
    JEFFERSON R. GENTRY v. THE UNITED STATES
    [No. 450-57.
    Decided November 2, 1960]
    
      
      Carl F. Bauersfeld for the plaintiff. Robert Ash, Charles H. Burton and Ash, Bauersfeld dc Bv/rton on the brief.
    
      Robert Livingston, with whom was Assistant Attorney General Charles K. Rice, for the defendant. James P. Garland and Myron C. Baum on the brief.
   MaddeN, Judge,

delivered the opinion of the court:

The plaintiff, in his income tax return for the year 1951, took a deduction of $4,011.98 from his income. The Commissioner of Internal Eevenue disallowed the deduction and required the plaintiff to pay the additional amount of tax resulting from the disallowance. The plaintiff filed a claim for refund, which claim was denied. He brings this suit for the recovery of the additional taxes.

The plaintiff owned a house in Florida. He married a wife in 1939 and lived with her in the house until 1945. In that year a daughter was bom to the couple. Later in that year the appropriate Florida court entered a final decree of legal separation of the spouses, in an action for separate maintenance brought by the wife. Pursuant to the decree, and to a subsequent order of the court, the plaintiff was required to make and did make, in the year 1951, repairs and improvements of the house for which he paid the $4,011.98 referred to above.

The applicable provisions of the Internal Eevenue Code of 1939 are the following:

Seo. ££. Gross Income—
*****
(k) [as added by Section 120(a) of the Eevenue Act of 1942, c. 619, 56 Stat. 798] Alimony, etc., Income.— In the case of a wife who is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, periodic payments (whether or not made at regular intervals) received subsequent to such decree in discharge of, or attributable to property transferred (in trust or otherwise) in discharge of, a legal obligation which, because of the marital or family relationship, is imposed upon or incurred by such husband under such decree or under a written instrument incident to such divorce or separation shall be includible in the gross income of such wife, and such amounts received as are attributable to property so transferred shall not be includible in the gross income of such husband. * * *
(26 Ü.S.C. (1952 ed.), Sec. 22.)
/Seo. 23. Deductions From,. Gross Income.
In computing net income there shall be allowed as deductions,:
* ‡ ‡ ‡
(u) [as added by Section 120(b) of the Revenue Act of 1942, supra]. Alimony, etc., Payments. — In the case of a husband described in section 22 (k), amounts in-cludible under section 22 (k) in the gross income of his wife, payment of which is made within the husband’s taxable year. If the amount of any such payment is, under section 22 (k) or section 171, stated to be not in-cludible in such husband’s gross income, no deduction shall be allowed with respect to such payment under this subsection.
(26 U.S.C. (1952 ed.), Sec. 23.)
Sec. 24.. Items Not Deductible—
(a) General Buie. — In computing net income no deduction shall in any case be allowed in respect of—
(1) Personal, living, or family expenses; * * *
(2) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate; * * *
‡ $ $ $ #
(26 U.S.C. (1952 ed.), Sec. 24.)

The husband may not, under section 23 (u), deduct from his income payments to the wife, unless the payments are taxable income to the wife under section 22 (k). The question is, then, whether the $4,011.98 was taxable income to the wife.

The house was a modest one. The plaintiff bought it for $2,300 in 1937. From that time until the end of 1947 the plaintiff had spent only $1,700 on its maintenance. In the years 1948, 1949, and 1950, while his wife was occupying it and he was maintaining it pursuant to the court’s decree, he spent, respectively $159.53, $769.30 and $117.50 for such maintenance. The stipulation of the parties says that he showed those expenditures on his income tax returns for those years. That must have been for the purpose of taking deductions for the expenditures, and, so far as appears, those deductions were not disallowed.

The large expenditure in 1951 was for replacement of uprights, ceiling fixtures and Venetian blinds; installation of additional electrical outlets; replastering and painting walls and ceilings; sanding and varnishing of floors; and repainting the exterior of the house. Most of these items would be items which, if performed in a house which a taxpayer owned and leased to a tenant, would not be deductible as current expenses. They would have to be capitalized, and any tax benefit from them would have to await the sale of the house by the landlord. The Government could not tax, as 1951 income to the wife, expenditures for such purposes and in such amounts, made by the plaintiff in the improvement of his own house.

The legal separation of the spouses, decreed in 1945, culminated in a final decree of divorce entered in 1952. That decree required the plaintiff to convey the house to the wife. In 1956 the wife sold the house for $11,500. We regard these later events as irrelevant to our instant problem, except that the sale price of the house confirms our view that the expenditure of $4,011.98 in 1951 must have been largely for capital improvements.

Since the plaintiff’s wife was not taxable on the sum in question under section 22 (k), the plaintiff’s situation does not meet the requirement of section 23 (u). The plaintiff’s petition will be dismissed.

It is so ordered.

Dttreee, Judge; Laramoee, Judge; and JoNEs, Chief Judge, concur.

Whitaker, Judge, took no part in the consideration and decision of this case.

FINDINGS OF FACT

The court makes findings of fact, based upon the stipulation of the parties, and the briefs and argument of counsel, as follows:

1. The plaintiff, Jefferson R. Gentry, is an individual whose residence address is Bartow, Florida. The plaintiff and Dixie Gist Gentry were married on September 17,1939. One daughter, Michel A. Gentry, was born to them on August 22, 1945.

2. The plaintiff, Jefferson R. Gentry, on April 20, 1937, purchased a house on Lot No. 16 in Block No. 27 of Shore Acres, a subdivision of Lakeland, Florida, which said property was also known as 1804 Elm Road, Lakeland, Florida, for the amount of $2,300. Prior to their separation in 1945, the said house was occupied by the plaintiff and his wife as a residence. Thereafter, it was occupied as a residence by Dixie Gist Gentry and Michel A. Gentry.

3. Between the period from April 20, 1937, to December 31, 1947, the plaintiff expended approximately $1,700 on improvements, repairs and maintenance to said real estate. The plaintiff reported as repairs to the house occupied by Dixie Gist Gentry and Michel A. Gentry on his Federal income tax returns for the years 1948 to 1950, inclusive, the following amounts:

Year Amount
1948- $159.53
1949_ 769.30
1950- 117.55

4. On December 28, 1945, the Circuit Court of the Tenth Judicial Circuit, Polk County, Florida, entered a Final Decree of legal separation in an action for separate maintenance brought by the plaintiff’s wife against the plaintiff.

5. During the year 1951, pursuant to said Final Decree dated December 28, 1945, and pursuant to an oral order of said Court directing plaintiff, upon the complaint of his wife, to make certain repairs and improvements to said house, the plaintiff expended the amount of $4,011.98 for repairs and improvements to said house occupied by Dixie Gist Gentry and Michel A. Gentry. Although the plaintiff protested the incurrence of said expenditures as excessive, he was informed by the said Court that if he did not make the repairs and improvements requested by his wife, he would be held in contempt of court. These repairs and improvements which the plaintiff made to the aforesaid house during the year 1951 consisted of the following: Replacement of uprights, ceiling fixtures and Venetian blinds; installation of additional electrical outlets; replastering and painting of walls and ceilings; sanding and varnishing of floors; and repainting of the exterior of the house. The amount of $4,011.98 was paid by the plaintiff to various businessmen for the following purposes:

Labor-$2,257.48
Materials_ 1, 695. 64
Miscellaneous Expenses_ 58. 86

6. By decree dated September 29, 1952, the Circuit Court for the Tenth Judicial Circuit, Polk County, Florida entered a Final Decree of Divorce between the plaintiff, Jefferson R. Gentry, and his wife, Dixie Gist Gentry.

7. Pursuant to said Final Decree dated September 29,1952, the plaintiff executed a deed dated October 8, 1952, transferring title to Lot No. 16, Block 27, Short Acres, Lakeland, Florida, to his former wife, Dixie Gist Gentry.

8. The plaintiff duly filed a Federal income tax return for the year 1951 with the Collector of Internal Revenue, Jacksonville, Florida, and paid the taxes shown thereon to be owing.

9. In computing his taxable income for the year 1951, the plaintiff deducted the amount expended for said repairs and improvements in the amount of $4,011.98. The Commissioner of Internal Revenue disallowed said deduction in the amount of $4,011.98 and, as a result thereof, determined a deficiency in income taxes against the plaintiff for the year 1951 in the amount of $2,527.55.

10. On December 21,1955, the plaintiff paid to the District Director of Internal Revenue, Jacksonville, Florida, additional income taxes for the year 1951 in the principal amount of $2,527.55, plus interest in the amount of $568.70; a payment in the total amount of $3,096.25.

11. The plaintiff’s former wife, Dixie Gist Gentry, in her Federal income tax return for the year 1951, did not include the said amount of $4,011.98 as taxable income.

12. The plaintiff’s former wife, in December 1956, sold said house for the amount of $11,500.00.

13. On March 7,1957, the plaintiff duly filed with the District Director of Internal Revenue, Jacksonville, Florida, in proper form, a claim for refund of the additional income taxes for the year 1951 in the amount of $3,096.25, as aforesaid.

14. On August 16,1957, the Commissioner of Internal Revenue, under the provisions of Section 6532(a) (1) of the Internal Revenue Code of 1954, sent to the plaintiff, by Registered Mail, notice that his claim for refund for the year 1951 had been denied in full.

CONCLUSION OP LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover and his petition is therefore dismissed.  