May v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 91874.

• Decision Date: 23 May 1939
• Docket Number: Docket No. 91874.
• Citation: 39 BTA 946
• Parties: JOE MAY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

39 B.T.A. 946 (1939)

JOE MAY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 91874.

Board of Tax Appeals.

Promulgated May 23, 1939.

Frederic A. Pike, C. P. A., for the petitioner.

E. A. Tonjes, Esq., for the respondent.

This proceeding was brought for the redetermination of a deficiency in income tax for the year 1934 in the sum of $2,764.09. All but $45.61 of this amount is in controversy.

The issues are:

(1) Does the fact that the petitioner and his wife were in the United States under visitors' visas prevent their reporting the petitioner's salary income on a community property basis?

(2) Was the petitioner entitled to a personal exemption of $2,500 during the period from January 1 to November 23, 1934?

(3) Was the petitioner entitled to deduct as business and professional expenses certain amounts expended for the operation of automobiles, entertainment costs, and telephone, telegraph, and cable service and tolls?

FINDINGS OF FACT.

The petitioner was born in Vienna, Austria, in 1880, of Jewish parentage. He resided in Germany from 1910 to March 31, 1933, when he went to France on account of a boycott against Jews, his wife, a Gentile, being fearful for his safety. He left all his property in Germany and has been unable to recover anything from it.

The petitioner traveled in France and England looking for employment. In October 1933, while in Paris, he received through its London representative a cabled offer of employment with the Columbia Pictures, Inc., a motion picture company in Hollywood, California. The Columbia representative advised and required the immediate departure of the petitioner and his wife, and, in order to save time, arranged to secure visitors' visas to the United States instead of having them entered under the quota. When he applied for the visa the petitioner asserted that he intended to visit the United States for six months and, upon its renewal, June 5, 1934, a similar representation was made.

The petitioner and his wife entered the United States on December 5, 1933. On December 15, 1933, he signed a contract with Columbia for employment for six months, with renewal options exercisable by the company, to serve as a motion picture director and as a collaborator and writer of motion picture scripts. He began work on December 15, but the contract was terminated in May 1934, by mutual consent, in order to enable him to work for the Fox Film Corporation under single picture contracts. During the remainder of 1934 he was employed by the Fox Company and did not seek or negotiate employment outside of California.

Immediately after signing his contract with Columbia the petitioner gave an agent his order to secure a dwelling house. The petitioner and his wife soon rented a house into which they moved on December 31, 1933, and in which they lived during 1934. They did not leave California during 1934 except to go to Mexico for the purpose of reentering the United States under the Austrian quota to become citizens of this country.

At the beginning of January 1934 the petitioner desired to become an American citizen. He discussed the situation with his English teacher, who was familiar with naturalization procedure and represented those who sought naturalization. During the first part of January the petitioner employed his teacher to take the necessary steps to that end. On January 25, 1934, he wrote to his lawyer in Vienna to secure the records and data required as a basis for his application for citizenship. In that letter he stated that he intended to make the United States his permanent home. On the same day he wrote to the Berlin Police Department for the prescribed police clearance. Many tedious delays and obstacles prevented the prompt accomplishment of his object. The Berlin Police Department refused a clearance, claiming that he owed delinquent taxes.

The petitioner obtained from the immigration authorities a waiver of certain requirements and eventually secured the necessary documents. As soon thereafter as he was able to leave his work, he and his wife went to Mexico and reentered the United States on November 23, 1934, having been assigned a number under the Austrian quota. On the same day he applied for citizenship papers, and expects to become naturalized on November 23, 1939. Since January 1934 it has been his constant intention to become a citizen of the United States. Following the making of "Music in the Air", directed by the petitioner in 1935, he remained in Hollywood for one and one-half years without employment.

The petitioner used automobiles to travel from his home to the studio which employed him. The services for which he was paid were performed at both his home and the studio. He averaged two round trips a day. In the forenoon he worked at his home with collaborating writers, drove to the studio to discuss the previous day's script and returned to work again with the writers. In the afternoon he went to the studio to arrange for casting, actors, etc. It was two or three miles from the petitioner's home to Columbia studio and from four to five miles to the Fox studio. The petitioner used his automobile for frequent trips to see producers, actors, agents, and previews. He and his wife also used the automobile for their personal needs.

The petitioner owned a Nash automobile, for which he paid $2,488.76 on January 19, 1934, and which he exchanged in December 1936, receiving credit for $400. Depreciation for 11½ months of the taxable year amounted to $686.30. He also owned a Ford automobile, for which he paid $902. The date of acquisition, the rate and amount of depreciation on the Ford were not proved. During the year 1934 the petitioner expended $494.34 for rental, repairs, and operating expenses of automobiles and $165 for interest and insurance on automobiles.

The petitioner expended $346.86 for telephone tolls and service and $607.21 for telegraph and cable charges. Fifty percent of such expenses were for business purposes.

The petitioner entertained at his home persons prominent in the moving picture industry, primarily for the purpose of making contacts which would result in business advantages to him and in future employment. He expended a total of $1,271.85 in such activities. He claimed $1,076.64 as a business expense.

OPINION.

VAN FOSSAN:

The first issue presents the question of the right of the petitioner to return his income under the community property laws of California while he was living in that state by the grace of a visitor's visa. The petitioner contends that such laws do not discriminate against aliens, resident or...