Macior v. Commissioner
| Decision Date | 09 May 1984 |
| Docket Number | Docket No. 16970-81. |
| Parties | Lazarus W. Macior v. Commissioner. |
| Court | U.S. Tax Court |
Alan G. Segedy, 40 E. Mill St., Akron, Ohio, for the petitioner. Richard S. Bloom, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined the following deficiency in and additions to petitioner's Federal income taxes:
Additions
Year Deficiency Sec. 6651(a)(1)1 Sec. 6654(a)
1978 $4,249.51 $1,062.38 $135.79
The issues for decision are: (1) whether petitioner's gross income includes his teaching salary and savings accounts interest; (2) whether petitioner is subject to an addition to tax under section 6651(a)(1) for failure to file an income tax return for the taxable year 1978; and, (3) whether petitioner is subject to an addition to tax under section 6654(a) for underpayment of estimated tax.
Some of the facts have been stipulated and are found accordingly. The stipulations of facts and attached exhibits are incorporated herein by this reference.
Petitioner resided in Akron, Ohio, when he filed his petition in this case.
Petitioner was ordained a Roman Catholic priest in 1956, and, through the year 1978, continued to be a member of the Assumption of the B.V.M. Province of the Order of Friars Minor ("the Order"). The Order was established for communal living. In 1954, petitioner executed a vow of poverty, executed a declaration agreeing to accept sacred orders, and took a vow of chastity.
Petitioner received a B.A. degree and an M.A. degree in botany from Columbia University. Petitioner received a Ph.D. in botany and biology from the University of Wisconsin in 1959. In the fall of 1959, petitioner began teaching biology at Bishop Newman High School in Philadelphia. After teaching at the high school, petitioner taught for two years as an instructor in biology at St. Francis College, and for two years as an associate professor of biology at Marquette University. Petitioner next taught at Loras College as an assistant professor of biology.
In 1967, petitioner obtained a teaching position as an assistant professor of biology at the University of Akron ("University") based upon his qualifications as a professor of biology. The University was aware that petitioner was a priest.
By letter dated April 11, 1967, petitioner notified the Order of his acceptance of the position with the University. Petitioner's appointment was approved by the University on April 19, 1967. On August 25, 1969, the Order instructed petitioner to accept the duties of associate professor of biology at the University.
Petitioner has taught continually at the University since his inital appointment in 1967. Through the year 1978, petitioner's contracts were executed by his signing "Lazarus W. Macior." Petitioner's professorial services were subject to the policies of the Board of Trustees and the University Faculty Manual. Petitioner did not wear clerical garb at the University.
In 1978, petitioner taught courses in plant anatomy, plant morphology, organic evolution and organic evolution discussion. Petitioner determined the courses he taught, the content of the courses, and the methods used in teaching them. The theological concepts covered in the courses taught by petitioner were not limited to Catholic theology.
The salary for petitioner's teaching services was paid by checks payable to petitioner. During 1978, petitioner received $27,940.00 from the University. No Federal income tax was withheld from the salary paid by the University in 1978, and petitioner made no estimated tax payments. Petitioner did not file a Federal income tax return for 1978.
Petitioner participated in the State Teacher's Retirement System at the University, and amounts were withheld from the salary checks for petitioner's contributions to the System. Petitioner was provided with life and medical insurance by the University.
During 1978, petitioner maintained two savings accounts and a checking account in his own name. The savings accounts earned interest in 1978 amounting to $849.22. During 1978, respondent began to audit petitioner's 1977 tax year. After the audit, petitioner changed the name on his accounts to "Franciscan Friars, Lazarus W. Macior (Agent)."
In 1975, petitioner paid cash for a single family home in Akron. The house was purchased in the name of Walter A. Macior, another name by which petitioner is known. Petitioner has resided in this house since purchasing it. In 1979, petitioner transferred the property to "Lazarus Walter Anthony Macior, O.F.M., Agent for Franciscan Friars, Pulaski, Wisconsin." An application for exemption from real property filed by the Order through petitioner in 1980, was denied.
During 1978, petitioner held title in his name to two motorcycles, a station wagon and a travel trailer. Petitioner purchased another travel trailer in his own name in 1979, disposing of the first trailer at that time. In 1979, petitioner transferred the titles to all his vehicles to "Fransciscan Friars."
Petitioner did not send the Order any of the salary he received from the University or any other money. Petitioner gave $1,481.95 of his 1978 salary to various charities, spent $2,314.31 on books, subscriptions, memberships and xeroxing, and spent $2,950.45 on summer travel.
Petitioner filed monthly financial reports with the Order. On these reports, petitioner stated monthly expenses for rent and for car lease. Petitioner made no expenditures for such items.
The General Constitutions of the Order provides:
Section 61 states the general rule that gross income includes all income from whatever source derived. It includes in gross income not only those items specifically enumerated, but "all gains except those specifically exempted." Commissioner v. Glenshaw Glass Co. 55-1 USTC ¶ 9308, 348 U.S. 426 430 (1955); section 1.61-1(a), Income Tax Regs. Sections 61(a)(1) and (4) specifically include compensation for services and interest as income items. The salary received by petitioner from the University and the interest earned on petitioner's savings accounts clearly fall within the definition of gross income.
Petitioner bears the burden of proving that income is excluded. Welch v. Helvering 3 USTC ¶ 1164, 290 U.S. 111 (1933); Rule 142(a), Tax Court Rules of Practice and Procedure. The mere fact that a Roman Catholic priest has executed vows of poverty and obedience does not exempt him from income taxes under all circumstances. This Court previously held that:
A member of a religious order under a vow of poverty is not immune from Federal income tax by reason of his clerical status or his vow of poverty, but is subject to tax to the same extent as any other person on income earned or received in his individual capacity. McGahen v. Commissioner Dec. 37,781, 76 T.C. 468, 478 (1981), affd. 720 F. 2d 664 (3d Cir. 1983).
See Kelley v. Commissioner Dec. 32,567, 62 T.C. 131 (1974). An individual who turns over his entire income to a church is still taxable on that income, subject to the deduction allowed for charitable contributions. Riker v. Commissioner 57-1 USTC ¶ 9588, 244 F. 2d 220 (9th Cir. 1957), affg. a Memorandum Opinion of this Court Dec. 21,181(M), cert. denied. 355 U.S. 839 (1957).
Petitioner argues that he was acting as an agent of the order when he received the amounts in issue. Where an agent receives income for a principal, it is the income of the principal, not of the agent. Maryland Casualty Co.v. United States 1 USTC ¶ 29, 251 U.S. 342 (1920). Where there is no agency relationship, it is a basic rule of tax law that an assignment by a taxpayer of income to another person is ineffectual to relieve him of income tax liability, regardless of the motivation behind the assignment. Lucas v. Earl 2 USTC ¶ 496, 281 U.S. 111 (1930). See also Helvering v. Horst 40-2 USTC ¶ 9787, 311 U.S. 112 (1940): Helvering v. Eubank 40-2 USTC ¶ 9788, 311 U.S. 122 (1940).
Petitioner relies on several revenue rulings to support his position, and...
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