Sneed v. Commissioner

RIVES, Circuit Judge

(specially concurring) .

I concur in the affirmance of the judgments of the Tax Court, but because I agree with the opinion of Judge Mur-dock in Estate of Sneed v. Commissioner, 17 T.C. 1344, and think that Barbour v. Commissioner, 5 Cir., 89 F.2d 474, has been departed from and should be overruled.1

It is axiomatic that income is taxed to the owner thereof. Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75; Corliss v. Bowers, 281 U.S. 376, 50 S.Ct. 336, 74 L.Ed. 916; Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731. It seems to me that the surviving wife remains the owner of her one-half of community property and the income therefrom. It is true that under the Texas statutes 2 and decisions,3 the executor of the deceased husband’s estate has sole power of, administration of the community to the exclusion of the widow. The same authorities establish that the executor holds the community property for the purposes of paying any debts existing against that property and of dividing the remainder one-half to the widow and one-half to the husband’s estate, and for no other purpose. Indeed, the statute 4 provides that the widow is entitled to delivery of her equal moiety in the community upon the execution and delivery to the county judge of a bond for an amount equal to the value of her interest in the common property, “conditioned for the payment of one-half of all debts existing against such common property”.5 That is the extent of the liability of the widow’s moiety in the hands of the executor. His payment of her one-half of the community indebtedness enures to the widow’s benefit. The remainder of her moiety must be delivered to the widow. In every real sense the widow’s ownership acquired during the marriage continues uninterruptedly,, and the executor has title to that half only of the community property belonging to his decedent.6

It does not follow from the fact that, ■the executor has control and possession of the community and its income during-administration that- the income is not. taxable to the widow. It is said that the widow may have received no funds-with which to pay the tax. I apprehend! that under state law it would be the executor’s fiduciary duty to provide the widow with such necessary funds. If the widow were destitute and the executor failed to provide her with the tax moneys, an extension of time for paying the tax could be granted the widow.7 *317It is likewise true that during the lifetime of the husband, he has administration of the community property, but the wife’s share of the community income is taxable to her.8 There is no invariable principle that income collected by an executor is taxable to the estate; to the contrary the rule is well established that an estate cannot be taxed with respect to income which passes directly to another.9

The holding in the Barbour case seems to me inconsistent with the holdings of this Court in Henderson’s Estate v. Commissioner, 5 Cir., 155 F.2d 310, 164 A.L. R. 1030, and Blackburn’s Estate v. Commissioner, 5 Cir., 180 F.2d 952, and with the holdings of the Ninth Circuit in Bishop v. Commissioner, 152 F.2d 389, and United States v. Merrill, 9 Cir., 211 F.2d 297. In the last cited case, the Ninth Circuit said of its earlier decision in Commissioner v. Larson, 9 Cir., 131 F.2d 85, “And in the Larson case we gave undue emphasis to the powers of the executor of the estate of a deceased spouse with reference to the community property and the income therefrom during the period of administration, and insufficient attention to the community property law of the state.” [211 F.2d 301.] It seems to me that we might properly make much the same comment on the Barbour case,

I therefore concur specially.

. The opinion of the Tax Court has met the approval of the Ninth Circuit which agrees that the Barbour case is without vitality. United States v. Merrill, 9 Cir., 211 F.2d 297, 302. After reviewing the opinion of the Tax Court, the 1954 pocket supplement to Vol. 3, Mertens Law of Federal Income Taxation, p. 33, says, “Judge Murdock’s view seems eminently sound.” In his concurring opinion in the Blackburn case, ISO F.2d 954, Judge Waller thought that the holding in that case was inconsistent with the Barbour decision and that Barbour was wrongly decided.

. Texas Revised Civil Statutes, Vernon’s Ann.Civ.St.Texas, Articles 3630, 3661.

. Hollingsworth v. Davis, 62 Tex. 438; Carlton v. Goebler, 94 Tex. 93, 58 S.W. 829; Lovejoy v. Cockrell, Tex.Com.App., 63 S.W.2d 1009.

. Texas Revised Civil Statutes, Article-3628.

. Texas Revised Civil Statutes, Article 3628.

. 1 de Funiak, Principles of Community-Property (1943), Pages 586, 587.

. See Sections 56(c), 58(e) of the 1939 Internal Revenue Code; Sections 6161— 6165 of the 1954 Code, 26 U.S.C.A.

. Hopkins v. Bacon, 282 U.S. 122, 126, 51 S.Ct. 62, 75 L.Ed. 249.

. Bull v. United States, 295 U.S. 247, 55 S.Ct. 695, 79 L.Ed. 1421; 6 Mertens Law of Federal Income Taxation, Sec. 36.23, p. 275 and cases collected in Note 45.