Richardson v. Com. of Internal Revenue, 7144.

• Decision Date: 22 May 1956
• Docket Number: No. 7144.,7144.
• Citation: 234 F.2d 248
• Parties: Richard C. RICHARDSON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

234 F.2d 248 (1956)

Richard C. RICHARDSON, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 7144.

United States Court of Appeals Fourth Circuit.

Argued April 13, 1956.

Decided May 22, 1956.

Sam B. Witt, Jr., and George W. Reilly, Richmond, Va., for petitioner.

Helen A. Buckley, Atty., Department of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., and Lee A. Jackson, Atty., Department of Justice, Washington, D. C., on brief), for respondent.

Before SOPER and DOBIE, Circuit Judges, and PAUL, District Judge.

PAUL, District Judge.

The statutory provisions pertinent to this case are sections 22(k), 23(u) and 23(a) (2) of the Internal Revenue Code of 1939, as follows:

"§ 22. Gross Income. * * *

"(k) Alimony, etc., income. In the case of a wife who is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, periodic payments (whether or not made at regular intervals) received subsequently to such decree in discharge of, or attributable to property transferred (in trust or otherwise) in discharge of, a legal obligation which, because of the marital or family relationship, is imposed upon or incurred by such husband under such decree or under a written instrument incident to such divorce or separation shall be includible in the gross income of such wife, and such amounts received as are attributable to property so transferred shall not be includible in the gross income of such husband. * * *" 26 U.S.C. 1946 ed. § 22(k).

"§ 23. Deductions from gross income.

"In computing net income there shall be allowed as deductions: * * *

"(u) Alimony. Etc., Payments. In the case of a husband described in section 22(k), amounts includible under section 22(k) in the gross income of his wife, payment of which is made within the husband\'s taxable year. If the amount of any such payment is, under section 22 (k) or section 171, stated to be not includible in such husband\'s gross income, no deduction shall be allowed with respect to such payment under this subsection." 26 U.S.C. 1946 ed., § 23 (u).

"§ 23. Deductions from Gross Income. * * *

"(a) Expenses.

* * * * * *

"(2) Non-trade or non-business expenses. In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income."

It will be noted that Sec. 22(k) provides that the wife shall include in her income payments made to her by the husband under certain conditions while Sec. 23(u) allows the husband to deduct from his income such payments as are described in Sec. 22(k).

Sec. 23(a) (2) provides for deductions to be allowed a taxpayer for expenses incurred in protecting income-producing property.

The controversy is over certain amounts which the petitioner claims he was entitled, by virtue of the above statutes, to deduct from his gross income for the years 1949 and 1950. The Commissioner of Internal Revenue disallowed these deductions and assessed deficiencies against petitioner in the amount of $3,026.89 and $5,437.03 for the taxable years 1949 and 1950 respectively. The deficiency assessments were upheld by the Tax Court in proceedings before that body and this is an appeal from that decision.

The facts are not in dispute and so far as pertinent are substantially as follows:

The taxpayer was married in August, 1943, to Doris Catherine Clark. No children have been born of this marriage. In June, 1946, Doris Catherine Richardson filed her bill of complaint against the taxpayer in the Chancery Court of the City of Richmond, alleging that the taxpayer had, without justification, deserted her in August, 1945, and had thereafter refused further cohabitation and all conjugal relations with her. The bill prayed that the defendant be required to pay to the complainant and her counsel such sums by way of alimony, pendente lite, suit money and preliminary counsel fees as to the court might seem proper; and further prayed "that the court may at the proper time (emphasis added) require the defendant to pay the complainant by way of permanent alimony for her support and maintenance" such sums as the court might determine to be adequate for complainant's needs. The bill further prayed that the taxpayer be restrained from disposing of any of his property during the pendency of the suit.

Before any final disposition of this suit the taxpayer and his wife became reconciled in January, 1947, and lived together until June, 1947, when there was another separation. In November, 1948, the wife filed a supplemental bill in the suit which was still pending in the Chancery Court, in which, after reciting various prior events including the brief reconciliation, she alleged that the taxpayer had again deserted her on June 7, 1947, and had avowed his intention of no longer living with her. The prayer of this supplemental bill is substantially the same as that of the original bill, namely, that the court award her such sums for alimony pendente lite, suit money and preliminary counsel fees as the court might think proper; and that at the proper time the taxpayer be required to pay her such sums by way of permanent alimony for her support and maintenance as the court should determine to be reasonable; and that the taxpayer be enjoined from disposing of any of his property during pendency of the suit.

To this supplemental bill the taxpayer filed a plea in abatement. On February 9, 1949, the cause came on to be heard in the Chancery Court upon the plea in abatement and the motion of the defendant to dismiss the supplemental bill. As a result of this hearing the court, by a decree entered February 17, 1949, ordered the plea in abatement stricken, denied the motion to dismiss the bill, and ordered the taxpayer to pay his wife as alimony pendente lite, until further order of the court, the sum of $250.00 a month beginning as of February 1, 1949, and to forthwith pay to the complainant the sum of $500.00 to be applied by her on account of attorney's fees. The decree then provided that the defendant should have thirty days in which to answer or otherwise plead to the bill and supplemental bill of complaint.

Pursuant to this decree of February 17, 1949, the taxpayer paid to his wife in 1949 $2,750.00 in monthly payments of $250.00 each and $500.00 for her attorney's fees. By a decree entered July 24, 1950, the court made a further allowance of $1,000.00 to be paid by the taxpayer to his wife's attorneys. In the same decree he set the case to be heard on its merits on October 23, 1950. The taxpayer paid to his wife during 1950 the sum of $2,500.00 alimony, representing monthly payments of $250.00 each through October; and paid the additional $1,000.00 for her attorney's fees.

After the case had come on to be heard on its merits in October, 1950, the Chancery Court, on October 25, 1950, delivered an opinion in which, after reciting the facts disclosed at the hearing, stated that the taxpayer had deserted his wife without just cause and that "the judgment of the court is that the wife, under the circumstances disclosed in the evidence, is entitled to a separate maintenance." This opinion of the court was followed by a formal decree dated October 28, 1950, entitled "Decree Awarding Separate Maintenance", which, after reciting that the cause had come on to be heard upon the pleadings and upon the testimony of various witnesses, and after adjudging the marriage of the parties, the desertion by the husband, and the lack of any fault on the part of the wife, provided:

"That the defendant shall, therefore, pay to the complainant a separate maintenance in the monthly sum of Two Hundred and Fifty Dollars ($250.00), the first payment to be made on the first day of November, 1950, and on the first day of each and every month thereafter until further order of the Court in this cause or until the death of either of the parties."

The decree further provided that the defendant should pay the complainant a balance of $87.28 for suit money and expenses, and should pay the further sum of $1,500.00 to the wife's attorneys for their services. The decree closed with the recitation that nothing further remained to be done and that accordingly the cause was stricken from the docket, with leave to either party to have it reinstated for good cause shown.

The taxpayer claimed as deductions in his returns for the year 1949 and for 1950 the amounts of $5,226.20 and $8,681.28 respectively. These sums covered the amounts he had paid to his wife and to her attorneys under the orders of the court during these years and included also the amount paid by him to his own attorneys and court costs paid by him. The Commissioner allowed the deduction of $500.00 representing the monthly payments of $250.00 each for separate maintenance paid in November and December, 1950, following the final decree of the Chancery Court of October 28, 1950, and as provided therein. He disallowed the balance of the claimed deductions in compiling the deficiency assessment.

In argument the petitioner stresses the fact that the suit instituted by the taxpayer's wife in the Chancery Court of Richmond was not a statutory proceeding for...