*3922 A wife's compensation for personal services, where an agreement exists between herself and her husband, under the laws of the State of California that such compensation shall be her separate income and separate property, and where she has made separate income-tax returns, may not be added to and taxed as income of the husband.
*1233 This proceeding results from the determination by respondent of a deficiency in income tax for the year 1922, amounting to $3,215.23.
Petitioner alleges that respondent has erred in adding to the income reported by petitioner a salary amounting to $12,000 earned by the wife of petitioner which was her separate property.
FINDINGS OF FACT.
The petitioner, a resident of San Francisco, during the year 1922 and for some years prior thereto and since, has been married and living with his wife, M. E. Davis. For some years prior to, during, and since 1922, the petitioner has been and is the president of a corporation known as the Wisconsin Furniture Co. His wife has been and is a large stockholder and secretary of said*3923 company. At a meeting of the board of directors of said corporation held on August 26, 1919, the said board, by proper corporate action entered upon the minutes thereof, fixed and designated salaries and other compensation to be paid to the president and the secretary, and the salaries then fixed or as thereafter increased have been regularly paid to the said president and secretary, and during the calendar year 1922, the secretary, M. E. Davis, wife of petitioner, received such salary in the amount of $12,000.
During all the years from 1919 to the present time such or similar salaries have been paid to petitioner's wife, and under a continuing agreement and understanding between petitioner and wife, such salary compensation has been treated as the separate income and separate property of the wife. She has kept her funds in her separate bank account and has had full possession and control of the moneys. She has made investments of such funds and retained control of the investments. The husband has never received nor had any control over or any benefit from the amounts paid to his wife as salary for her services to the said corporation. During each of the years *1234 *3924 from 1919 to 1922, inclusive, the husband and wife have each made separate income-tax returns and paid taxes due thereon.
OPINION.
TRUSSELL: The record in this case clearly establishes that during all the period from 1919 to 1922, inclusive, and since that time, the petitioner and his wife had each drawn from the Wisconsin Furniture Co. the compensation designated and authorized by said company and have each treated the same as their separate income and separate property. All the facts disclosed convince us that during those years there existed a clear and definite agreement between husband and wife as to the character and the exclusive possession and use of such salaries and that such agreement has been continuously in existence and continuously acted upon by each of them. The Board has heretofore had similar situations under consideration in the ; ; ; ; *3925 ; and . The opinions and decisions of the Board in those cases are controlling here. The wife's compensation for the year 1922 should not have been added to the petitioner's income.
Judgment will be entered for the petitioner.