Bishop v. Commissioner , 19 B.T.A. 1108 ( 1930 )

L. BRACKETT BISHOP, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Bishop v. Commissioner

Docket No. 35205.

United States Board of Tax Appeals

19 B.T.A. 1108; 1930 BTA LEXIS 2257;

May 26, 1930, Promulgated

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Held that amounts received by petitioner's wife under instruments executed by petitioner, assigning to her one-third of certain renewal commissions then due and which might thereafter accrue to him on insurance business secured by him, are taxable to the assignor.

L. Brackett Bishop pro se.

Arthur H. Murray, Esq., for the respondent.

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ARUNDELL

The respondent has determined deficiencies in income taxes for the years 1923, 1924, and 1925 in the amounts of $1,309.81, $851.14, and $837.81, respectively. The petitioner assigns as error the action of respondent in including in petitioner's income for each of the years 1923, 1924, and 1925 the sum of $7,500, which sum represented commissions received on renewal premiums, the right to receive which was assigned by petitioner to his wife. The facts were stipulated.

FINDINGS OF FACT.

Prior to and during the taxable years the petitioner was the manager of the Chicago Branch of the Massachusetts Mutual Life Insurance Co., hereinafter called the company.

On February 26, 1915, the petitioner executed the following instrument:

KNOW ALL MEN BY THESE PRESENTS, That I, L. Brackett Bishop, of Chicago, Cook County, Illinois, in consideration of the sum of One Dollar and in further consideration of the love and affection which I have for my wife hereinafter named, do hereby sell, assign, transfer, and set over unto my wife, Minnie R. Bishop, of said City, County and State, all my right, title and interest in and to one-third of any and all renewal commissions due to hereafter become due to which I may be entitled by virtue of my General Agency contract with the Massachusetts Mutual Life Insurance Company, of Springfield, Massachusetts, dated September 6, 1906, and all amendments thereto, upon business secured thereunder on or before December 31, 1914.

It is expressly understood and agreed, however, that this assignment is subject to all of the terms and conditions of said contract and amendments thereto, and that said renewal commissions shall not in any event be payable to said assignee unless and until they become due and payable to me under the terms and provisions of the aforesaid contract; and the said Insurance Company shall not be bound to pay the said assignee said renewal commissions in any other way or manner or at any other time than as set forth in said contract and amendments thereto.

Thereafter petitioner executed similar assignments in favor of his wife upon business secured by him in years subsequent to 1914.

Pursuant to the provisions of the assignments just referred to, the company paid to petitioner's wife in each of the taxable years commissions of $7,500, which amount she reported in her returns for the respective years as income to her.

The respondent in computing the deficiencies in controversy transferred the commissions of $7,500 per year paid direct to petitioner's wife to the returns of petitioner for the taxable years.

OPINION.

ARUNDELL: The assignments executed by the petitioner merely gave his wife the right to receive direct from the Massachusetts Mutual Life Insurance Co. one-third of such renewal commissions as were then due or might thereafter become due and payable to him under his contract with the company. The effect of the instruments was to assign a right to receive future income. The amount becomes taxable income to the assignor in such cases before the assignee receives the money. The action of the respondent in taxing the petitioner on the amounts returned by his wife is sustained. ; ; .

Decision will be entered for the respondent.