This- is a petition for review of a decision of the Board of Tax Appeals. Section 1001, Revenue Act of 1926; 26 USCA § 1224. The petitioner is; and was during the times hereinafter mentioned, a married man domiciled in the state of. California. In 1920 and 1921, the years here involved, he earned for personal services the sums of $24,839.00 and $22,946.20. He and his wife made separate income tax returns for the years stated, each returning one-half of the above amounts. The Commissioner of Internal Revenue ruled that the entire amount of the petitioner’s earnings was taxable to him, and no part to his wife, and as a result determined that there was a deficiency in the tax paid by the petitioner in the sums of $2,420.12 for 1912, and $2,-432.46 for 1921. Erom this decision the petitioner appealed to the Board of Tax Appeals, where the ruling of the Commissioner was sustained.
There is no dispute as to the facts. On the 1st day of June, 1901, the petitioner and his wife entered into a contract in' writing as follows: “It is agreed and understood between us that any property either of us now has or may hereafter acquire (of any and every kind) in any way, either by earnings (including salaries, fees, etc.), or any rights by contract or otherwise, during the existence of our marriage, or which we or either of us may receive by gift, bequest, devise, or inheritance, and all the proceeds, issues and profits of any and all such property shall be treated and considered, and hereby is declared to be received, held, taken and owned by us as joint tenants, and not otherwise, with the right of survivorship.”
This agreement has been continuously lived up to by the petitioner and his wife throughout the years, and at the time it, was made a bank account was opened in their joint names and subject to the cheek of either, and in this account all incomes, including earnings of the petitioner, have been deposited immediately upon their receipt. It was by reason of these facts that separate income tax returns were made by the petitioner and his wife.
The question for decision is whether the contract referred to is a valid and binding obligation, and such as a husband and wife may legally make, and, if so, whether under its provisions the personal earnings of the petitioner immediately became the joint property of himself and wife as soon as
*899
earned, or was there an interval before the title passed to their joint estate during which time such earnings were impressed with the community property status, and returnable by and taxable to him, under U. S. v. Robbins,
Sections 162, 163, and 164 of the Civil Code of California provide that all properly owned by either spouse before marriage or-thereafter acquired by gift, bequest, devise, or descent, with the rentals, issues, and profits thereof, is separate property, and all other property acquired after marriage by either spouse belongs to them as community property, hut by the same law a husband and wife may enter into any engagement or transaction with the other respecting property which either might if unmarried (section 158), and they may hold property as joint tenants, tenants in common, or as community property (section 161). It is consequently the holding of the Supreme Court of California that an agreement between a husband and wife domiciled there, without any other consideration than their mutual consent, that the future earnings of the wife should he her separate property, is valid, and such earnings do not become community property. Wren v. Wren,
Under the California system there is no difference between the earnings of the wife and the earnings of the husband. They are each community property (Martin v. Southern Pacific,
The remaining question is its proper construction. The petitioner claims that by its terms his personal earnings become the joint property of himself and wife immediately upon being earned, while the position of the government is that, notwithstanding the language of the contract, there was an interval of time during which his earnings belonged to the community and were taxable as such. We are unable to agree with this latter view. The language of the contract is that the earnings, including salaries, fees, etc., of either spouse, shall he treated and considered and “is hereby declared to he received, held, taken, and owned” by them as joint tenants and not otherwise.
This clearly indicates an intention that the earnings of either spouse shall not he received and held by the community, hut by them as joint tenants. The Board of Tax Appeals and the government seem to rely principally on the decision of this court in Blair v. Roth,
Decree of Board of Tax Appeals reversed.