Tressler v. Commissioner of Internal Revenue
| Decision Date | 10 November 1955 |
| Docket Number | No. 14205.,14205. |
| Citation | 228 F.2d 356 |
| Parties | S. B. TRESSLER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Joseph A. Fitzsimmons, Fort Lauderdale, Fla., for petitioner.
H. Brian Holland, Asst. Atty. Gen., John Potts Barnes, Chief Counsel, I. R. S., Chicago, Ill., Melva Graney, Ellis N. Slack, A. F. Prescott, George F. Lynch, Sp. Assts. to Atty. Gen., for respondent.
Before HEALY and POPE, Circuit Judges, and LINDBERG, District Judge.
This case is before the court on a petition to review a decision of the Tax Court of the United States.
The facts for the purpose of review are to be found largely in the memorandum findings of fact and opinion of the Tax Court which are not officially reported.1 They may be summarized as follows:
Petitioner, residing in Reno, Nevada, filed his federal income tax returns for 1946 and 1947 on the cash basis.
In August, 1944 he married Ada Zoeller Tressler in Maryland. On their honeymoon they visited petitioner's sons Norman and Kenneth in Reno, and subsequently went to Florida to spend the winter. Early in 1945 petitioner purchased several parcels of real estate in Florida, including two apartments known as Maxwell Court Apartments for $45,000 and Tarpon River Apartments for $22,875, title to which was taken in the name of petitioner's son Kenneth.
On March 7, 1945 Ada filed in the Circuit Court of Florida a "Bill for Alimony Unconnected with Divorce,"2 praying for "temporary and permanent support and alimony unconnected with a divorce together with suit money and a reasonable amount with which to compensate her attorneys." She also asked for a decree adjudging that the properties purchased in the name of Kenneth were held in trust for petitioner and requested that a receiver be appointed to take charge of the apartments, collect the rents and pay the proceeds into court to insure the payment of any sums that might be adjudged due and payable to her by petitioner.
On March 13, 1945 the Florida Court entered an order appointing Ruth Westerberg receiver for the apartment properties (other property of petitioner in Florida was not included in the receivership), restraining Kenneth and petitioner from transferring the properties, and directing the receiver to collect the rents, pay expenses of operation, and deposit the balance of the receipts in a bank subject to further court order.
Petitioner was served with process by publication, and a decree pro confesso rendered against him on June 5, 1945.3 He at no time appeared or submitted himself to the Florida state court's jurisdiction.4
On June 28, 1945 an order was entered making an allowance of $300 per month, retroactive to March 3, 1945, for temporary alimony and support of Ada and $2,000 temporary attorney fees, and court costs of $334.86. This order was appealed by Kenneth without avail.
On July 17, 1945 petitioner was granted a divorce from Ada in the District Court of Nevada. Ada did not appear in or contest the Nevada divorce action and no provision for alimony was made therein.
In October, 1945 Kenneth sought to file a further answer in the Florida proceedings in an effort to secure possession of the apartment properties and to plead the Nevada divorce, but was denied the right to file the answer. By order dated January 7, 1946 the Florida court decreed that the apartment properties were the properties of petitioner and held in trust for him by Kenneth. Later in January the court ordered the receiver to pay the sum of $5,334.86 as follows: $3,000 for accrued support of Ada from March 3, 1945 to January 3, 1946; $2,000 temporary attorneys fees; and $334.86 costs.
An appeal from these orders by Kenneth resulted in an affirmance by the Florida Supreme Court, Tressler v. Tressler, 157 Fla. 881, 27 So.2d 341, and the United States Supreme Court denied certiorari, 329 U.S. 796, 67 S.Ct. 481, 91 L.Ed. 681. While the appeal of the Florida state court proceeding was pending petitioner filed suit in the United States District Court in Florida seeking recovery of the apartment properties. A motion to dismiss this action was granted and an appeal taken. While the latter appeal was pending and after Kenneth's petition for certiorari was denied by the United States Supreme Court, the parties entered into a settlement agreement under which Ada acquired the Tarpon River Apartments and other properties and petitioner retained the Maxwell Court Apartments. In accordance with the settlement agreement all the litigation above described was terminated and a decree entered by the Florida court to the effect that the various court orders be marked satisfied and the properties be released from the receivership.
A summary of the income and disposition of the rents collected, expenses paid, and disposition of the remaining funds by years by the receiver appears in the margin.5
On August 31, 1947 the petitioner sold the Maxwell Court Apartments for $59,000.
In connection with the litigation in the Florida and the United States Courts, petitioner bore the expense of legal representation for Kenneth and himself. For the year 1946 he claimed on his return a deduction of $1,425 for legal expenses and attorney fees; by amended pleadings before the Commissioner he claimed $5,500. For 1947 he claimed a deduction of $5,035 for such expenses; by amended pleadings before the Commissioner he claimed $6,535.
The Commissioner determined a deficiency of $701.07 for 1946 based on disallowance of claimed legal expenses of $1,425 and depreciation of $1,931.25. By amended answer the Commissioner increased the deficiency for 1946 to $2,239.64 based on his contention that the taxpayer realized additional income by reason of the payment of $5,334.86 made by the receiver to Ada under the January 17, 1946 order of the Florida court for support, attorney fees, and court costs.
The Commissioner determined a deficiency of $936.29 for 1947 as a result of the disallowance of the claimed deduction of $5,035 for attorney fees and an error of $1,000 (admitted by taxpayer) in computing net income. By amended answer this deficiency was increased to $3,967.15 partly based on the contention that the taxpayer realized additional income by reason of payments amounting to $7,099.70 made by the receiver under final decree of the Florida court dated July 16, 1947. The increase also was occasioned by disallowance of $2,517.50 legal expense which were added by the Commissioner to the cost of the Maxwell Court Apartments in computing the capital gain arising from the sale thereof. Another portion of the increase resulted from increasing the capital gain by offsetting depreciation for 1946 on the apartment in the sum of $1,246.
The Tax Court sustained the Commissioner in his actions with respect to both tax years, except that for the year 1947 it held that the items of $2,862.55 and $1,500 paid to the attorneys for the receiver (See schedule in margin supra) represented receivership expenses and did not, as the Commissioner contended, constitute additional income to the petitioner. Decisions were entered by the Tax Court in accordance with a computation made under Rule 50 of the Tax Court rules, 26 U.S.C.A. (I.R.C.1954), § 7453.
The petitioner contends first that the Tax Court erred in holding that the sums paid Ada Tressler by the receiver pursuant to court order of temporary support, attorney fees and court costs constituted income to the taxpayer. To sustain this contention he asserts that the Tax Court failed to accord full faith and credit to the final decree of divorce entered by the Nevada court on July 17, 1945 and further failed to consider that payments made by the order of the Florida state court dated January 17, 1946 were made from properties held in trust and subsequent to divorce and were taxable to the former wife Ada and not to petitioner.
The gist of petitioner's complaint in reality appears to be that the Florida state court erred in holding him obligated to make payments to his one-time wife Ada and in satisfying such obligation through the sequestration of certain of his Florida properties. Failing before the Florida as well as the United States courts in the principal litigation he now seeks to be relieved, in part at least, through avoiding tax liability on income actually not in hand received6 but held by the Florida courts to be his although owing to others under legal obligation. Neither the merits nor the validity of the Florida litigation and decrees were before the Tax Court for review nor are they before us. Those issues were resolved when, after the United States Supreme Court refused certiorari and the United States District Court denied relief, petitioner settled the Florida suit for "temporary alimony and support."
The question before the Tax Court was the tax liability resulting from the income received and sums paid from rentals of petitioner's Florida apartment properties in receivership. In ascertaining this the Tax Court was bound by and followed the decree of the Florida court just as it was bound by and followed the Nevada decree of divorce.
Petitioner's contention that the payments made to his former wife under order of the Florida court were taxable as income to her and not to petitioner under the provisions of Sections 22(k), 23(u) and 171 of Title 26 U.S.C. is not tenable under the unquestioned findings of the Tax Court. These findings were:
...
To continue reading
Request your trial
-
Rodney v. Comm'r of Internal Revenue
...would result in taxable income to petitioner, in that it would have relieved him of a personal obligation. See Tressler v. Commissioner, 228 F.2d 356 (C.A. 9, 1955) (and cases cited in fn. (6), affirming a Memorandum Opinion of this Court. The record does not disclose the nature of or princ......
-
United States v. Gilmore, 21
...support are not deductible by either the husband or the wife.' 20 See, e.g., the present case, 290 F.2d, at 947; Tressler v. Commissioner, 228 F.2d 356, 361 (C.A.9th Cir.); Howard v. Commissioner, 202 F.2d 28, 30 (C.A.9th Cir.). 21 Compare, with the present case, Davis v. United States, 287......
-
Maier Brewing Company v. Commissioner
...property for purposes of depreciation. See Tressler v. Commissioner Dec. 19,155(M), T.C. Memo. 1953-111, affd. 56-1 USTC s 9102 228 F.2d 356 (9th Cir. 1955). However, in the taxable year 1966, the year of foreclosure, petitioner must realize additional gain on disposition of the property un......
-
Schaeffer v. Commissioner of Internal Rev.
...not actually received by him. Old Colony Trust Co. v. Commissioner, 279 U.S. 716, 729, 49 S.Ct. 499, 73 L.Ed. 918; Tressler v. Commissioner, 9 Cir., 228 F.2d 356, 359, Note 6; Northern Trust Co. of Chicago v. United States, 7 Cir., 193 F.2d 127. The immediate payment of the amounts so credi......