Constantinescu v. Comm'r of Internal Revenue, Docket No. 15562.
| Decision Date | 14 July 1948 |
| Docket Number | Docket No. 15562. |
| Citation | 11 T.C. 37 |
| Parties | FLORICA CONSTANTINESCU, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Under the facts, held, petitioner, who was an alien physically present in the United States, was not a resident of the United States within the meaning of Treasury regulations and applicable decisions during the year 1944 and the period January 1 to November 3, 1945. John E. Higgiston, Jr., Esq., for the petitioner.
Rigmor O. Carlsen, Esq., for the respondent.
The Commissioner has determined deficiencies in petitioner's income tax of $3,346.15 for the calendar year 1944 and $1,851.79 for the period January 1 to October 31, 1945. The deficiency for the year 1944 is due to four items being included in petitioner's net income, namely:
+-------------------------------------+
¦(a)¦Dividends ¦$2,650.00¦
+---+-----------------------+---------¦
¦(b)¦Interest ¦500.00 ¦
+---+-----------------------+---------¦
¦(c)¦Short term capital gain¦3,983.74 ¦
+---+-----------------------+---------¦
¦(D)¦Long term capital gain ¦6,694.83 ¦
+-------------------------------------+
Those items are explained in the deficiency notice as follows:
(a), (b), (c) and (d) An examination of the records discloses that you received the items of income shown below. Since no return was filed by you, these items have been included in their entirety in your income under the provisions of section 22 of the Internal Revenue Code.
Similar adjustments were made by the Commissioner for the period January 1 to October 31, 1945, except as to amounts, and were explained in the deficiency notice in the same manner. To these adjustments petitioner assigned errors as follows:
(a) The Commissioner erred in determining that the status of petitioner was that of a resident alien during the calendar year 1944 and the period from January 1, 1945 to November 3, 1945.
(b) The Commissioner erred in subjecting to tax capital gains realized by petitioner during the calendar year 1944;
(c) The Commissioner erred in subjecting to tax capital gains realized by the petitioner during the period from January 1, 1945 to October 31, 1945.
The facts have been stipulated and may be summarized as follows:
The petitioner, Florica Constantinescu, a single woman, is a citizen of Roumania, presently residing in Paris, France.
Petitioner resided in Paris from 1934 to 1939. During that period she visited the United States on two occasions, once in October of the year 1933 and once again in the month of December in the year 1936. On each of these occasions petitioner was admitted to this country on a temporary visitor's visa and departed from this country within a period of six months.
Following the outbreak of the war in Europe in 1939, petitioner left France for Italy, where she embarked for New York. Petitioner was admitted to the United States at New York City on October 3, 1939, on a temporary visitor's visa for a period of six months. Prior to the expiration of the six-month period petitioner departed from the United States for Cuba. Petitioner returned to the United States on February 2, 1940, and was admitted at Miami, Florida, on a temporary visitor's visa for a period of five months. Prior to the expiration of her visitor's visa for a period of five months. Prior to the expiration of her visitor's visa, petitioner applied for an extension of the period of her stay; which was granted. Thereafter petitioner applied for further extensions, which were granted and extended the period of her stay until May 15, 1942.
Prior to the latter date, petitioner applied for permission to enter the United States on an immigrant's visa. This application was denied under date of February 27, 1942, by the Department of State. On September 21, 1942, petitioner's application for a further extension of the period of her temporary visa was denied by the Department of Justice. Under date of September 30, 1942, a warrant for the arrest of the petitioner was issued by the Department of Justice, wherein it was charged that petitioner ‘has been found in the United States in violation of the immigration laws thereof, and is subject to be taken into custody and deported.‘ On December 23, 1943, the warrant of arrest referred to above was served on petitioner at New York. A hearing was had, at which time petitioner was represented by counsel. Following the hearing and pending determination, petitioner was released from custody upon posting a bond in the sum of $500 and upon petitioner's agreement to report, in writing, every 30 days to the Department of Justice. Under date of February 19, 1944, a preliminary determination was made by the Department of Justice as follows:
It is recommended that the alien be deported to France, if practicable, otherwise to Roumania, at Government expense on the charge contained in the Warrant of Arrest.
The petitioner appealed this determination and oral argument was had before the Board of Immigration Appeals at Washington, D.C., on April 12, 1944. On May 10, 1944, the Board of Immigration Appeals directed:
* * * that an Order of Deportation be not entered at this time but that the subject be required to depart from the United States, without expense to the Government, to any country of her choice, within ninety days after notification of decision, on consent of surety.
At the same time petitioner's application for preexamination was denied.
On September 13, 1944, the time within which petitioner was required to depart from the United States was extended for a period of 90 days at the request of petitioner. Under date of May 7, 1945, a further extension of 90 days was granted. Under date of July 25, 1945, and at the request of petitioner the time within which petitioner was required to depart from the United States was extended to October 25, 1945. On November 3, 1945, petitioner departed from the United States for France.
On January 24, 1946, the bond executed by petitioner to secure her release from custody was canceled and the collateral deposited as security was thereafter returned.
For the calendar years 1940, 1941, 1942, and 1943 petitioner filed Federal income tax returns with the collector of internal revenue at New York City on Form 1040.
During the calendar year 1944 petitioner received income from sources within the United States representing interest on and dividends from securities held in the United States, amounting to $3,150, exclusive of capital gains. Upon this sum an income tax of $795 was withheld and paid at the source. During the same year petitioner realized recognized capital gains from the sale of securities by brokers in the amount of $10,678.57.
During the period from January 1 to November 3, 1945, petitioner received income from sources within the United States representing dividends on securities held in the United States amounting to $2,710, exclusive of capital gains. Upon this sum an income tax of $983.20 was withheld and paid at the source. During the same taxable period petitioner realized recognizable capital gains on the sale of securities by brokers in the amount of $8,006.19.
Petitioner filed no income tax return for the calendar year 1944 or for the taxable period from January 1 to November 3, 1945. Petitioner performed no services and was not otherwise engaged in a trade or business within the United States during such periods within the meaning of section 211 of the Internal Revenue Code.
During the period from October 3, 1939, to November 3, 1945, petitioner lived at some 14 different addresses, most of which were hotels. At No. 15 East 66th Street, New York, New York, which was the last address at which petitioner lived, she occupied an apartment pursuant to a lease agreement for a term of 15 months, to commence on July 1, 1943, and to end on September 30, 1944. Under date of August 10, 1944, a new lease agreement for a period of 12 months, to commence on October 1, 1944, and to end on September 30, 1945, was executed by petitioner. This lease was not thereafter renewed, but petitioner continued to occupy the premises until her departure from the United States on November 3, 1945, as a statutory tenant from month to month.
In this case the parties are not in disagreement as to the amounts of petitioner's income from sources within the United States during the periods in question. The only matter as to which they are in disagreement is whether or not petitioner was a resident alien during the periods in question.
It is petitioner's contention that she was a nonresident alien not engaged in any business in the United States during the entire time involved and therefore she was not taxable on capital gains which she received from the purchase and sale of certain securities through a brokerage account in her name. It is respondent's contention that during the entire year 1944 and up until the time she departed for France, November 3, 1945, petitioner was a resident alien and therefore taxable on all her net income as any other taxpayer would be. It is agreed between between the parties that if petitioner was a nonresident alien during the periods in question she is not taxable on her capital gains, whereas if she was a resident alien during such time she is taxable on these capital gains. The applicable Treasury regulations are printed in the margin. 1
It seems clear that during the periods in question petitioner was not domiciled in the United States, but that is not a question we have to decide. In Walter J. Baer, 6 T.C. 1195, we said:
It must be kept in mind that ‘residence‘ and ‘domicile‘ have different meanings in the law. In Mertens Law of Federal Income Taxation, vol. 3, sec. 19.31, it is said:
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