Lucas v. Earl

Decision Date17 March 1930
Docket NumberNo. 99,99
Citation281 U.S. 111,74 L.Ed. 731,50 S.Ct. 241
PartiesLUCAS, Commissioner of Internal Revenue, v. EARL
CourtU.S. Supreme Court

The Attorney General and Mr. Charles E. Hughes, Jr., Sol. Gen., of Washington, D. C., for petitioner.

Warren Olney, Jr., of San Francisco, Cal., for respondent.

[Argument of Counsel from pages 111-113 intentionally omitted] Mr. Justice HOLMES delivered the opinion of the Court.

This case presents the question whether the respondent, Earl, could be taxed for the whole of the salary and attorney's fees earned by him in the years 1920 and 1921, or should be taxed for only a half of them in view of a contract with his wife which we shall mention. The Commissioner of Internal Revenue and the Board of Tax Appeals imposed a tax upon the whole, but their decision was reversed by the Circuit Court of Appeals, 30 F.(2d) 898. A writ of certiorari was granted by this court.

By the contract, made in 1901, Earl and his wife agreed 'that any property either of us now has or may hereafter acquire * * * in any way, either by earnings (including salaries, fees, etc.), or any rights by contract or otherwise, during the existence of our marriage, or which we or either of us may receive by gift, bequest, devise, or inheritance, and all the proceeds, issues, and profits of any and all such property shall be treated and considered, and hereby is declared to be received, held, taken, and owned by us as joint tenants, and not otherwise, with the right of survivorship.' The validity of the contract is not questioned, and we assume it to be unquestionable under the law of the State of California, in which the parties lived. Nevertheless we are of opinion that the Commissioner and Board of Tax Appeals were right.

The Revenue Act of 1918 approved February 24, 1919, c. 18, §§ 210, 211, 212(a), 213(a), 40 Stat. 1057, 1062, 1064, 1065, imposes a tax upon the net income of every individual including 'income derived from salaries, wages, or compensation for personal service * * * of whatever kind and in whatever form paid,' § 213(a). The provisions of the Revenue Act of 1921, c. 136, 42 Stat. 227, 233, 237, 238, in sections bearing the same numbers are similar to those of the above. A very forcible argument is presented to the effect that the statute seeks to tax only income beneficially received, and that taking the question more technically the salary and fees became the joint property of Earl and his wife on the very first instant on...

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