Forni v. Commissioner , 22 T.C. 975 ( 1954 )

F. Giacomo Fara Forni, Petitioner, v. Commissioner of Internal Revenue, Respondent

Forni v. Commissioner

Docket No. 37977

United States Tax Court

22 T.C. 975; 1954 U.S. Tax Ct. LEXIS 133;

July 28, 1954, Filed July 28, 1954, Filed

---

Decision will be entered for the respondent.

Petitioner's only motive in coming to the United States was to obtain a license to unblock his property, and to create a trust which would eliminate the danger of seizure of his property by a European government. His intention was to remain in this country long enough to accomplish these purposes. While he did not know precisely how long it would take, he knew that the period was relatively limited. He did not intend to reside here permanently, or for any extended period unrelated to the accomplishment of his objectives. He arrived in New York on April 27, 1948. The license unblocking his property was granted on September 14, 1948. He executed his trust agreement on September 21, 1948. The visa permitted him to remain in this country until October 25, 1948. He made no effort to have the period extended, and left the country on October 2, 1948, and has never returned. While living in this country, he owned two houses in northern Italy, and all of his close relatives were living in Italy.

Held, petitioner has failed to overcome the presumptive correctness of respondent's determination that he was not a resident of the United States in 1948 within the meaning of section 1004 (a) (1) of the Internal Revenue Code.

Edward S. Bentley, Esq., for the petitioner.

Charles M. Greenspan, Esq., for the respondent.

Fisher, Judge.

---

FISHER

Respondent determined a deficiency in gift tax for the year 1948 in the amount of $ 7,200. The issue is whether petitioner was a resident of the United States for gift tax purposes and therefore entitled to a specific exemption of $ 30,000 within section 1004 (a) (1), Internal Revenue Code.

FINDINGS OF FACT.

Some of the facts were stipulated by the parties. Those facts are found accordingly and incorporated herein.

The petitioner was born on July 12, 1864, at Pettenasco, Province of Novara, Italy, and at all times was and now is a citizen of Italy. In 1889, the petitioner entered the diplomatic service of the Italian Government. While in that service, he was stationed at many places including Pittsburgh, New York, New Orleans, and Philadelphia.

The petitioner married in 1913. His wife, Annina Fabbricotti, had been a citizen of the United States of America prior to her marriage to petitioner. From 1913 until the time of her death Signora Fara Forni was a citizen of Italy.

The petitioner resigned from the diplomatic service in 1925. Thereafter, he went to Paris as special counsellor of the Italian Embassy, and after 2 years he returned to Milan, Italy. After 1927 petitioner was retired, and he engaged in no business or diplomatic activity.

From 1927 to 1934, the petitioner lived part of the time in Milan and part of the time in Luino, Lago Maggiore, Italy. At the end of 1934, the petitioner and his wife, on the advice of a doctor, moved to Cimiez, Nice, France, where they lived for 2 years. At Cimiez, Nice, the petitioner and his wife lived in a hotel, and then rented an apartment, for which he bought the furniture. His wife was ill, and there was a night nurse and a day nurse for her.

In 1936, the doctors advised petitioner to take his wife into the interior of the country, and in that year the petitioner terminated his lease for the apartment in Nice, and he and his wife went to live in Lugano, Switzerland. In Lugano, petitioner rented a villa and furnished it with the furniture which he brought with him from Cimiez.

In 1938 Signora Fara Forni died, and the petitioner took her remains to the United States where they were buried.

Under the will of his deceased wife, the petitioner received the residuary estate, valued at about $ 415,000. These assets had been held by his wife in an agency account with the United States Trust Company, New York, N. Y. That company, acting as her executor, continued to hold the assets after her death in an estate account. In 1939 the major part of the estate was distributed to the petitioner by transferring the assets, consisting principally of securities, from the estate account to an agency account in the United States Trust Company in the name of the petitioner. On June 12, 1939, the petitioner granted to the United States Trust Company a general power of attorney to do all things necessary in the handling of his financial interests in the United States.

Following the death of Signora Fara Forni, the petitioner returned to Lugano, Switzerland, where he lived until 1946 in a rented apartment.

The President of the United States, by Executive Order No. 8785, dated June 14, 1941, amending Executive Order No. 8389 of April 10, 1940, regulated transactions in foreign exchange and foreign-owned property, and in effect prohibited the transmission of payments by the United States Trust Company to the petitioner, except as thereafter authorized by the Secretary of the Treasury. On October 23, 1941, General License No. 32 was amended to permit remittances of $ 100 per month. On February 9, 1943, General License No. 32 was amended to permit remittances of $ 500 per month, but only $ 100 per month if the payee was within Portugal, Spain, Finland, Sweden, or Switzerland, and was a national of any blocked country other than Portugal, Spain, Finland, Sweden, or Switzerland. On July 24, 1945, General License No. 32 was amended to permit remittances for living expenses of $ 1,000 per month, provided that if the payee was within Portugal, Spain, Sweden, Switzerland, or Tangier and was a national of Germany, Italy, Japan, Bulgaria, Hungary, or Rumania, the remittances might not exceed $ 100 per month.

Between 1940 and 1945, the petitioner's American property in the possession of the United States Trust Company was thus "blocked." The United States Trust Company continued, however, to manage, invest, and reinvest this property, and collect the income therefrom. It attempted to remit money to petitioner, but the Swiss regulations prevented him from converting it into Swiss currency.

On January 10, 1945, the petitioner resumed correspondence with his New York attorneys, Conklin and Bentley, and thereafter letters were frequently exchanged concerning petitioner's financial interests. On May 18, 1945, petitioner wrote to his attorneys from Lugano in part as follows:

The war in Europe is over; how long do you think I ought to keep my domicile in Switzerland? When will be possible to send to my address in Italy those remittances [sic]?

Petitioner was subsequently advised by his attorneys to continue his domicile in Switzerland because funds could not be remitted to him in Italy without a special license from the Treasury Department. The attorneys considered it doubtful whether such a license would be issued.

During August 1945, petitioner wrote that he had decided to continue his domicile in Switzerland and that he hoped the end of the war and the prospect of peace with Italy would allow him "very soon" to change his domicile to Italy and to receive remittances there.

In September 1945, his attorneys wrote petitioner to the effect that the only feasible way for him to receive the income from his property was for him to come to the United States, and they suggested that he initiate inquiries along that line.

The next year, in June 1946, petitioner inquired of his attorneys when it would be possible for him to dispose of his property in view of the accord between the Swiss and United States Governments which affected the blocked property of Swiss residents. He wrote in July 1946, however, that he had been informed by his Swiss attorney that he would incur special taxes and be fined for not having previously "denounced" his American property if he should attempt to obtain its release through the Swiss Government. He stated that he was willing to transfer his residence to France, and he inquired whether he could receive remittances there and whether they would be able then to "retake control of my blocked account in New York (out of the U. S.Switzerland agreement)." In reply, petitioner's New York attorneys wrote that they had no objection to his transferring his residence to France. They also wrote in part as follows:

If you came to the United States as a visitor, the Foreign Funds Control Division would not unblock your account, but if you came to the United States as a permanent resident, an application to free your account could be made with a reasonable chance of success.

Since your family resides abroad, we presume that you would not consider making your home in the United States, and, therefore, we cannot recommend to you that you come to New York in the hope of freeing your account from control, although, of course, we should take great pleasure in your visit.

Thereafter, in October 1946, petitioner went to Paris, France, and he regularly thereafter received monthly remittances of $ 1,000. He terminated his lease for the apartment in Lugano and sold the household furnishings. Thereafter he lived in hotels when not in Italy.

On November 21, 1946, while visiting Monte Carlo, Principality of Monaco, petitioner wrote to his attorneys in New York in part as follows:

In Nice and in Monte Carlo, where I am now as a tourist, competent people manifested the possibility that in the near future the French Government might be compelled to control or take over our American property or list such property with them in order to tax it. For the moment the thing is only in prospect -- just what you mentioned in your letter of August 6th -- anyhow another serious reason for me to be uncertain about my doing.

Now I see in the Swiss newspapers notice of a new financial accord with Switzerland. The blocked accounts in the United States will become free (libres) through the certification in conformity to the General License 95 --

I should be delighted if you could now remove any control with respect to my money: It would also save me taxes and fine in Switzerland -- menaced -- * * *.

* * * *

My dear Mr. Butler, it is now with all my aching heart that I apply, with confidence and trust, to the benevolent friendship of Mr. Conklin and of yourself toward me; am 82 years old with a weak heart and other infirmities, tired and exhausted by these years of exile, am longing for my family in Italy. You know that an Italian going to live permanently in Italy, is obliged to remit to the Italian Government all money, bonds, stocks (except real estate) that he may possess abroad. The compensation of course is far below the real value.

I think we spoke already in New York about this problem and you suggested a donation in favour of my daughter, but taxes were high and we dismissed the matter.

Now an English lady living here, with an only daughter married in Boston, told me that she was advised to perform in Boston a trust in favour of her grandchildren and reserving to herself the income during her life. Could Mr. Conklin and yourself take in serious consideration my ardent wish and arrange, in accord with the U. S. Trust Company, my belonging in some legal way that would surely prevent the Italian Government from taking hold of my money? I am ready to renounce to my right of using the capital. I would be pleased to satisfy myself with the income during my life and reserving the same usufruct after my death to my daughter -- appointing my grandchildren heirs to the estate.

Could this or something else be done with not a great expense?

I would be very grateful to Mr. Conklin and yourself for a kind reply. I hope to go to my home in Milan about the 10th of December and remain there for the holidays so please address me; Via Spiga, 25, Milan (Italy). Please accept with Mr. Conklin my kindest personal regards.

In order to avoid listing his foreign property with the French Government, petitioner remained in Monte Carlo. From there, on November 30, 1946, petitioner wrote to his New York attorneys in part as follows:

The Principality has granted me today other three months of stay: it means until the beginning of March 1947. No declaration of any kind I had to sign -- except taking the engagement not to have a remunerative work. In the meantime I keep by domicile in Switzerland and I enjoy of a visa allowing me to travel to Italy and to Switzerland as many times as I like, during the next three months, and after that period -- another three months may be granted to me, if I ask -- and so on --

* * * *

I want now to inform you that urgent business in Milan calls me back to Italy. There is a loan of reconstruction from the Government, which I cannot overlook, besides that we received already notice of a very onerous War Taxation on property and of course I have to provide funds for both operations.

I shall stay in Italy two or three weeks, spend a few days in Lugano in order to confer with my lawyer there, and then come back as soon as possible to Monte Carlo, waiting for your desirable advice. I mean: the unblocking of my account with reference to the recent financial accord -- United States and Switzerland -- and the possibility of arranging my property in New York in some legal way, which would surely prevent the Italian Government from taking hold of such property -- when I should take up again my residence in Italy, with your previous approval.

On December 3, 1946, the New York attorneys wrote petitioner that, if he could procure a certification from the Swiss Compensation Office, he would be treated as a Swiss national by the United States and his assets would be unconditionally released. They also wrote that they were doubtful about the outcome of the situation if petitioner should resume his Italian residence before obtaining the Swiss certification. They suggested that petitioner create a trust before taking up residence in Italy in order to protect his American property. Petitioner replied to this letter on December 23, 1946, from his country seat at Pettenasco, Italy, where he was spending a few weeks. He wrote that he would carefully consider the trust suggestion later and that he was planning to confer with his attorney in Lugano concerning the Swiss certification. Thereafter, on January 9, 1947, petitioner wrote from Lugano that he had been advised to return to France and to apply for certification through the French Government in order to avoid the Swiss taxes and fine. He stated that he expected to return to Milan, Italy, at the end of that month and then take up his residence again in the Principality of Monaco.

On March 8, 1947, petitioner wrote that he was back in Monte Carlo and that he had discovered that there would be considerable delay in obtaining certification from France. On June 14, 1947, he wrote that, on the advice of his doctors, he would spend most of the summer in Italy, and that mail should be addressed to him at Via Spiga, 25, Milan, Italy, until further notice. On July 14, 1947, petitioner wrote his attorneys from Pettenasco, Italy, to the effect that he wished to avoid any possibility that the Italian Government might take his American property and compensate him with Italian money or bonds at the low official rate of exchange. Thereafter, in response to his attorneys' advice not to take up a residence or domicile in Italy, petitioner wrote to them from Milan, Italy, on August 18, 1947, in part as follows:

I do not intend to take up a residence or domicile in Italy. I shall endeavor to maintain my residence and domicile either in Switzerland or in Monaco. My preference would go to Lugano, two hours railway train from Milan, while my heart condition do not support the twelve hours journey from Monaco.

In October 1947, pursuant to the advice of his Swiss attorney, petitioner again took up residence in Lugano, Switzerland, where he was then able to convert his remittances into Swiss money. From there, on November 5, 1947, petitioner wrote to his New York attorneys in part as follows: "As I wrote, my old age oblige me to avoid long journey: So I am settled down again in Lugano, near my home and my family in Italy."

On January 28, 1948, petitioner's New York attorneys wrote to him that there was some danger that his property might be seized after June 30, 1948, by the United States Government as part of a policy then being considered to assist foreign countries to obtain dollar balances. They suggested that he reconsider the irrevocable trust plan to protect the property if it becomes unblocked. In reply, petitioner wrote to his attorneys on February 5, 1948, from Lugano in part as follows:

Considering the reasons given to me: the fact already reported to you that I should incur in heavy taxes and penalty for the certification from Switzerland (10-15-20% of the amount to be declared), I resolved to come to New York.

Today I went to Zurich and inquired about the visa on my passport at the American Consulate General. I would have liked a visa as a permanent resident: They informed me that it would take about two months to get it. So I had to make a formal application for a non-immigrant visa (six months in the U. S.). In a couple of weeks I ought to get the visa and be able to come.

The principal reason to come to New York is my firm will to consider now the irrevocable trust plan outlined by you in your letters and which would prevent any government from seizing my property.

* * * *

Please consider very carefully my situation. If advisable, could you have the State Department cable the Consulate General in Zurich to deliver me a visa as a permanent resident, in order to allow you the possibility of making an application to free my account? If that step is not feasible would you advise me to come by airplane next March the 25th? * * *

In reply to his letter, the attorneys wrote to petitioner that his account would not be unblocked unless he took up residence in the United States as a permanent resident which would require entry under an immigration visa and the spending of about 6 months in the country. On March 17, 1948, they wrote to advise petitioner that unless he obtained certification from the Swiss authorities prior to June 1, 1948, the Office of Alien Property would investigate his account and advise the Swiss Government of his holdings.

By reason of his former rank in the Italian diplomatic service, the Italian Government, as was customary, had issued to petitioner a diplomatic passport which was valid for his entire lifetime. On March 1, 1948, the United States Legation at Bern issued to petitioner a non-immigrant visa under section 3 (2) of the Immigration Act of 1924. The visa stated: "Valid for single journey," and that the purpose was "Personal Visit."

On April 8, 1948, petitioner wrote to his attorneys from Lugano. He stated that he hoped to sail on April 21, 1948, and he wrote in part as follows:

Am willing to become a permanent resident and stay long enough to obtain the unblocking of my account.

Once in New York, I am advised to proceed to obtain certification from the Italian Government in my [illegible] of Italian resident and domicilated abroad since the year 1931.

Petitioner entered the United States at New York on April 27, 1948. The nonimmigrant registration form issued to petitioner by the immigration inspector stated under "Date to Which Admitted," October 25, 1948.

The petitioner went to the Hotel Chesterfield, New York, New York, and stayed at that hotel all the time that he remained in the United States. The Hotel Chesterfield is a "transient hotel." It is the practice of the Hotel Chesterfield to extend special weekly or monthly rates to guests who are staying for longer periods of time. At the time the petitioner registered he did not attempt to arrange for a weekly or monthly rate. On the registration card the petitioner gave his foreign mail address as "25 Via Spiga, Milan, Italy." His luggage consisted of three suit cases. Petitioner admitted that he made no efforts to rent a suitable apartment in New York City, to purchase a dwelling house in the United States, or to find a suitable place of abode, but stated that he began to make inquiries about the possibility of buying property with money which he would have received from Italy.

On April 27, 1948, September 21, 1948, and October 2, 1948, the petitioner owned both his house in Milan, Italy, and his country seat in Pettenasco, Italy. His immediate family then consisted of the following:

1. His daughter who lived in Rome, Italy, with her husband and three children;

2. His brother who lived in petitioner's house in Milan, Italy; and

3. His two sisters who lived in Pettenasco, Italy.

Petitioner had no relatives in the United States and he did not see any relatives of his deceased wife while he was in this country. He did, however, have friends in New York City.

On April 27, 1948, petitioner executed a signature card for the United States Trust Company in which he declared that he was a resident alien, a citizen of Italy, and a resident of New York State for Federal and State income tax purposes.

On April 30, 1948, petitioner executed an application for a Treasury Department license which would unblock his accounts with the trust company. It included the following sworn statement:

That the applicant is and at all times has been a citizen of Italy and has never been a citizen of any other country. That prior to the year 1937 the applicant took up a residence and domicile in Switzerland and was a resident there until May 28, 1947, when he became a resident of and domiciled in Monaco. On April 27, 1948, the applicant came to the U. S. A. to stay for an indefinite period and does not intend to return to Switzerland as a resident or as a person domiciled there, and the applicant has no definite plans for any residence or domicile in the event he should leave the U. S. A.

In a supplemental statement which petitioner subsequently submitted to the Treasury Department, he stated in part as follows:

5. I consider myself a permanent resident of the United States of America.

6. I intend to stay in the United States of America for an indefinite period.

* * * *

9. By reason of advanced years, I do not intend to apply for citizenship.

10. By reason of a heart difficulty, Lugano, Switzerland, is no longer a suitable place for me to live, and I felt that the climate in Monaco would be favorable. My property in Italy was greatly damaged during the war, and at the present time I have no income from my property in Italy, nor any income from any source except my property in the United States. I came to the United States to look after my property here, and possibly to arrange for the creation of an inter vivos trust of a large part of my property so that a New York trust company may assume the care of the property as trustee, and I may be assured of the income during my life with an appropriate provision for my daughter after my death.

Pursuant to the petitioner's application, the Foreign Funds Control Division of the Treasury Department on September 14, 1948, issued a license authorizing the United States Trust Company to regard his account as property in which no blocked country or national thereof had any interest.

In July and August 1948, the petitioner had a number of discussions with his attorneys regarding the creation of an irrevocable trust. On September 21, 1948, at Greenwich, Connecticut, the petitioner executed an indenture of trust with the United States Trust Company as trustee. Under the terms of this trust he was the income beneficiary for life, with remainder interests in his daughter and her children.

During the summer of 1948, petitioner became ill. He was advised by his physician that he had suffered a thrombosis and that he should stay in bed for at least 15 days in order to avoid the danger of a second stronger attack. Petitioner became frightened. He decided to leave New York and go to Europe in order to be near his sister.

On October 2, 1948, the petitioner departed from the United States aboard the SSQueen Mary. He went to Cherbourg and Paris, France, and then to Geneva, Switzerland, where his daughter was residing. In the middle of October 1948, he arrived in Lugano, Switzerland.

From October 1948 to May 1949, the petitioner lived in Lugano in a rented apartment. From May until October 1949, he lived in his country seat in Pettenasco, Italy. He follows the same procedure each year, except for trips to Rome and to Milan, where he has business interests.

On November 2, 1948, the petitioner wrote from Lugano to his attorneys that his permanent address was Via Spiga, 25, Milan, Italy. On November 30, 1948, the petitioner's attorneys wrote to him as follows:

Upon receipt of your letter advising us that your legal residence was Via Spiga, 25, Milan, Italy. We communicated that fact to the United States Trust Company who asked us to have the enclosed income tax status card signed by you and forwarded to them.

Everything seems to be proceeding smoothly here, and we hope that you are feeling well and are comfortably settled.

With further reference to the income tax status card enclosed, we would say that if we are mistaken and you do not consider yourself a resident of Italy, then of course the card should not be signed.

On December 10, 1948, the petitioner wrote from Lugano to his attorneys stating as follows:

In answer to your letter of November 30, I beg to state that I am a citizen of Italy, that my legal domicile in Italy is Pettenasco (Novara) and that I am now a resident of Lugano (Switzerland).

In Milan I own the house in Via Spiga, 25, but it is not my legal residence (residence -- in the Italian Civil Code -- is considered the locality where you stay with your body.)

Being an Italian citizen, I must have a legal domicile in Italy and it is in the village where I was born: Pettenasco (Italy) -- and where I am expected to exercise the right of political and administrative vote.

My actual residence, where I am living now, is Lugano (Switzerland).

I return the card enclosed in your letter, filled in accordance to the Italian laws. Please consider now if it will be of use for the local requirements.

The card which was enclosed was dated November 20, 1948, and originally was filled in as follows: "My legal residence is Via Spiga, 25, Milan, Italy." This was changed by petitioner, however, to read as follows: "My legal domicile is: Pettenasco (Novara), Italy."

The petitioner filed his gift tax return for the calendar year 1948 in the office of the collector of internal revenue for the second district of New York (in connection with his gift in trust dated September 21, 1948) claiming therein a specific exemption of $ 30,000.

OPINION.

Fisher, Judge: Petitioner was born in 1864 in Pettenasco, Novara, Italy, and he has at all times been a citizen of Italy. He entered the diplomatic service of that country and served at numerous posts throughout the world until his complete retirement in 1927. At all times he owned a house in Milan, Italy, and a country seat in the place of his birth.

He married an American, and, after his retirement from the diplomatic service, he lived with her in Italy, France, and Switzerland. Most of their moves were necessitated by the condition of his wife's health. In 1938, she died in Lugano, Switzerland. After bringing her remains to this country for burial, petitioner returned to Lugano, where he lived until 1946. Lugano is in the southern part of Switzerland near the Italian border and about two hours away from Milan by train. Novara is near Milan in the northern part of Italy.

Under his wife's will, petitioner acquired certain securities and accounts which he permitted to remain in the possession or custody of the United States Trust Company of New York. During World War II, the transfer of funds to petitioner was restricted by Executive Order and his property was blocked. As a resident of Switzerland, petitioner was entitled to receive $ 100 per month under a general license granted by the Treasury Department. He was unable, however, to convert American money into Swiss currency and such sums were not sent to him by the trust company.

When the war in Europe ended, petitioner went to Paris and then to Monte Carlo, Principality of Monaco, where he regularly received $ 1,000 per month for his living expenses from the trust company. These payments were the maximum permitted out of blocked accounts under the pertinent general license. In 1947 petitioner returned to live in Lugano after he was advised that he would be able to receive his remittances there and convert them into Swiss currency.

Petitioner desired greatly to return to live in Italy near his relatives. His brother lived in Milan; his two sisters lived in Pettenasco; and his daughter and three grandchildren lived in Rome. Although he frequently traveled into Italy for visits and for business reasons, on the advice of his New York attorneys, petitioner did not return to Italy to live permanently. The attorneys feared that the property would be seized by the United States Government if he became an Italian resident before a treaty of peace with Italy was consummated.

During this period, petitioner was also influenced greatly by his desire to protect his American property from seizure by a European government which would compensate him in local money at a low rate of exchange. Accordingly, he corresponded with his attorneys concerning the possibility of transferring the property irrevocably in trust in order to eliminate this danger. It was necessary, however, that his American property be unblocked before such a trust could be created.

Petitioner was reluctant to apply for the release of his funds through the Swiss Government because a disclosure of this property would subject him to heavy taxes and penalties for having failed to "denounce" his American property during the war. He was afraid to apply through the Italian Government because of the possibility that the funds would be seized by that country pursuant to the terms of a pending treaty of peace with the United States. Petitioner considered applying through the French Government but discovered that action by that Government would be delayed considerably.

In early 1948, petitioner was advised by his New York attorneys that, unless he was able to obtain the release of his funds by the following June 1, the Alien Property Custodian would investigate his account and report its contents to the Swiss Government. They subsequently advised him that, if he came to the United States and stayed long enough to convince the Treasury Department that he was a permanent resident of this country, his account would be unblocked, and that he could then execute the desired irrevocable trust.

Thereafter, petitioner arrived in New York on April 27, 1948. Three days later his application for a license to unblock his account was filed with the Treasury Department. On September 14, 1948, the license was granted, and on September 21, 1948, petitioner executed the trust agreement which irrevocably transferred certain assets to the United States Trust Company as trustee. On October 2, 1948, petitioner sailed for Europe on the Queen Mary and has not returned to this country.

The issue in this proceeding is whether petitioner was a resident of the United States at the time of the transfer to the trust company and thus entitled to take a specific exemption of $ 30,000 in his gift tax return as provided in section 1004 (a) (1) of the Internal Revenue Code.

The term "resident" has different meanings in different settings and under differing statutes. With respect to the issue before us, the word is construed by Regulations 108, section 86.4, which reads, in part, as follows:

A resident is one who has his domicile in the United States * * * at the time of the gift. * * * All others are nonresidents. A person acquires a domicile in a place by living there for even a brief period of time with no definite present intention of moving therefrom. Residence without the requisite intention to remain indefinitely will not suffice to constitute domicile, nor will intention to change domicile effect such change unless accompanied by an actual removal. [Emphasis supplied.]

Counsel for both parties agree that, for the purpose of this case, "residence" and "domicile" are synonymous. The problem thus resolves itself into the question of whether petitioner was domiciled in the United States on September 21, 1948, when the trust agreement was executed.

In Mitchell v. United States, 21 Wall. 350">21 Wall. 350, the Supreme Court said, at page 353:

A domicile once acquired is presumed to continue until it is shown to have been changed. Where a change of domicile is alleged the burden of proving it rests upon the person making the allegation. To constitute the new domicile two things are indispensable: First, residence in the new locality; and, second, the intention to remain there. The change cannot be made except facto et animo. Both are alike necessary. Either without the other is insufficient. Mere absence from a fixed home, however long continued, cannot work the change. There must be the animus to change the prior domicile for another. Until the new one is acquired, the old one remains. These principles are axiomatic in the law upon the subject.

There is no dispute in the instant case concerning the first factor necessary to constitute a change of domicile, i. e., petitioner did reside in the United States between April 27 and October 2, 1948. The elements of the second factor, the intention to remain, were discussed further by the Supreme Court in Williamson v. Osenton, 232 U.S. 619">232 U.S. 619 (1914). In that case, the Court, through Mr. Justice Holmes, said, at page 624:

The essential fact that raises a change of abode to a change of domicile is the absence of any intention to live elsewhere, Story on Conflict of Laws, § 43 -- or, as Mr. Dicey puts it in his admirable book, "the absence of any present intention of not residing permanently or indefinitely in" the new abode, Conflict of Laws, 2d ed. 111.

In the instant case, we hold that petitioner has not established the requisite intention to remain in the United States indefinitely (or permanently) which is a necessary element in the chain of proof if he is to show that he was domiciled in this country. In this connection, we point out the following:

(1) Petitioner owned two houses in northern Italy, one in Milan and the other in Pettenasco. In New York he lived in a transient hotel.

(2) Petitioner's close relatives were living in Italy. In New York, he had no relatives although he did have friends in that city.

(3) After the war, petitioner expressed his great desire to return to his "home" and family in Italy and to end his long "exile." He remained abroad near northern Italy, however, on the advice of his attorneys, in order to avoid the possible seizure of his American property and to receive remittances from the United States for his living expenses. When these reasons for living outside of Italy were eliminated in 1948, petitioner promptly returned to Europe. He thereafter lived part of each year in Milan, Italy, and part in nearby Lugano, Switzerland.

(4) Petitioner's only motive in coming to the United States was to obtain a license to unblock his property and to create a trust which would eliminate the danger of its seizure by a European government. He was willing to remain here long enough to accomplish these purposes. He knew from correspondence and discussions with his attorneys that the period necessary for the accomplishment of his objectives was relatively limited. He had no intention of living in this country permanently. While he testified that he intended to reside in the United States "indefinitely," it appears from his testimony that he was using the word loosely, indicating merely that he did not know precisely how long it would take to get his property unblocked, or to create the contemplated trust.

(5) Petitioner entered this country on a nonimmigrant visa as a visitor under section 3 (2) of the Immigration Act of 1924, as amended. (8 U. S. C. sec. 203 (2) (1946 ed.)). There is evidence that petitioner inquired about obtaining an immigration visa on February 5, 1948, pursuant to the advice of his attorneys, but that he did not apply for one when he was informed that it would take about 2 months.

(6) Petitioner was authorized to remain in the United States until October 25, 1948. The pertinent immigration regulation then in effect ( 8 C. F. R. sec. 119.12 (1949 ed.)) provided, with respect to extension of stay, that an application must be filed approximately 30 days before the expiration of the period of admission. There is no evidence that petitioner contemplated extending the period of his stay beyond the 6 months which was granted to him when he entered the country. The contemplation of such an application became unnecessary, in fact, because petitioner had completed his business on September 21, and left the country on October 2, 1948. It is to be noted that the license unblocking his account was issued on September 14, 1948, 14 days before it would have been necessary for him to have applied for an extension of his stay.

(7) With respect to his intentions, petitioner deposed as follows:

Yes, I intended to stay there [in the United States] for an indefinite time, as I had sold everything I had in Europe, except in Italy, but I did not plan to become a permanent resident. [Emphasis supplied.]

The foregoing facts, and the record as a whole, present convincing reasons for us to conclude affirmatively that petitioner at all times while in this country had, in the words of the regulation, supra, "a definite present intention of moving therefrom" when his financial affairs had been settled. His stay in the United States may be termed of indefinite duration only in the sense that the exact date of his return to Europe could not be forecast precisely. It was abundantly clear to him that the period required to straighten out his affairs would be limited and relatively brief. It is not necessary, however, for us to make an affirmative finding to that effect in this case. Respondent determined that petitioner was not a resident of the United States in 1948 within the meaning of section 1004 (a) (1) of the Code, and his determination is presumptively correct. Upon the whole record, we think it is clear that petitioner has failed to overcome this presumption. We add, however, that if it were necessary to make an affirmative finding, we would concur in respondent's determination.

We hold, therefore, that petitioner has failed to establish that he was domiciled in the United States in 1948, and, as a consequence, may not be deemed to have been a United States resident in 1948 within the meaning of section 1004 (a) (1) of the Internal Revenue Code.

Decision will be entered for the respondent.