Walz v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 75790.
| Decision Date | 07 June 1935 |
| Docket Number | Docket No. 75790. |
| Citation | 32 BTA 718 |
| Parties | FRANCES R. WALZ, ADMINISTRATRIX, ESTATE OF W. G. WALZ, DECEASED, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
H. R. Gamble, Esq., for the petitioner.
T. H. Histon, Esq., for the respondent.
In this proceeding respondent has determined a deficiency against petitioner's decedent for the year 1931 of $405.70. Only a part of the deficiency is contested.
There is only one issue for us to determine, which is whether the petitioner is entitled to deduct an alleged loss of $10,231 representing the difference between the cost to the community of 400 shares of Radio Corporation of America stock, amounting to $16,881, and its fair market value, amounting to $6,650, which resulted from a partition of community property of the petitioner's decedent and his wife, Rosalie B. Walz, at the time of their divorce on July 16, 1931.
The facts have been stipulated and are a part of the record. Only such facts will be stated herein as are necessary to make clear the issue which we are to decide.
The petitioner's decedent, W. G. Walz, and Rosalie Behr Walz were married in El Paso, Texas, on May 9, 1917, and they were divorced in El Paso, Texas, on July 16, 1931. On July 15, 1931, they entered into an agreement dividing and partitioning their community property. During the year 1930 there were purchased by the community of petitioner's decedent, W. G. Walz, and his wife, Rosalie Behr Walz, among other property, 400 shares of stock of Radio Corporation of America at a cost of $16,881.
Under and pursuant to the aforesaid agreement dated July 15, 1931, the 400 shares of stock of Radio Corporation of America were partitioned to the wife of the deceased petitioner and at the date of the partition this stock had a fair market value of $6,650.
After describing the property which was to be distributed to the wife, the property settlement agreement dated July 15, 1931, contained the following paragraph:
In connection with the foregoing, it is agreed that the community property to be divided between the parties, not including the household furniture and furnishings, is of the value of Ninety-two Thousand ($92,000.00) Dollars, and that the party of the first part is entitled to one-half of all the amount, or Forty-six Thousand ($46,000.00) Dollars. In setting apart to her such interest, she shall be charged with Four Thousand ($4,000.00) Dollars for the North El Paso Street house, and with the market value of the four hundred (400) shares of R. C. A. stock, the value of the stock to be determined as aforesaid, and the value of the stock, plus Four Thousand ($4,000.00) Dollars having been deducted from the sum of Forty-six Thousand ($46,000.00) Dollars, the party of the second part shall execute unto the party of the first part his promissory note for such sum, which note shall bear interest at the rate of six per cent (6%) per annum, interest to be payable monthly; * * *
Then follows a description of the property set apart for the husband in the division of property, which need not be set out here in detail.
In decedent's income tax return filed for the year 1931 there was claimed a loss of $10,231 on the distribution of this stock to his wife. The respondent disallowed this loss in the deficiency notice and, among other things, said in connection with the disallowance:
Investigation discloses that the losses claimed resulted from a partition of community property of the taxpayer and his wife, Mrs. Rosalie B. Walz, at the time of their legal separation in July, 1931, and represents the difference between the cost of the properties and their listed price at the time of separation. It is held that "losses" resulting from the partition of community property or resulting from a separation agreement do not...
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