Davies v. Comm'r of Internal Revenue, Docket No. 47771.
| Decision Date | 27 December 1954 |
| Docket Number | Docket No. 47771. |
| Citation | 23 T.C. 524 |
| Parties | JOHN DAVIES AND GERTRUDE C. DAVIES, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Edward S. Macie, Esq., for the petitioner.
Robert R. Veach, Esq., for the respondent.
GROSS INCOME— EXCLUSIONS— COMPROMISE OF CLAIM AGAINST ESTATE— SEC. 22(b) (3), I.R.C. 1939.— An amount received in compromise of a claim against an intestate decedent's estate based upon an oral contract whereby decedent promised to take care of the taxpayer in his will in exchange for the taxpayer's personal services is includible in gross income and is not excluded as a gift, bequest, devise, or inheritance under section 22(b)(3).
The Commissioner determined a deficiency of $1,400.42 in the income tax of the petitioners for 1950. The only issue for decision is whether the Commissioner erred by including in income $8,500 received by Gertrude from the estate of Richard J. Tivnen. The facts have been presented by a stipulation which is adopted as the findings of fact.
The petitioners are husband and wife. They filed a joint income tax return for 1950 with the collector of internal revenue for the first district of Illinois.
Gertrude C. Davies commenced to work for Dr. Richard J. Tivnen in October 1931 and continued in his employ until his death on August 27, 1946. Her salary during that entire employment was at the rate of $25 per week. She married John Davies during the course of that employment.
Dr. Tivnen was an eye, ear, nose, and throat specialist and had his office at 30 North Michigan Avenue, Chicago, Illinois, and lived at the Chicago Athletic Club, which was a few blocks from his office. Gertrude served the doctor as secretary, nurse, bookkeeper, and general confidential agent. She regularly worked for 9 hours each day 6 days a week, and very often did additional work in the evenings and on Sundays without additional compensation. She and her husband performed other miscellaneous services for Dr. Tivnen, such as chauffeuring him in their automobile without additional compensation.
Gertrude spoke to Dr. Tivnen on several occasions about terminating her employment but each time he put her off by promises that if she stayed he was going to take care of her in his will by an arrangement under which she would never have to work again after he died. Gertrude continued in his employ until his death because she relied on those promises.
Dr. Tivnen was a bachelor, was 73 years of age at the date of death, and died intestate. Gertrude was not related in any way to him.
Gertrude filed a claim on June 3, 1947, in the Probate Court of Cook County, Illinois, for $60,000 against the Estate of Richard J. Tivnen which had been opened in that court. The claim was stated in the alternative and consisted of four counts which may be summarized as follows:
Count I. The deceased during his lifetime ‘in consideration of special services rendered and to be rendered’ by Gertrude in handling and managing his professional and business affairs and in nursing and caring for him, agreed with her ‘that he would make a valid will, giving and bequeathing to claimant one-third of his gross personal estate’ which amounted to more than $180,000, but he failed to carry out his agreement and died intestate.
Count II. This count is substantially the same as count I except that it alleges that Gertrude was to be given under the will sufficient to support her for the balance of her life, the total gross estate amounted to more than $300,000, and Gertrude would require at last $60,000 to support her for the balance of her life.
Count III. Gertrude, during the life of the deceased ‘at his special instance and request and on his express promise that he would pay her the reasonable value of said services, rendered divers services in handling and managing his personal, professional, and business affairs, and in nursing and caring for him.’ The reasonable value of such services was $60,000.
Court IV. Gertrude, during the lifetime of Tivnen, ‘on his implied promise that he would pay her the reasonable value of said services, rendered divers services in handling and managing his personal, professional, and business affairs and in...
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Elrick v. CIR
...E. g., Cotnam v. Commissioner, 263 F.2d 119 (5th Cir. 1959); Cohen v. United States, 241 F.Supp. 740 (E.D.Mich.1965); Davies v. Commissioner, 23 T.C. 524 (1954); Rev.Rul. 67-375, 1967-2 Cum.Bull. 60. This element is absent here. Alternatively, even when the taxpayer is a contracting party, ......
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...v. Commissioner, 263 F.2d 119 (C.A. 5, 1959), affirming on this issue 28 T.C. 947 (1957); Joseph M. Mariani, 54 T.C. 135 (1970); John Davies, 23 T.C. 524 (1954); Mildred E. McDonald, 2 T.C. 840 (1943); Cole L. Blease, 16 B.T.A. 972 (1929); Cohen v. United States, 241 F.Supp. 740 (E.D. Mich.......
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...as a creditor and not as a legatee and that the amount recovered by her was compensation for services rendered." In Davies v. Commissioner, 1954, 23 T.C. 524, the taxpayer was a nurse, secretary, and bookkeeper for a doctor who had promised to provide for her in his will. He died intestate.......
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...119 (5th Cir. 1959); Mariani v. Commissioner, 54 T.C. 135 (1970); Cohen v. United States, 241 F.Supp. 740 (E.D. Mich.1965); Davies v. Commissioner, 23 T.C. 524 (1954). True, in each of these cases the testator did not fulfill his contractual obligation to provide in his will for payment of ......