interstate. In early October 1968, a hearing...