*873 Where a married woman receives no support from her husband, who willfully omits support, and the married woman's daughter is the sole support of such person, who is maintained in the daughter's home, held, the daughter is entitled to the personal exemption credit of $2,500, as the head of a family, under section 25(b)(1) of the Revenue Act of 1934, even though the husband of the dependent person lives in the same household maintained by the daughter.
*253 The Commissioner determined a deficiency for the year 1934 in the amount of $103.06. The deficiency results from the Commissioner's reduction of the personal exemption credit claimed by petitioner in the amount of $2,500, to $1,000. The only question is whether petitioner is entitled to a personal exemption credit of $2,500 as the head of a family.
FINDINGS OF FACT.
Petitioner resides in San Francisco and filed income tax return for the year 1934 with the collector for the first district of California. She is twenty-seven years of age. During the taxable year 1934 petitioner was not married. She received*874 an annual income of about $6,000 from a trust created by her deceased father. She has received an annual income of about $6,000 from that trust for over ten years. Prior to her father's death, petitioner's parents were divorced. Petitioner's mother received no property from her former husband's estate.
In 1934 petitioner lived in a six room apartment which she selected and moved into in 1932. Petitioner owned the furniture in the apartment. Petitioner maintained and supported in her home her mother, who was married to William Ash. William Ash lived with petitioner and his wife. He was employed by the Industrial Accident Commission of the State of California as a claim agent at a salary of $2,100 per annum. He told his wife that he would not pay any of the rent or maintenance charges of the apartment, any food bills, or support his wife, because he supported his mother and his daughter, both of whom lived in Oregon. He paid for his own personal expenses, such as cleaning and laundry bills. He did not give his wife any money whatever during the taxable year. He willfully omitted to support and maintain his wife, petitioner's mother. Petitioner's mother had no income of*875 her own in the taxable year. Upon her husband's failure to support her, she was dependent on petitioner, her only child, for support.
In 1934 petitioner paid all expenses of maintaining the apartment, as follows:
| Rent (12 months at $115 per month) | $1,380.00 |
| Maid | 600.00 |
| Extra maid | 100.00 |
| Cleaning | 180.00 |
| Gas and electricity | 120.00 |
| Food | 535.00 |
| Furniture | 76.88 |
| Total | 2,991.88 |
Petitioner also paid all of her mother's expenses in 1934 as follows: clothing, traveling expenses, etc., $930.77; medical expenses, $83; *254 costs of an operation, $892. Petitioner also purchased an automobile for her mother at a cost of $1,800. Petitioner paid the following for William Ash: $34.50 for medical expenses; $450 for an automobile; and several hundred dollars for clothing. Otherwise, she did not contribute to his personal expenses. Petitioner spent about $543 for her own expenses.
Petitioner selected the place of abode and servants and paid all bills. Petitioner's mother had no trade or occupation. She was operated on in July 1934 and was a long time recovering.
Petitioner was the head of the family within the intendment of section 25(b)(1) of the*876 Revenue Act of 1934.
OPINION.
HARRON: Petitioner claims a personal exemption credit of $2,500 under section 25(b)(1) of the Revenue Act of 1934 1 as a head of a family. Respondent contends that petitioner is entitled to the personal exemption credit of $1,000, only, allowed in the case of a single person.
Petitioner bases her claim to the credit as a hand of a family upon the grounds that her married mother is dependent on her for support and maintenance and that she actually supported*877 and maintained her dependent mother in one household; that her right to exercise family control and provide for her dependent mother is based on a moral obligation. Such is our understanding of petitioner's contentions from her testimony, petitioner being a lay person and having appeared for herself in this proceeding without counsel and without filing a brief on the law.
The facts show that petitioner was the sole support of her married mother in 1934 and that she maintained her mother in her own home. Also, that the husband of petitioner's mother willfully failed to support and maintain his wife and placed her in the position of a poor person dependent upon an only child, petitioner, for support and maintenance. Petitioner, by selecting and maintaining the home for herself and her mother, and by paying all expenses of the household and the mother, exercised family control. The mother was not in the position of an employee of petitioner and was not *255 capable of self-support. William Ash lived in the same household with his wife and petitioner, but he did not perform his financial duties and obligations; he did not select the place of abode. It is a reasonable conclusion*878 that, of his own will, he relinquished his place as the head of the family to petitioner. No other conclusion can be reached upon the facts nor is it necessary to reach any other conclusion in applying and construing section 25(b)(1) of the Revenue Act of 1934, according to our understanding of the intent of Congress.
Congress has allowed a higher personal exemption credit against net income, since the Revenue Act of 1916, to a person who is a head of a family or a married person. Finding nothin to the contrary in any express intent of Congress in making such provision in all the revenue acts since 1916, we assume that the underlying reason for the higher personal exemption credit is to make the tax burden of a person who supports and maintains others in the capacity of either a head of a family or a married person somewhat lighter than the tax burden of a single person or a person who is not a head of a family. This involves a weighing of social burdens. While Congress has not defined the term "head of a family", the interpretation of that term made by the Commissioner is enlightening. In Regulations 86, article 25, the term is interpreted as follows:
4. Personal*879 exemption of a head of family. - A head of a family is an individual who actually supports and maintains in one household one or more individuals who are closely connected with him by blood relationship, relationship by marriage, or by adoption, and whose right to exercise family control and provide for these dependent individuals is based upon some moral or legal obligation. * * *
The interpretation adopted by the Commissioner makes it a prerequisite, as we read his interpretation of the statute, that to be classed as a head of a family there must be a legal or moral obligation to exercise family control over a dependent person or persons. This requirement appears to us to be reasonable and to be within the intendment of the statute. Cf.
In this proceeding, so far as the record shows, petitioner's claim to be a head of a family does not put any strain upon the statute, i.e., there are no conflicting claims by persons in the same family unit for the same personal exemption. William Ash does not claim any personal exemption*880 credit as either a head of a family or as a married person. He has apparently claimed immunity from Federal income tax as a state employee. In such circumstances, we believe petitioner's claim is not defeated by other considerations relating to the legal status of William Ash under local law as a married man. *256 It is true that under local law a husband is a head of a family and has a primary legal duty to support his wife; nevertheless, where he has neglected his legal duty and failed to exercise his legal rights as a head of a family, then, in applying a provision of a revenue act, we believe that it is in accord with the intendment of Congress to hold that another person who acts as head of the family under exercise of a moral obligation was the head of the family for purposes of taxation. Petitioner supported and maintained her mother, a poor person, according to her concept of her moral obligation. There is even room for argument that petitioner had a legal obligation to support her mother in the existing situation under the provisions of
It is held that petitioner is entitled to the personal exemption credit of $2,500 as a head of a family.
Reviewed by the Board.
Decision will be entered for the petitioner.
OPPER concurs only in the result.
DISNEY dissents.
BLACK, dissenting: I think the Commissioner's determination in this proceeding should be sustained. I, therefore, dissent from the majority opinion.
The findings of fact show that the taxpayer's mother was, during the taxable year, living with her husband, William Ash, and that Ash was employed and received about $2,100 income during the taxable year. Notwithstanding this fact, William Ash and Mrs. Ash resided with*882 petitioner and petitioner contributed the entire support of her mother. Even though this was so and was a very generous act on petitioner's part, I don't think it gives her the right to deduct $2,500 personal exemption as "head of a family." Under
In
* * * A reading of the applicable regulation which we have quoted above shows that the individual or individuals whom the taxpayer must maintain and support in one household in order to constitute him the "head of a family" must be dependent upon him for support. The language of the regulation is, among other things, "and whose*883 right to exercise family control and provide for these dependent individuals is based upon some moral or legal obligation." [Italics ours.]
I will agree that if it can be said, under the facts found in the majority opinion, that Mrs. Ash was "dependent" upon her daughter as the word "dependent" is commonly and ordinarily understood, then there would be "moral obligation" enough on petitioner's part to fulfill the requirement of the regulation. But how can it be said, under the facts found, that Mrs. Ash was dependent upon her daughter for support? She was living on amicable terms with her husband, and her busband was employed and received an income of about $2,100 in the taxable year, though apparently contributing nothing to the support of his wife. I think it is stretching the law beyond anything that Congress ever intended to hold that under such circumstances the mother is dependent upon her daughter for support and that the daughter, who furnished support under these circumstances in one household, maintained by her, is entitled to deduct $2,500 as the "head of a family."
Now, if the mother had been estranged from her husband and not living with him and had no means*884 of support of her own and on that account lived with her daughter, doubtless under such circumstances the daughter would be entitled to the $2,500 personal exemption provided by law for the head of a family. Cf.
But the facts here are not that kind of a case and, under the facts as found, I can not agree that petitioner is entitled to the $2,500 personal exemption provided by law for the "head of a family."
ARNOLD and HILL agree with this dissent.
Footnotes
1. SEC. 25. CREDITS OF INDIVIDUAL AGAINST NET INCOME.
* * *
(b) CREDITS FOR BOTH NORMAL TAX AND SURTAX. - There shall be allowed for the purposes of the normal tax and the surtax the following credits against net income:
(1) PERSONAL EXEMPTION. - In the case of a single person, a personal exemption of $1,000; or in the case of the head of a family or a married person living with husband or wife, a personal exemption of $2,500. A husband and wife living together shall receive but one personal exemption. The amount of such personal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them. ↩
2.
SEC. 206↩ . It is the duty of the father, the mother, and the children of any poor person who is unable to maintain himself by work, to maintain such person to the extent of their ability. The promise of an adult child to pay for necessaries previously furnished to such parent is binding.