Palmieri v. Commissioner , 27 T.C. 720 ( 1957 )

Napoleon Palmieri, Jr., and Nan M. Palmieri, Petitioners, v. Commissioner of Internal Revenue, Respondent

Palmieri v. Commissioner

Docket No. 59147

United States Tax Court

27 T.C. 720; 1957 U.S. Tax Ct. LEXIS 275;

January 28, 1957, Filed

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Decision will be entered under Rule 50.

During 1952, petitioner Nan M. Palmieri owned a house which she permitted her aged mother and father to occupy. Her mother rented one room in the house and collected and spent the rent therefrom. Nan advertised the room for rent and paid for such advertisement. Petitioners paid all taxes and repair expenses on the property. Held, the income received from renting the room was taxable to petitioners. Lucas v. Earl, 281 U.S. 111">281 U.S. 111, 74 L. Ed. 731">74 L. Ed. 731, 50 S. Ct. 241">50 S. Ct. 241 (1930).

Harry L. Cohn, Esq., for the petitioners.

Marion B. Morton, Esq., for the respondent.

Rice, Judge.

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RICE

This proceeding involves a deficiency in income tax in the amount of $ 575 for the year 1952.

The sole issue is whether certain rental income from property which petitioner Nan M. Palmieri owned was taxable to her or to her mother who had the use of the property. Respondent conceded the other issue originally raised in the petition, and such concession will be taken into account in a Rule 50 computation.

FINDINGS OF FACT.

During 1952, petitioners were husband and wife and residents of Richmond, Virginia. They filed a joint income tax return for such year with the director of internal revenue at Richmond.

During such year and for some years prior thereto, Nan M. Palmieri (hereinafter referred to as the petitioner) owned a residence located at 15 North Stafford Avenue, Richmond, Virginia. She permitted her aged parents to occupy the house. For approximately 26 weeks during 1952, one of the bedrooms in the house was rented to various tenants. Petitioner advertised the room for rent and paid for such advertisement. Her mother collected the rent of $ 10 per week and spent it as she chose. Petitioners paid all taxes and repair expenses on the property.

In reporting their income for 1952, petitioners did not include the rent received from the room. Respondent determined that the sum of $ 260, less allowable deductions of $ 90.94 for property taxes and other expenses, was includible by petitioners as rental income earned by them during such year.

OPINION.

The respondent determined, and we think correctly so, that the rental income received from the North Stafford Avenue property, owned by Nan M. Palmieri, was properly includible in petitioners' gross income for the year in question. The respondent based his determination on the familiar and well established doctrine that the one who truly possesses the right to receive income is taxable thereon even though the actual receipt of the income is channeled directly into the hands of another. ; ; and . While there is a certain equitable appeal in the position in which the petitioners find themselves, we can see no difference in principle in their situation here and in the ordinary type of anticipatory assignment case. Clearly, if they had simply had the rent from a piece of property paid directly to the mother, such arrangement would have been an anticipatory assignment of rental income on which petitioners would have been taxable. We are unable to distinguish that situation from the one actually before us here.

Decision will be entered under Rule 50.