Rogan

In 1930, appellee, A. J. Delaney, received a dividend of $126,500 on 1100 shares of stock of Delaney Petroleum Corporation (hereafter called Petroleum) and a dividend of $23,760 on 1,500 shares of stock of Delaney Producing & Refining Company (hereafter called Refining). In his income tax return for 1930, appellee reported one-half ($75,130) of these dividends as his income. His wife, in a separate return, reported the other half as her income. The Commissioner of Internal Revenue determined that the entire amount ($150,260) was income of appellee, and that, consequently, there was a deficiency of $4,968.07 in respect of appellee’s income tax for 1930.

This deficiency, with interest in the sum of $1,265.70 — a total of $6,233.77— was assessed against appellee and paid by him under protest. Appellee filed a claim for refund, which was disallowed. He then brought this action against appellant, Nat Rogan, Collector of Internal Revenue, to recover the $6,233.77. Appellant answered, jury trial was waived, the case was tried, and the court, having made and filed its findings of fact and conclusions of law, entered judgment in appellee’s favor for the full amount claimed. Appellant…

I concur in Judge MATHEWS’ opinion and the decision it indicates.

Delaney Petroleum Corporation Dividends.

What I gather ' from Mr. Delaney’s sketchy and hesitant testimony of his recollection of the events over ten years before under strongly leading questions by the court is that the understanding he had with his associates, sometime late in 1926 before the organization of the Delaney Petroleum Corporation, was not carried out after that corporation subsequently was organized.

The most that can be made out from that testimony is that Mr. Delaney was to have a portion of that corporation’s shares after he had paid for the shares by his services. What actually transpired is that after the organization of the corporation he subscribed for shares of its original issue and agreed to pay for them as would any subscriber. He actually did pay for them before the amendment of the California community property law became effective on July 29, 1927, with community funds consisting of money loaned him by his associates. He had no agreement with the corporation, of which he was general manager, other than the subscription.

Delaney stipulates that the certificate stubs and his company’s…

I dissent. In order to fully set forth my views, I desire to file the following opinion:

Appeal by the Collector of Internal Revenue from the judgment of the District Court allowing recovery of certain income taxes paid by appellee for the calendar year 1930. The income in question consisted of dividends from two separate blocks of stock, namely, 1,100 shares of Delaney Petroleum Corporation and 1,500 shares of Delaney Producing & Refining Company. The Collector contends that each of these blocks of stock constituted community property in which the wife did not have a present existing interest, but rather a mere expectancy, and hence that the entire income therefrom was properly taxable to the husband [taxpayer]. The appellee-taxpayer on the other hand argues, and in this he is supported by the findings of the District Cour-t 1 , that the stocks were community property belonging to the taxpayer and his wife, and that under the applicable laws the wife had a present and existing interest therein, permitting the dividends to be reported for taxation one-half by each spouse. The two blocks of stock should be considered separately, since they were purchased at different times and…