Lord v. Comm'r of Internal Revenue
| Decision Date | 14 May 1973 |
| Docket Number | Docket No. 2091-71. |
| Citation | 60 T.C. 199 |
| Parties | ROBERT P. LORD, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Woolvin Patten, for the petitioner.
Richard J. Shipley, for the respondent.
Petitioner left his wife and children in Iowa in March 1960 and moved to Seattle, Wash. Petitioner's move was motivated by petitioner's personal, financial, and marital problems. Petitioner acquired both a regular residency and permanent job in the State of Washington in 1962. During the period from March 1960 through Aug. 2, 1965, petitioner made no effort to contact his family, and petitioner's wife made only a nominal effort to contact him. Moreover, petitioner provided only negligible financial support for his family during this period. On Aug. 2, 1965, petitioner's wife was granted a divorce from petitioner by an Iowa State court. Petitioner failed to file Federal income tax returns for each of the taxable years 1960 through 1966 and also failed to pay any of his Federal income tax liability for any of these years. Held, petitioner acquired domicile in the State of Washington in 1962. Held, further, petitioner and his wife manifested their intent no later than 1962 to renounce their marital community. Held, further, petitioner's income earned in 1961 as an Iowa domiciliary and from Jan. 1, 1962, through Aug. 2, 1965, as a Washington domiciliary constituted petitioner's separate income for Federal income tax purposes. Held, further, respondent has not established by clear and convincing evidence that petitioner's failure to file Federal income tax returns during the years in issue was due to fraud. Held, further, petitioner is liable for the additions to tax imposed by secs. 6653(a) and 6654, I.R.C. 1954.
Respondent determined the following Federal income tax deficiencies against petitioner:
+------------------------------------+
¦ ¦ ¦ ¦ ¦
+----+----------+--------------------¦
¦ ¦ ¦Additions to tax ¦
+----+----------+--------------------¦
¦Year¦Deficiency¦____________________¦
+----+----------+--------------------¦
¦ ¦ ¦Sec.6653(b)¦Sec.6654¦
+----+----------+-----------+--------¦
¦ ¦ ¦ ¦ ¦
+----+----------+-----------+--------¦
¦ ¦ ¦ ¦ ¦
+----+----------+-----------+--------¦
¦1961¦$4,483.86 ¦$2,241.93 ¦$119.49 ¦
+----+----------+-----------+--------¦
¦1962¦20,692.01 ¦10,346.01 ¦573.06 ¦
+----+----------+-----------+--------¦
¦1963¦8,940.68 ¦4,470.34 ¦243.08 ¦
+----+----------+-----------+--------¦
¦1964¦13,033.74 ¦6,516.87 ¦357.68 ¦
+----+----------+-----------+--------¦
¦1965¦12,916.02 ¦6,458.01 ¦354.38 ¦
+----+----------+-----------+--------¦
¦1966¦3,300.51 ¦1,650.26 ¦81.05 ¦
+----+----------+-----------+--------¦
¦ ¦ ¦ ¦ ¦
+------------------------------------+
By an amendment to this answer, respondent has asserted, in the alternative, the following additions to tax:
ADDITIONS TO TAX
+----------------------------+
¦ ¦ ¦ ¦
+----+-----------+-----------¦
¦Year¦Sec.6651(a)¦Sec.6653(a)¦
+----+-----------+-----------¦
¦ ¦ ¦ ¦
+----+-----------+-----------¦
¦ ¦ ¦ ¦
+----+-----------+-----------¦
¦1961¦$1,120.97 ¦$224.19 ¦
+----+-----------+-----------¦
¦1962¦5,173.00 ¦1,034.60 ¦
+----+-----------+-----------¦
¦1963¦2,235.17 ¦447.03 ¦
+----+-----------+-----------¦
¦1964¦3,258.44 ¦651.69 ¦
+----+-----------+-----------¦
¦1965¦3,229.01 ¦645.80 ¦
+----+-----------+-----------¦
¦1966¦825.13 ¦165.03 ¦
+----+-----------+-----------¦
¦ ¦ ¦ ¦
+----------------------------+
Petitioner admits his liability for the additions to tax provided by section 6651(a) of the Internal Revenue Code of 1954.1 Moreover, most of the adjustments made in respondent's notice of deficiency have been conceded by petitioner. Only two issues remain for our consideration. These issues are (1) whether the income earned by petitioner during the period from January 1, 1961, through August 2, 1965, constituted community property income under the community property laws of the State of Washington for purposes of determining the amount of petitioner's taxable income from January 1, 1961, through August 2, 1965; and (2) whether petitioner's failure to pay his Federal income tax for the taxable years 1961 through 1966 is due to fraud, thereby making him liable for the additions to tax asserted by respondent under section 6653(b).
Some of the facts have been stipulated by the parties; the stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.
Petitioner is an individual and his legal residence as of the date of the filing of his petition in the instant case was in Seattle, Wash.
Petitioner was born on May 17, 1916, at Pine River, Minn. He is a high school graduate and has also taken some college equivalency tests at Grinnell College in Grinnell, Iowa.
Petitioner married the former Marian McDonald (Marian) in Des Moines, Iowa, on September 6, 1937. Six children resulted from this marriage. Petitioner had several different jobs during the period from 1937 until 1960. He served in the Navy, worked for the U.S. Soil Conservation Service, and later functioned as a securities salesman.
On March 24, 1960, petitioner left his wife and children and moved to Seattle, Wash. This move was motivated by petitioner's financial, drinking, and family problems. Petitioner's parents lived in close proximity to Seattle, and he hoped that they could assist him in resolving his personal problems and in establishing a better life for himself.
Petitioner's first year in Seattle subsequent to the separation from his family was neither happy nor successful. He worked irregularly as a salesman on several used-car lots in Seattle. He had no permanent residence and continued to suffer from his alcoholic problem.
In 1961 petitioner obtained his real estate license and found employment selling recreational beach property for MacPherson's, Inc. (MacPherson's), at Ocean Shores, Wash. He did not have a regular residence address during 1961.
Petitioner was promoted to the position of sales manager by MacPherson's in 1962 and he continued his employment with MacPherson's through 1966. Petitioner established a regular residence address in Ocean Shores sometime during 1962 and became a domiciliary of the State of Washington at this time. Prior to 1962 petitioner had no intention of changing his State of domicile from Iowa to that of Washington.
From the commencement of the separation in 1960 until June 1964 petitioner neither contacted his wife and children nor contributed any money to their support. Petitioner's wife, Marian, made at least one attempt to contact him during this period but this attempt was unsuccessful. In June 1964 Marian learned of petitioner's precise location through a newspaper clipping. Marian then contacted petitioner, and he requested that she should not inform the children of his location. Despite this request Marian did tell the children where their father was then residing. Petitioner's son Bobby had wanted to contact petitioner for some time; upon learning his father's location, Bobby visited petitioner and stayed with him for approximately 6 months. During the period between June 1964 and August 2, 1965, Marian called petitioner several times and requested that he send money for support of her and the children. Petitioner promised to send money, but, in fact, he sent less than $1,000 to his wife and children during this period. Neither petitioner nor Marian denied or attempted to conceal the fact of their marriage during the years of their physical separation.
In 1965 Marian initiated proceedings to divorce petitioner. A final divorce decree was entered by the District Court of Cerro Gordo County, Iowa, on August 2, 1965. The divorce decree awarded Marian the sum of $20,000 as a property settlement and adopted the terms of the property settlement agreement in which petitioner agreed to satisfy his $20,000 liability to Marian in $200 per month increments.
Prior to the divorce, petitioner had acquired real property at Ocean Shores in his and Marian's name. Petitioner commenced acquiring such real property at Ocean Shores in 1962. Marian had no knowledge at the time of the divorce of petitioner's acquisition of such real property.
Petitioner failed to make the monthly payments required both by the divorce decree and the property settlement agreement. Marian thus instituted legal proceedings against petitioner in Grays Harbor County, Wash., to collect the backpayments. During these proceedings, Marian inadvertently discovered that petitioner had not disclosed to her that he had acquired real estate at Ocean Shores between January 1, 1962, and August 2, 1965, and that he had disposed of some of this property by forging her signature on the deeds of conveyance. Marian accordingly apprised the Washington court of this factual discovery. On April 25, 1969, the Superior Court of Washington for Grays Harbor County entered a stipulated judgment on the basis that the 1965 Iowa divorce decree had not conclusively disposed of all property interests of petitioner and Marian. The stipulated judgment provided (1) that petitioner would be entitled to all real property in Washington which he had acquired in his and Marian's name; and (2) that petitioner would make specified monthly payments to Marian.
In the latter part of 1960 petitioner became involved with Jean Gerlach (Jean). This involvement continued through 1966. Petitioner recently married Jean.
During the taxable years 1961 through 1966 petitioner received the following amounts of compensation from MacPherson's due to his employment as a real estate salesman and/or real estate sales manager:
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