Vance v. Comm'r of Internal Revenue

• Decision Date: 20 June 1961
• Docket Number: Docket No. 84413.
• Citation: 36 T.C. 547
• Parties: AARON F. VANCE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

36 T.C. 547

AARON F. VANCE, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 84413.

Tax Court of the United States.

Filed June 20, 1961.

Dickinson Thatcher, Esq., for the petitioner.

Lawrence S. Kartiganer, Esq., and L. Justin Goldner, Esq., for the respondent.

A State court order granted custody of petitioner's two minor children to their mother, with visitation rights to petitioner and ordered petitioner to pay weekly sums for the support and maintenance of the children. Held, petitioner has failed to prove he supplied over one-half of the support of his two children in 1955, 1956, and 1957. Held, further, that his contributions for support of the children would not include such items as a part of the estimated rental value of his own home where he and his mother lived, life insurance premiums on the lives of the children, a portion of the cost of organs he installed in his own home, and automobile expenses for conveying the children between his home and theirs. Held, further, petitioner is not entitled to a casualty loss deduction in 1955 for household furniture repossessed in default of payments on a loan. Held, further, petitioner is not entitled to a deduction in 1956 for the ‘theft’ of household fixtures.

MULRONEY, Judge:

The respondent determined deficiencies in petitioner's income tax of $288.23 in 1955, $312 in 1956, and $312.48 in 1957. By amended answer respondent affirmatively pleaded new matter which increased the deficiencies for 1955 and 1956 by $444.86 and $273.20, respectively. The questions for decision are:

(1) Whether petitioner furnished more than half of the support of each of his two minor children during each of the years in question; (2) Whether petitioner suffered a casualty loss in 1955, under section 165 of the Internal Revenue Code of 1954,¹ of $1,022 when furniture was repossessed because of default on a loan; and

(3) Whether petitioner suffered a theft loss of household fixtures in 1956.

The last two questions were raised affirmatively by respondent in an amended answer.

FINDINGS OF FACT.

Some of the facts have been stipulated and they are found accordingly.

Petitioner, Aaron F. Vance, resided in Pomona, California, in 1955 and part of 1956; in Van Nuys, California, for part of 1956, and in Sherman Oaks, California, for part of 1956 and all of 1957. His income tax returns for the years in question were filed with the district director of internal revenue at Los Angeles, California.

Petitioner and Beverly J. Vance were married in 1948. Two children, Paul and Debra, were born to them. Petitioner's marriage to Beverly was annulled in April 1954 by a California court and petitioner was ordered to pay Beverly $25 per week for the support and maintenance of the children. The court amended these payments in November 1957 to $20 per week for Paul and $15 per week for Debra. Pursuant to the court orders, petitioner paid Beverly $1,250 in 1955, $1,175 in 1956, and $1,340 in 1957.²

Petitioner and Beverly were both employed by North American Aviation Corporation during the years in question. Petitioner's net salary, after deductions for FICA and Federal withholding taxes, was $8,522.66 in 1955, $9,663.49 in 1956, and $9,284.44 in 1957. Beverly's net salary, after the same deductions, was $3,957.02 in 1955, $4,403.66 in 1956, and $4,810.25 in 1957. In addition Beverly had available some additional funds from gifts, loans, a savings account, and insurance during the years in question.

During 1955, 1956, and 1957 Beverly had custody of the two children by virtue of the annulment decree. Petitioner had visitation rights with the children under the court order which he exercised during the years in question. It is stipulated he had the children in his care as follows:

+--------------------+
                ¦    ¦      ¦Hours   ¦
                +----+------+--------¦
                ¦    ¦{Paul ¦1,876   ¦
                +----+------+--------¦
                ¦1955¦      ¦        ¦
                +----+------+--------¦
                ¦    ¦{Debra¦1,299   ¦
                +----+------+--------¦
                ¦    ¦{Paul ¦2,536   ¦
                +----+------+--------¦
                ¦1956¦      ¦        ¦
                +----+------+--------¦
                ¦    ¦{Debra¦2,536   ¦
                +----+------+--------¦
                ¦    ¦{Paul ¦2,724   ¦
                +----+------+--------¦
                ¦1957¦      ¦        ¦
                +----+------+--------¦
                ¦    ¦{Debra¦2,724   ¦
                +--------------------+
                

Beverly and the children lived in rented houses or apartments until sometime in 1957 when she purchased a house. She paid rent and utilities, purchased food, clothing, and furniture for the children, provided them with toys and entertainment, and paid medical and dental expenses when necessary. Because she worked during the day she paid for child care for them while she was away at work. She maintained an automobile for her own use and for that of the person caring for the children.

In addition to the amounts paid pursuant to the court order petitioner purchased some food, clothing, toys, paid some medical expenses, provided music and dancing lessons and entertainment for the children.

Petitioner claimed dependency deductions for both children on his income tax returns for the years 1955, 1956, and 1957. Respondent disallowed said deductions.

In 1953 petitioner borrowed $884.37 from a loan company secured by a chattel mortgage on furniture. On January 8, 1955, the furniture was repossessed by the finance company due to a default on the loan. Petitioner deducted $1,022 as a casualty loss on his 1955 tax return for the repossessed furniture. By amended answer respondent affirmatively pleaded an increased deficiency based on the disallowance of this amount.

In 1955 Beverly moved from the house which she and petitioner had occupied prior to the annulment of their marriage. On leaving she removed a laundry tray with its attendant plumbing, a metal cabinet, special chimes, mercury switches, and a television aerial. Some of the items were later returned. On his income tax return for 1956 petitioner deducted $998 and described the deduction as ‘theft of household fixtures * * * and legal expenses in connection with theft & title to property.’ In the amended answer respondent affirmatively pleaded an increase deficiency based on the disallowance of this amount.

OPINION.

Petitioner has the burden of proving that his two children were his ‘dependents' within the meaning of section 151(e). Section 152(a) defines the term dependent as here applicable as meaning a son or daughter of the taxpayer ‘over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer.’ Thus it is petitioner's burden to establish not only what amount he contributed toward their support, but he must also show in some way that it exceeded one-half of their total support. Cf. James H. Fitzner, 31 T.C. 1252. The parties have stipulated that he paid $1,250 in 1955, $1,175 in 1956, and $1,340 in 1957 to Beverly under the court decree for the children's support. Petitioner argues that he spent additional amounts for their support during these years, and respondent concedes that he spent a total of $1,390 in 1955,³ $1,591.83 in 1956,⁴ and $1,956.90 in 1957.⁵ In addition to the items conceded by respondent, petitioner would substantially increase his contributions to include as support furnished by him a part of the estimated rental value of the home in which he and his mother lived ($810 in 1955, $680 in 1956, and $740 in 1957), life insurance premiums on insurance policies on the lives of the children ($55.64 in 1957), a portion of the cost of two organs which he bought in 1957 and installed in his own home ($355.40 in 1957), and automobile expenses for conveying the children between his home and theirs ($175 for each of the years involved). We do not consider any portion of the rental value of his house and furniture as a part of the support of the children. Beverly had custody of the children and the duty to provide them with a place to live. Petitioner was merely exercising his personal rights of visitation when he brought the children to his own home and he was under no necessity to provide a home for them. Life insurance premiums are not items of support. Portions of the purchase price of the organs which he installed in his own home are not allocable to the children's support and...