*3835 Neither the petitioner nor her husband filed income-tax returns for the years 1917 to 1921, inclusive. When the collector made returns for the petitioner and her husband, under the provisions of section 3176, Revised Statutes, as amended, the petitioner and her husband directed the collector to make the returns joint returns. Taxes were assessed against the petitioner's husband. Not being able to collect the tax from the husband, the respondent determined a deficiency against the petitioner of one-half of the tax and penalty shown to be due on the joint returns filed. Held, that the petitioner had no income for the taxable years in excess of the specific exemption to which she was entitled and which she claims.
*275 This proceeding is for the redetermination of a deficiency in income tax for the years 1917, 1918, 1919, 1920 and 1921, in the total amount of $318.09, and a delinquency penalty of $87.67.
FINDINGS OF FACT.
During the taxable years W. B. Burkhart, the husband of Rosa E. Burkhart, was engaged in the*3836 mercantile business in a small way, in Missoula, Mont. Neither W. B. Burkhart nor Rosa E. Burkhart made income-tax returns for either of the taxable years. On February 8, 1923, the following document was executed:
INTERNAL REVENUE SERVICE,
Missoula, Montana, Feb. 8, 1923.
Mr. H. K. ROUZER,
Internal Revenue Agent,
DEAR SIR:
We hereby request that returns for 1917-1918-1919-1920-1921 shall be a joint return.
(Signed) W. B. BURKHART
(Signed) ROSA E. BURKHART
WITNESS:
(Signed) H. K. ROUZER.
On February 13, 1923, the following document was executed:
FEBRUARY 13, 1923.
Income and Profits Tax Waiver.
In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, W. B. Burkhart and Rosa E. Burkhart of Missoula, Montana, and the Commissioner of Internal Revenue, hereby consent to a determination, assessment and collection of the amount of income, excessprofits *276 or war-profits taxes due under any return made by or on behalf of the said W. B. Burkhart and Rosa E. Burkhart for the years 1917-1918-1919-1920-1921 under the Revenue Acts of 1921 or under Section 38 of the Act entitled "An Act to provide revenue, equalize*3837 duties and encourage the industries of the United States, and for other purposes," approved August 5, 1909, irrespective of any period of limitations.
(Signed) W. B. BURKHART
Taxpayer
APPROVED Mar. 23, 1923.
(Signed) ROSA E. BURKHART
(Signed) D. H. BLAIR
Commissioner of Internal Revenue.
The petitioner owned no interest in the mercantile business conducted by her husband, but worked in the store regularly as clerk, besides acting in the capacity of housewife for her husband. For such services the petitioner's husband, W. B. Burkhart, agreed to pay petitioner $40 per month as clerk and $25 per month as housewife. For about ten years prior to 1921 the petitioner had been performing such services and regularly each year the amount of her wages was credited to her on the books of the mercantile business, but she had not drawn any considerable part of same. She had in the beginning of that business loaned to her husband a small amount of money (the exact amount is not disclosed), and from year to year was credited with some interest on her undrawn credits. In 1921 her credit account, including accumulated interest, amounted to something over $10,000. On April 13, 1921, in*3838 consideration of the settlement and cancellation of the credit account, W. B. Burkhart transferred to the petitioner lots numbers 33 and 34 in the City of Missoula, and 160 acres of land. The 160-acre tract was then encumbered with mortgage loan for $2,000, and the petitioner subsequently mortgaged it to secure an indebtedness of W. B. Burkhart to a bank in the amount of $4,000. Petitioner also assumed the burden of paying to some of her children amounts owed to them by W. B. Burkhart for services rendered to him, the amount of which is not disclosed.
The property encumbered as it was, so conveyed to Rosa E. Burkhart, did not have a market value of more than $8,000.
The computation attached to the deficiency notice sent by the respondent to Rosa E. Burkhart, introduced in evidence by the respondent without objection, disclosed the fact that the taxable income of the W. B. Burkhart mercantile business for the taxable years was as follows:
| Year. | Amount. |
| 1917 | $5,031.70 |
| 1918 | 3,004.03 |
| 1919 | 3,342.40 |
| 1920 | 10,407.60 |
| 1921 | 5,407.17 |
*277 At the time W. B. Burkhart conveyed his property to the petitioner he owed no other debts, but soon thereafter he*3839 became financially embarrassed and in 1922 was adjudged bankrupt.
When the revenue agent in 1923 made an audit of the books of the W. B. Burkhart mercantile business, made his report, and made returns for W. B. Burkhart for all the years in question, the respondent assessed all the taxes claimed by him to be due under such returns against W. B. Burkhart. After obtaining the request dated February 8, 1923, hereinbefore set out, he treated those returns as joint returns and divided the taxes and penalties claimed to be due upon the basis of the returns, equally between the husband and wife.
On February 19, 1925, a deficiency notice was mailed to the petitioner, stating her deficiency in the total amount of $405.76, just one-half of the amount originally assessed against W. B. Burkhart. There is nothing in the record to show that a deficiency notice was mailed to W. B. Burkhart, and W. B. Burkhart has not appealed from any deficiency notice, if one was sent.
OPINION.
SMITH: At the hearing of this proceeding counsel for respondent moved for judgment in accordance with the proof adduced, and asked for a decision to the effect that the petitioner be adjudged to be indebted*3840 for taxes on her salary income. He also renewed his motion filed on April 17, 1925, to dismiss the appeal for want of jurisdiction. Briefly, the grounds for the latter motion were that the assessment of the tax in question had been made prior to the enactment of the Revenue Act of 1924, and that only adjustments had been made relative to same since the enactment of that Act, and that the Board had no jurisdiction to review such action on the part of the respondent. A motion the same as the last was denied by the Board on May 12, 1925.
Both of these motions must be denied.
The determination of the deficiency made by the respondent with reference to the petitioner, of which notice was mailed to her on February 19, 1925, was the first and only determination and notice made by the respondent and sent to the petitioner; that determination was made subsequent to the enactment of the Revenue Act of 1924, and that situation gives to the Board jurisdiction of the proceeding.
If the petitioner had any income during any of the taxable years, it represented amounts paid to her by her husband or credited to her upon his books of account. The evidence is not clear that he made any payments*3841 to her except those made in 1921, when he turned over his property to her. At the hearing she claimed to be entitled to *278 one-half of the personal exemption allowed a married couple. We are convinced that any income received was not in excess of the personal exemption to which she was entitled under taxing acts, and that in any event the income in any year was not in excess of $900. We are of the opinion that the $25 allowed to the wife as compensation for acting as housewife was not taxable income to her. This amount represented merely a personal expense of W. B. Burkhart and not income of the petitioner. Upon the record we must hold that there was no income tax liability assessable against the petitioner for any of the years 1917 to 1921.
Judgment will be entered for the petitioner.