Patino v. Comm'r of Internal Revenue

• Decision Date: 29 November 1949
• Docket Number: Docket No. 16826.
• Citation: 13 T.C. 816
• Parties: CRISTINA DEBOURBON PATINO, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

13 T.C. 816

CRISTINA DEBOURBON PATINO, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 16826.

Tax Court of the United States.

Promulgated November 29, 1949.

Petitioner, the wife of a Bolivian diplomat accredited to Great Britain, entered the United States, as did her husband and children, as war refugees, in 1940. She remained in the United States, except for short trips to Mexico and Italy, until at least the end of 1945, the last taxable year, living in a hotel in New York City. She twice brought action for divorce against her husband, her second petition, in 1943, alleging her residence in New York. From July 1, 1942, to July 10, 1944, she and her husband had a written agreement of separation, and in May 1945 he abandoned her. Held, on the facts, that during 1944 and 1945 she was a resident alien; held, further, that her failure to file an income tax return was with reasonable cause. Basis of stock determined from the evidence. Aloysius F. Schaffner, Esq., and J. Harlin O'Connell, Esq., for the petitioner.

William F. Evans, Esq., for the respondent.

This proceeding involves deficiencies in income tax for the years 1944 and 1945 in the amounts of $3,479.97 and $12,972.57, respectively, and a penalty for 1944 in the amount of $869.99. The primary issue is whether or not petitioner was a resident alien during the taxable years. Other questions relating to dividends, interest, capital gain, and the penalty asserted for failure to file a timely return depend, in part, upon the answer to that question. Petitioner claims that she is entitled to a refund of $1,573.15 for the year 1944.

FINDINGS OF FACT.

Petitioner, on April 8, 1931, while a resident of Madrid, Spain, and a national of that country, married Antenor Patino, hereinafter sometimes referred to as ‘Patino,‘ who was a national of Bolivia, serving as second secretary of its legation in Spain. Thereafter, he was appointed secretary to the legation in Paris, which post he retained until March 1938, when he was appointed minister to Great Britain.

From 1936 until April 1938, when Patino went to London to assume his new duties, he and his wife and two young children occupied a house in Paris, which Patino had previously purchased and furnished. While in London, the the family occupied quarters in a hotel and in a rented house. Patino continued as Bolivia's minister to Great Britain until May 1945, when he was appointed envoy extraordinary and minister plenipotentiary, without portfolio.

In June 1940 Patino and his family went from France to Spain to escape from the German invasion. In September 1940 Patino and his two children, then 5 and 8 years of age, respectively, came to the United States. Petitioner joined them in the United States about October 25 or 26, 1940. Patino's father came to this country from Europe at about the same time, and left for Argentina in 1945. All of them came to the United States to avoid the war then going on in Europe. The Patino family lived in an apartment in the Hotel Plaza, New York City. Petitioner brought no personal belongings with her to this country other than jewelry and clothes and had no other property of her own in the apartment. Petitioner entered the United States under a diplomatic passport issued to her as the wife of the minister of Bolivia to Great Britain, and a diplomatic visa issued by the American Embassy, at Madrid, Spain, on August 30, 1940.

On Mary 6, 1941, the Department of State issued a notice that petitioner had notified it of her ‘status in the United States as wife of an official (or employee) of the Bolivian Government.‘

Petitioner was in the United States at all times after October 1940 through 1945, except for a trip to Mexico in July 1941 to visit relatives and a trip to Italy in September 1941, from which she returned in December 1941. She reentered the United States from Mexico under a diplomatic visa granted under section 3(2) of the Immigration Act of 1934. She was admitted by an immigrant inspector, under the same provision, for one year. A diplomatic visa was used to reenter the United States on the return trip from Italy. Upon her return to the United States, petitioner joined her husband at the Hotel Plaza. At the time of trial in December 1948 she was staying at the Savoy Plaza Hotel. She brought nothing back with her except the personal effects she had taken with her for the trip.

In May 1941 petitioner instituted an action against Patino in the Supreme Court of the State of New York for a divorce. She and her children then moved out of the quarters they had been occupying with her husband and into a furnished apartment in the Savoy Plaza Hotel in New York City. They had no personal belongings in the new apartment other than clothing and jewelry. Except for a period of two months in 1942, when they were absent from New York City on a vacation, petitioner and her two children occupied the apartment continuously until July 10, 1944. Petitioner did not live or have marital relations with Patino from May 1942 until July 10, 1944. Petitioner opened a bank account in New York City after she left her husband. The action for divorce was discontinued on July 1, 1942.

On July 1, 1942, petitioner and her husband entered into a property settlement and separation agreement, in which the husband agreed, among other things, to pay to petitioner, so long as they continued to be married and not permanently separated or divorced, the amount of $24,000 per annum for her sole and exclusive use, and $30,000 if they should become permanently separated or divorced and, in addition to the $30,000, the amount of $20,000 annually for the support of their two children. When a child married or attained her majority or if she died prior to the happening of either event, petitioner was to receive the amount payable for the support of such child. Petitioner was given the sole and exclusive custody of her children. It was agreed that the parties would continue to live separate and apart from one another and that each should be entitled to live free from the control, direct or indirect, of the other, in the same manner as if they were unmarried, and to engage in any occupation without the consent or approval of the other; also, that ‘Each party may reside in any place * * * without the consent or approval of the other party in all respects as if unmarried.‘ The agreement recites that each of the parties thereto had been fully advised by counsel of his or her own selection of their legal rights and understood the entire agreement. The payments were secured by 21,763 shares of stock of the Patino Mines & Enterprises Consolidated, Inc., a Delaware corporation. The payments required by the agreement were made until July 10, 1944.

In March 1943 petitioner filed a suit in the Supreme Court of the State of New York against Patino for an absolute divorce. The complaint alleged that petitioner and her husband had been residents of the State of New York since October 26, 1940. The answer denied that the parties had been residents of the State of New York since October 26, 1940, and alleged that he was not and never had been a resident of the State of New York. The pleadings were not signed or verified by petitioner or Patino. The action was never tried.

By the terms of the agreement petitioner and Patino entered into on July 10, 1944, they agreed to resume their marital relations and Patino agreed to provide a home for and support petitioner and their two children, and to pay to petitioner for her exclusive use the sum of $500,000, payable $100,000 in cash on the signing of the agreement, a like amount by delivery to her of 5,000 shares of the stock of Patino Mines & Enterprises Consolidated, Inc., the receipt of which she acknowledged, and $300,000 on January 1, 1945, with interest thereon from the date of the agreement at the rate of 6 per cent per annum, and a further amount of $500,000 on July 7, 1951, the latter amount to become immediately due and payable if he abandoned petitioner. Other provisions of the instrument canceled the agreement entered into on July 1, 1942, gave petitioner the custody of their two children in the event Patino abandoned petitioner, provided for the discontinuance of the action then pending for divorce, and recited that each party to the agreement had taken legal advice from independent counsel of their own selection, who had explained to them their full rights and obligations under the terms of the agreement, and that Patino and petitioner executed the document with a full understanding of its provisions. Interest in the amount of $5,243.83 was paid on the installment due January 1, 1945, and was reported by petitioner in her return for 1944.

The petitioner and her two children continued to live in a furnished apartment in the Savoy Plaza Hotel, in New York City, through the year 1945. Except for a period of about six weeks, Patino lived with them until May 1945, when he abandoned petitioner and thereafter did not live with her. He left the United States in May 1945 and did not return to this country during the remainder of the year, or, with petitioner's knowledge, until 1948. He was in Canada from August to October 1945, and then left for a trip to South America. In 1945 Patino filed a suit against petitioner in Paris for a divorce. Papers involved in the action were served on petitioner through ‘the consulate.‘ The proceeding has never been tried. Petitioner and her husband had no property in the apartment other than personal effects. In May 1945 she instituted suit in the courts of New York State and in July 1945 obtained a judgment thereon by default against her husband for the amount payable to her under the reconciliation agreement in the event he abandoned her without cause.

In 1941 Patino made two trips to his diplomatic post in London, one in March and the other in September, each lasting about a month. In 1942 he made one trip to the...