*40 Decision will be entered for the respondent.
H, a United States citizen employed in Spain as a civilian by the United States Air Force, and a resident of Spain, was married to W, a Spanish citizen who has no United States residence. The marriage ceremony took place outside Spain. The Civil Code of Spain contains comprehensive community property provisions governing the rights and interests of one spouse in the other's earnings. Held: Explicit provisions of art. 1325 of the Spanish Civil Code render the community property laws therein inapplicable to couples like H and W, and thus no portion of H's earnings belonged to W under Spanish law. H, who filed United States income tax returns without W, was therefore required to report his full earnings on such returns.
*53 The Commissioner determined deficiencies in petitioner's income tax in the amounts of $ 127.80 and $ 2,020.38 for the calendar years 1967 and 1969, respectively. Petitioner was a United States citizen who, as a civilian employee of the United States Air Force, worked and resided in Spain; his wife was a citizen and resident of Spain. The sole remaining issue is whether one-half of petitioner's gross income belonged to his wife under Spanish community property law and was therefore not taxable to petitioner.
FINDINGS OF FACT
The parties have stipulated to certain facts and exhibits which are incorporated herein by this reference.
Ramon R. Santiago (petitioner) is a United States citizen who resided in Madrid, Spain, at the time he filed his petition herein. He was born in Rochester, N. Y., in 1917. Both his parents were native-born Spaniards, and on two occasions during his youth, when he was 6 years old and again at the age of 11, petitioner's family lived in Spain for periods of about 1 1/2 to 2 years. Petitioner served in the United States Army Air Force from 1943 to 1947 and 1949 to 1953, attaining the rank of captain. Apart from*42 his two extended visits to Spain and his first period of service with the Army, his life until 1949 was spent in Rochester, where he worked for a time at Eastman-Kodak and married an American woman. That marriage was apparently dissolved before 1953, but it resulted in two children, both of whom still reside in Rochester and are over 30 years old.
Following his discharge from the Army in 1953, petitioner visited his father who was then, and is now, living in Spain. His mother is *54 no longer living. He secured civilian employment with the "controller's office" or "financial division" of the United States Air Force at Madrid, Spain, on September 15, 1954, and he has held the same position ever since, although the controller's office for that branch of the armed services has since been relocated to Torrejon Air Base, about 18 kilometers from Madrid. His current United States civil service grade is GS-11.
On July 29, 1958, petitioner married Amalia Duarte, to whom he is still married. Amalia is a Spanish citizen and has been such since birth. The marriage ceremony took place on the island of Gibraltar, a British colony, and its validity has subsequently been recognized by*43 the Government of Spain.
Petitioner has not lived in quarters furnished by the United States Government since his discharge from the Army in 1953, but the Air Force has provided him with a "quarters allowance" (currently in the amount of $ 3,000 per year) since the time of his employment by the controller's office in Madrid. During his first few years as an Air Force employee, he lived in hotels in Madrid. After his marriage in 1958, he rented an apartment in Madrid, which he and his wife occupied for 6 months to a year. They then moved to an apartment in Madrid which petitioner purchased. They purchased the furnishings for that apartment and resided there until around 1965, when they sold the apartment and purchased a larger one, also in Madrid, where they still live. They own the furnishings in their current apartment. Approximately a year and a half prior to the trial herein, petitioner purchased a parcel of real estate located about 15 miles from Madrid and measuring about 1,000 square meters. The area in which the property is located is currently undergoing "development," and petitioner intends to build a home on his land whenever he acquires sufficient funds.
Petitioner*44 and his second wife have had two children, a son born in 1959 and a daughter born in 1961. Both were born in Madrid. They are citizens of both Spain and the United States and speak both Spanish and English; they attend school at the Torrejon Air Base, where they are given instruction in both languages. Amalia has only a limited knowledge of English and her mother, who also lives with petitioner's family, knows no English at all. The principal language spoken in the household is Spanish.
Petitioner has never applied for Spanish citizenship, nor has he ever voted in a Spanish election or filed a Spanish "income tax" return. He carries a card, issued by Spanish authorities in 1954, identifying him as a member of the United States forces in Spain and he holds a Spanish driver's permit of a kind issued to members of such United States forces. That permit was also issued in 1954, and it is *55 still valid. Petitioner owns two automobiles, at least one of which is of a Spanish make, and both automobiles carry Spanish license plates. The license plates on one of the cars are part of a numerically sequential block issued some years ago to the United States Air Force.
Petitioner*45 has purchased automobile insurance through a Spanish company. In his application for such insurance, he gave the Torrejon Air Base, where he is employed, as his address. For reasons of personal convenience, he has also used the official base address, with a special "APO" designation, on his United States income tax returns and in his correspondence with the Internal Revenue Service.
During and after the taxable years in issue, petitioner has been authorized by the Air Force to patronize commissaries and theaters operated by the United States military outside of the United States, and he has also been entitled to certain "exchange" privileges. Such benefits were available to certain classes of Americans living abroad who were connected with the United States uniformed services. Petitioner's status as a retired military officer and an American residing in Spain also entitled him to become a nonvoting and associate member of the Torrejon Air Base Officers' Open Mess, which was a kind of eating club. He has been such a member of that club during and since the taxable years in issue, and, in his current capacity as chief of the controller's office at the air base, he regularly reviews*46 the club's accounting practices and procedures.
Petitioner has done considerable traveling outside Spain. He holds a currently valid United States passport, which was issued in 1969 at Frankfurt am Main, Germany. The passport does not disclose that petitioner had any address in the United States. Petitioner is not required to carry a visa into Spain. He has earned annual leave time as an Air Force employee and certain additional leave time which was available for visits to the United States. Since he has lived in Spain, he has made six or seven trips to the United States, including one to Washington, D.C., for the purpose of testifying at the trial herein and another to Texas for Air Force-sponsored schooling. Each trip was for approximately 2 weeks, and petitioner has drawn upon both types of leave for his visits to this country. On some occasions, the Air Force has provided him with free transportation on military aircraft between Madrid and McGuire Air Force Base in New Jersey, which was in the same region as his original "home of record" at Rochester, but his ultimate destinations in the United States have often been places other than Rochester. Petitioner's second wife*47 has been in this country only on the two occasions when petitioner had his family accompany him here.
*56 Petitioner has no plan to return to the United States presently, and he intends to continue living in Madrid for the foreseeable future. His thinking in this connection has not changed in at least 15 years. He has no home or mailing address and owns no real estate in the United States; he has not voted in this country since 1948; and he has not had a valid United States driver's license for nearly 20 years. He has, however, had investments in securities of United States corporations, and he has dealt in such securities through the Madrid office of an American brokerage firm. He realized dividend income on his United States stockholdings during each of the taxable years in issue, and he sustained a net long-term capital loss in 1967 through sales of certain of those securities.
Petitioner maintains active bank accounts in Fort Worth, Tex., and New York City. The Fort Worth account is a checking account he opened in 1949, when he was stationed in Fort Worth. He has made monthly deposits to it out of his salary and regular withdrawals to pay bills or to purchase Spanish*48 currency. The balance in that account has ordinarily been about $ 1,000. He maintains a balance of only $ 300 in the New York account, which is a savings account he uses only when he comes to New York City. The funds in that account earned interest at least during the taxable years in issue. Petitioner's most active checking account, which ordinarily has a balance of about $ 1,000, is with a bank in Madrid. He had no savings account with a Madrid bank in 1967 or 1969.
Petitioner and his wife timely filed a joint Federal income tax return for 1967, wherein they reported gross income from wages, dividends, and interest and claimed a net long-term capital loss and certain itemized deductions and exemptions. Petitioner, without his wife, subsequently filed an amended return for 1967 as an "unmarried head of household." The amounts of the wages, dividends, and capital loss treated as chargeable to petitioner in that return were one-half of the amounts reported in the original return. Petitioner timely filed a United States income tax return for 1969, also as an "unmarried head of household," and the only item of taxable gross income reported on that return was in an amount equal*49 to one-half of the wages indicated on his accompanying Treasury Form W-2. All of the foregoing returns were filed with the director of international operations at Washington, D.C. The manner in which gross income was reported on petitioner's 1969 return and 1967 amended return reflected advice which he had gotten from Spanish and American lawyers at Torrejon Air Base.
In his notice of deficiency to petitioner in respect of the year 1969, the Commissioner determined that: "Community property benefits are *57 being disallowed since you did not establish domicile in a community property State. All income and tax withheld is restored to your return and your tax has been adjusted accordingly."
Petitioner has conceded, or failed to contest, all other adjustments reflected in the 1969 deficiency notice and, apart from the community property issue, 1 all adjustments reflected in the 1967 deficiency notice.
*50 OPINION
The sole issue is whether petitioner was required to report gross income in amounts equal to only one-half of the gross income that he actually realized. He has defended the manner in which he reported income on his United States tax returns on the theory that Spanish law vests the ownership of one-half of the income of a marital community in each spouse at the time the income is realized, that he was domiciled in Spain during the taxable period in issue, that the Spanish law applied to him by reason of his Spanish domicile, and that half his income therefore belonged to his nonresident alien wife, who was exempt from taxation under the 1954 Code.
There is no dispute that the Spanish Civil Code contains comprehensive provisions relating to "conjugal partnership" or "community property" and that if those provisions are applicable to petitioner, they are of such character as to support his position with respect to his wife's ownership of one-half the income in dispute 2 and thus render him accountable only for the other half. Cf. Poe v. Seaborn, 282 U.S. 101">282 U.S. 101; Rev. Rul. 56-269, 1 C.B. 318">1956-1 C.B. 318;*51 sec. 871 et seq., I.R.C. 1954. The Government, however, contends that the Spanish community property laws are not applicable to petitioner. In this connection it argues that petitioner was not domiciled in Spain, that a proper application of the principles of renvoi in the conflict of laws calls for rejection of the applicability of the Spanish community property laws, and that in any event explicit provisions of the Spanish Code make its community property laws inapplicable to petitioner. Petitioner, on the other hand, argues that he was domiciled in Spain, disagrees vigorously with the Government as to its position relating to the conflict of laws, and denies that the explicit provisions of *58 Spanish law relied upon by the Government are applicable. In our opinion the record strongly supports petitioner's position that he was domiciled in Spain, 3 but we need not pass upon that issue here in view of the conclusion that we reach as to the last point. Nor is it necessary for us to consider the highly controversial and abstruse matters discussed and argued at length by the parties in respect of renvoi and the conflict of laws. For, in our view, the unambiguous provisions*52 of article 1325 of the Spanish Code, which we consider hereinafter, must in any event apply, and such provisions make clear that the Spanish community property laws are inapplicable to petitioner.
*53 Petitioner quite correctly argues that our Internal Revenue Code merely describes what type of income shall be taxed and how it shall be taxed, that it does not set up any standards of ownership for purposes of determining which taxpayer shall be charged with the income in question, and that this is a matter that must be determined by local law. Morgan v. Commissioner, 309 U.S. 78">309 U.S. 78, 80-81, rehearing denied 309 U.S. 626">309 U.S. 626; Helvering v. Stuart, 317 U.S. 154">317 U.S. 154, 161-162, rehearing denied 317 U.S. 711">317 U.S. 711. And he argues further that under Spanish community property law, he must be treated as the owner of only one-half of his earnings. But, even assuming that he was domiciled in Spain, article 1325 of the Spanish Code satisfies us that the Spanish community property laws are not applicable to him. Article 1325 (in English translation) reads as follows:
Should the marriage be contracted in a foreign country, between a Spaniard and a foreign woman or between a foreigner and a Spanish woman, and the contracting parties should not make any statement or stipulation with respect*54 to their property, it shall be understood, when the husband is a Spaniard, that he marries under the system of the legal conjugal partnership [the "community property" laws of the Spanish Code], and when the wife is a Spaniard, that she marries under the system of law in force in the husband's country, all without prejudice to the provisions of this Code with respect to real property.
The record establishes that petitioner and his Spanish wife were married outside Spain, that no "real property" is involved herein, and that the spouses made no antenuptial contract in respect of their property, and nothing in the record suggests that they have entered into a property agreement since they have been married. Moreover, article 17 et seq. of the Spanish Code, which delineate those who are *59 "Spaniards," make it reasonably clear that petitioner's wife was a "Spaniard," but there is no basis for such a finding in respect of petitioner. 4
*55 Under article 1325 of the Spanish Code, the community property provisions of the Code therefore appear not to apply to petitioner and his wife. Rather, the aplicable law is that of "the husband's country," and it is the view of both parties as well as that of a Spanish official, whose written statement was submitted in evidence by the Government, that "the husband's country" in article 1325 refers to the country of which the husband is a citizen. 5 Petitioner was a citizen of the United States and not of Spain, and there is, of course, no Federal community property law in this country (nor is there any in New York State, where petitioner was born and with which he appears to have been more closely identified than with any other State). Under the principles of the Spanish Code, petitioner's position thus appears to be groundless. 6
*56 Petitioner has sought to defend his position in respect of the applicability of the Spanish community property law on the theory that, as a matter of Federal tax law, the interest of one spouse in property belonging to the other is governed by the law of the domicile of the income-earning spouse and that the only "law" which may thus be consulted is the property law of the domicile, without regard to whether such "property" law is in fact inapplicable by reason of provisions such as those contained in article 1325, which may perhaps be characterized as "conflict" rules or "procedural" rules. The point is not well taken. The problem before us is merely to determine how petitioner's earnings would be treated under Spanish law, and it is *60 plain that article 1325 would be regarded as controlling under such law, thereby rendering the community property laws of Spain inapplicable to petitioner. We are not persuaded by the contention that merely because article 1325 may be characterized as a "procedural" or "conflict" rule, it can be ignored through an application of the principles of conflict of laws.
The thrust of the theories expounded in the Morgan and Stuart cases*57 is simply that the Federal tax statute is to be applied to the various rights or interests created by local law and that the extent or nature of such rights or interests must be determined under such local law. In short, the basic question here is whether the Spanish courts would treat petitioner's earnings as community property. And in our judgment, in the absence of any convincing authoritative exposition of Spanish law to the contrary, the courts of that country would apply article 1325, regardless of whether it be considered "procedural" or otherwise, and would conclude that by reason of article 1325 Spain's community property laws are not applicable to petitioner. 7
*58 Nor are we persuaded in this connection by petitioner's argument that the phrase "system of law in force in the husband's country" in article 1325 of the Spanish Code is meant to refer to anything more than the applicable property law of that country, if any. As we read the Spanish Code, it simply chooses to make its own community property provisions inapplicable in a case where the husband is a foreign national and the marriage took place outside Spain, and to defer, in such a case, to the ownership rules in force in the husband's country. 8
*59 Decision will be entered for the respondent.
Footnotes
1. Although the parties have regarded the "community property" issue raised in the 1969 deficiency notice as applicable to 1967 as well, none of the adjustments to petitioner's 1967 income reflected in the deficiency notice for that year appears to have been based explicitly on a "community property" theory. The extent, if any, to which the community property issue relates to 1967 is obscure.↩
2. Cf. Estate of Jose Simon, 40 B.T.A. 651">40 B.T.A. 651, acq. 1 C.B. 4">1940-1 C.B. 4; Rev. Rul. 68-81, 1 C.B. 40">1968-1 C.B. 40, made effective for taxable years beginning on or after Feb. 19, 1968, by Rev. Rul 69-213, 1 C.B. 34">1969-1 C.B. 34↩; 3 Mertens, Law of Federal Income Taxation, sec. 19.02, p. 11 (1972 rev.).
3. Cf. Lincoln T. Taira, 51 T.C. 662 (distinguishing District of Columbia v. Murphy, 314 U.S. 441">314 U.S. 441); Niki v.United States↩ (N.D. Cal., 71-2 U.S.T.C. par. 9526, affirmed per curiam 73-2 U.S.T.C. par. 9629 (C.A. 9)). We are satisfied that petitioner was a credible witness on his own behalf, and our findings of fact are based largely upon his testimony.
4. Art. 17 provides, inter alia↩, that children of a Spanish father or mother are generally to be regarded as "Spaniards," but subsequent provisions describe circumstances in which Spanish nationality may be lost. One way in which Spanish nationality may be forfeited is to acquire voluntarily another nationality. Although petitioner's parents were born in Spain, they lived for a while in the United States, and petitioner has failed to establish that they retained their Spanish nationality at the time of his birth, or, even if they did, that he himself has not forfeited his status as a "Spaniard."
5. Cf. art. 10 of the Spanish Code, which provides that "Personal property is subject to the laws of the nation of the owner thereof."↩
6. The applicability to petitioner of the community property provisions of the Spanish Civil Code is also called into question by an explanation of its genesis in a summary of the introduction thereto, which we have before us in English translation. It appears from that summary that Code provisions are in some cases subordinate to the so-called Derechos forales, or "local laws," of certain provinces or territories. Art. 12 of the Code itself appears to support the position of the author of the introduction, although the precise effect of art. 12 is unclear to us. This confusing state of Spanish legal affairs has, according to the summary of the Code introduction, made it "difficult to explain how civil legal provisions are coordinated." We have been unable to ascertain the extent to which the Code provisions relied upon by the parties may be preempted by "local laws" in the circumstances of this case, nor have the parties been of any help in establishing the supremacy of the allegedly applicable Code provisions.↩
7. Probably the strongest case in petitioner's favor is United States v. Rexach, 185 F. Supp. 465">185 F. Supp. 465, 477 (D. P.R.), an obscure decision by a Puerto Rican District Court, where there did not appear to be any specific statutory provision comparable to art. 1325, and where there were highly unusual circumstances involving the laws of at least three countries or jurisdictions. In any event, in failing to give effect to the plainly relevant coverage provisions of applicable local law, Rexach is at least superficially inconsistent in this respect with other decisions that have considerably greater precedential impact in this Court: Shilkret v. Helvering, 138 F. 2d 925, 929 (C.A. D.C.), affirming 46 B.T.A. 1163">46 B.T.A. 1163; Marjorie Hunt, 22 T.C. 228">22 T.C. 228, 231-232, acq. 1954-2 CB. 4. Moreover, to regard petitioner as owning only half of his income pursuant to a community property law to which he is not subject would run afoul of the well-settled rule, United States v. Mitchell, 403 U.S. 190">403 U.S. 190, 197↩, that "federal income tax liability follows ownership."
8. Certain materials submitted by petitioner purporting to be translations of the writings of Spanish legal commentators indicate that the Spanish law on this point has not been authoritatively determined. Some support for our view of art. 1325, however, is to be found in the English case of In re Duke of Wellington↩, [1947] Ch. 506, 514-521, appeal dismissed (affirmed) [1947] 2 A11 E.R. 854, where the phrase "national law" in another article of the Spanish Code was construed to comprehend only substantive law, and not choice-of-law rules.