Estate of Mollie J. Levert v. Commissioner

Memorandum Findings of Fact and Opinion

The respondent determined a deficiency of $3,003.03 in the income tax of the decedent, Mollie J. Levert, for the taxable year 1945. This action is brought by her estate through J. Alfred*154 Levert, the executor, to test the correctness of that determination.

The sole issue to be decided herein is whether rents from realty situated in the State of Alabama and the separate property of decedent, who was domiciled in the State of Louisiana, were community income or whether they were taxable as the separate income of decedent. The remaining issues raised in the deficiency notice have been conceded by respondent and can be disposed of under Rule 50.

Findings of Fact

Mollie J. Levert, the decedent, and J. Alfred Levert were wife and husband throughout the taxable year 1945 and until the time of her death on February 1, 1948, and during this period they were domiciled in the City of New Orleans, State of Louisiana.

Decedent was the owner of an undivided one-twelfth interest in and to certain real property situated in the City of Birmingham, State of Alabama, such undivided one-twelfth interest having been inherited by her. Throughout the taxable year 1945, the Florence Agency of Birmingham, Alabama, collected the rents on said real property and disbursed the net income therefrom to the several undivided owners, including decedent. She received during such taxable year*155 from the said Florence Agency as her share of her undivided one-twelfth interest in such real property, income in the amount of $9,331.76.

Decedent, in her income tax return, Form #1040, for the taxable year 1945, included in gross income one-half of $9,331.76, or $4,665.88.

Opinion

ARUNDELL, Judge: It is petitioner's position that under the community property laws of Louisiana accrued rents fall into community income regardless of the location of the source of those rents. Article 2386 of the Louisiana Revised Civil Code, as amended. ¹ But the question here raised has already been decided against petitioner. In the controlling case of , certiorari denied , the Circuit Court of Appeals for the Fifth Circuit, in holding that rents from separately owned realty in California did not constitute community income to a marital couple domiciled in Texas, stated: "It is universally held that real or immovable property is exclusively subject to the law of the country or State in which it is situated, and no interference with it by the law of any other sovereignty is permitted. * * * These rules apply to questions*156 of the marital rights of spouses in property." 11 Am. Jur., Conflict of Laws, sections 50, 85.

To transfer to decedent's husband a one-half interest in the rents and profits of her separately owned realty in Alabama would, in effect, constitute the giving to her husband of a one-half interest in the realty during the period of marriage. We think it is now well settled that the law of Louisiana is ineffective to accomplish such a result.

We, therefore, conclude*157 that the rents in question are governed by the law of the situs of the realty. Under the law of Alabama, the rents clearly were the separate property of the wife. ² It follows that the respondent properly determined that the rents in question were taxable as the separate income of decedent.

Decision will be entered under Rule 50.