Nubar v. Comm'r of Internal Revenue, Docket No. 9948.
| Citation | 13 T.C. 566 |
| Decision Date | 18 October 1949 |
| Docket Number | Docket No. 9948. |
| Parties | ZAREH NUBAR, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
The petitioner, an alien, was present in the United States continuously from August 1939 until August 1945. He was admitted under a visitor's visa which allowed him a stay of three months, but the time was extended because of difficulties of returning to Europe, and he was allowed to remain until cessation of hostilities in Europe. During the taxable years, large transactions on securities and commodities exchanges in the United States were effected for petitioner by resident brokers. Under the facts, held (1) that petitioner was a nonresident alien, and (2) that he was not engaged in a trade or business within the United States, so that under sections 211(a) and (b) he was not taxable on income from sources outside the United States or in his capital gains from sources within the United States. Henry Mannix, Esq., and Charles K. Rice, Esq., for the petitioner.
William F. Evans, Esq., for the respondent.
The Commissioner has determined deficiencies in income tax as follows:
+----------------+
¦1941¦$55,572.11 ¦
+----+-----------¦
¦1943¦115,370.40 ¦
+----+-----------¦
¦1944¦147,277.75 ¦
+----------------+
The year 1942 is not involved in this proceeding because of the provisions of the Current Tax Payment Act of 1943. The amounts of various classes of alleged income are not in dispute. Petitioner concedes that the respondent has correctly adjusted the amounts of certain items of income and of deduction.
The Commissioner has made the determination that the petitioner was a resident alien of the United States during the years 1941 through 1944, subject to Federal income tax upon all income from all sources, whether outside or inside the United States, and has included in gross income gains realized upon sales which were made in the United States of capital assets located in the United States, and certain income from sources outside the United States.
There are two questions for decision: (1) Whether or not the petitioner was a resident alien of the United States during the years 1941 through 1944; and (2) whether or not the petitioner was engaged in trade or business in the United States during the same years. The petitioner contends that he was a nonresident alien, and that, under the provisions of section 211(b) of the Internal Revenue Code, his transactions in securities and commodities futures did not constitute engaging in trade or business in the United States.
The record in this proceeding consists of a stipulation of facts, the testimony of petitioner and several witnesses, and exhibits.
The income tax returns of the petitioner for the years involved in this proceeding were filed with the collector of internal revenue for the district of Maryland.
The facts which have been stipulated are found as facts, and the stipulation is adopted as part of the findings of fact.
Zareh Nubar is a native citizen of Egypt, of Armenian descent. He was born in Alexandria in 1884. He is a man of great wealth and comes from a family of wealth and distinction. His grandfather, Nubar Pasha Nubar, was a Prime Minister of Egypt, and is regarded as the first great statesman of modern Egypt. Petitioner's father, Boghos Pasha Nubar, was philanthropist and founder of the Armenian General Benevolent Union, a charitable organization devoted to alleviating the suffering of Armenians throughout the world.
The petitioner attended schools in England. He married an English citizen in 1920. Two daughters born of this marriage are living. Petitioner's wife died in 1944. She was in Switzerland at the time of her death.
The petitioner has never practiced any profession or pursued any employment. He received income from his father, and later lived upon and managed his inheritance. He is a man of scholarly interests and pursuits.
The petitioner carried on transactions on the stock exchange in France from time to time, beginning in 1907. He carried on operations on foreign stock exchanges in 1917 and 1924, when he suffered losses. After the death of his father in 1930, his stock exchange transactions involved larger sums. In 1930, or at about the time, he opened accounts in New York with H. Hentz & Co., and with White, Weld & Co. through its Paris subsidiary named Quotations Facilities Corporation. In these accounts, the transactions involved American securities.
Prior to 1920 petitioner visited the following countries: United States in 1910; Turkey, Greece, Egypt, the Sudan, Russia, Norway, Sweden, Germany and England in 1911; Greece and Macedonia in 1914; and Italy in 1920.
Prior to 1915 the petitioner's residence was in Cairo, Egypt, but in 1915 petitioner and his father became residents of Paris. After his marriage, the petitioner leased an apartment in Paris, which he maintained continuously until 1944, when new owners of the property decided to terminate the lease.
In 1930 the petitioner's father gave petitioner's daughters property in Geneva, Switzerland, where a family residence was built which was occupied by petitioner and members of his family during summer periods.
The petitioner was in the United States from August 1, 1939, until August 15, 1945. After spending a short time with his daughters in Geneva he returned to Paris in March 1946, where he lived thereafter, and he is now a resident of Paris. When this proceeding came on for trial, he came to the United States to give his testimony and then departed.
After the petitioner left Paris in 1939, his wife and daughters went to Geneva. During the war they were, at various times, in occupied France, unoccupied France, and Switzerland. During the petitioner's absence from Paris, until sometime in 1944, the petitioner kept his Paris apartment, and paid rent for it regularly.
The petitioner was admitted to the United States on August 1, 1939, prior to the outbreak of war in Europe on September 1, 1939, on a three-month visitor's visa. His purpose in coming to the United States was to see the New York World's Fair, to talk with Dr. Einstein, and to travel in the United States, and later in Central and South America.
Prior to the expiration of his three-month visitor's visa, on November 1, 1939, petitioner applied for an extension of his stay and was granted an additional six months, extending the time of his visit to about April 21, 1940. Thereafter, further extensions were applied for, and the petitioner received two additional stays, which extended his visit until October 21, 1940, and December 31, 1940, respectively. Petitioner did not leave the United States on or after December 31, 1940, and on January 15, 1941, a warrant for his arrest was issued by the Department of Justice, charging that petitioner was in the United States in violation of the immigration laws and was subject to deportation. He was taken into custody and released on a bond which remained in effect until his departure from the United States in August 1945.
After his arrest and release on bond in 1941, the petitioner filed several requests for delay of his hearings before the Immigration Board, which were granted. Finally, on October 23, 1943, he was again taken into custody and was held at Ellis Island. After hearing and review by the Board of Immigration Appeals, it was ordered that the order of deportation should not be entered at that time, but that petitioner would be required to leave the United States at his own expense within ninety days after the termination of hostilities in Europe.
During the deportation hearings in 1943 the petitioner applied for permission to proceed to Canada and to reenter the United State on an immigrant's visa. This application was denied by the Department of State because the petitioner had stated that he desired to rejoin his family in Europe and did not intend to establish permanent residence in the United States.
On forms which the petitioner submitted to the Immigration Service, dated October 23, 1943, he stated that his permanent residence address was in Paris.
On August 15, 1945, the petitioner departed from the United States to go to Switzerland. He remained there with his daughters until March 1946, when he returned to Paris.
When the petitioner came to the United States in 1939, he brought with him only a small amount of clothing. During the period from August 1, 1939, to August 15, 1945, petitioner lived at the Hotel Piccadilly in New York City, a moderate price hotel. He did not retain a room there during the period when he was traveling in the United in 1940. He engaged only a single room at the hotel at weekly rates of from $8.50 to $17.50 a week. It was his custom when he left New York on week ends to check out of the room to which he was assigned and leave his luggage, consisting of one bag, in the check room.
During 1940 and 1941 the petitioner made four unsuccessful applications for a Mexican visitor's visa to visit that country, on April 29, 1940; June 4, 1940; July 15, 1940; and February 17, 1941. In his application for permission to enter Mexico which was made on April 29, 1940, the petitioner stated that he desired to visit archeological ruins and then intended to leave Mexico from Vera Cruz or from Suchiate, if he visited Guatemala. At the same time, he applied to the Egyptian consul at San Francisco for an extension of his passport, stating that he wished to go to Central and South America and that the Mexican Government wanted a validity a year ahead; and that he wished to go to Switzerland via France or Italy. It was petitioner's intention then not to return to the United States if he received admission to Mexico, but to continue on his travels to South America. After the applications to enter Mexico were denied, the petitioner returned to New York City in the summer of 1940, and from there he made his third application for permission to enter Mexico.
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