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Split Income and Separate Spheres: Tax Law and Gender Roles in the 1940s

Published online by Cambridge University Press:  28 October 2011

Carolyn C. Jones
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Extract

Before the income-splitting joint tax return for husbands and wives became a part of the Internal Revenue Code in 1948, the federal income tax was assessed essentially on an individual basis. The progressive rate structure of the income tax meant that a husband and wife would, as a couple, pay the least tax if their income were divided equally between them. This became a substantial consideration as maximum marginal rates of tax exceeded 90 percent during the 1940s.

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Articles
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Law and History Review , Volume 6 , Issue 2 , Fall 1988 , pp. 259 - 310
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Copyright © the American Society for Legal History, Inc. 1988

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References

Notes

1. Allie, quoted in Tobias, and Anderson, , Whatever Happened to Rosie the Riveter?, Ms., June 1973, at 92.Google Scholar

2. Surrey, , Federal Taxation of the Family—The Revenue Act of 1948, 61 Harv. L. Rev. 1097, 1111 (1948)Google Scholar.

3. Bittker, B., Federal Income Taxation and the Family, 27 Stan L. Rev. 1389, 1400 (1975)Google Scholar. Married couples could file joint returns, but the same rate schedule applied to both individual and joint returns, making the joint return a more expensive option in most cases. If one spouse had a joint income less than the personal exemption amount, filing a joint return would avoid wasting that spouse's personal exemption.

4. Chirelstein, M., Federal Income Taxation 157 (4th ed. 1985)Google Scholar; Vickrey, W., Agenda for Progressive Taxation 276 (1947)Google Scholar.

A very simple example of how the choice of tax unit can affect the amount of tax liability in relation to a progressive rate structure can illustrate the point. Suppose the tax system is proportional, imposing a 10 percent rate on all income. There are four taxpayers—A, B, C, and D. A and B are married to one another as are C and D. A and B each make $10,000 this year. C makes nothing and D earns $20,000. The tax liabilities for each, under an individually assessed system, would be as follows:

As couples, A-B and C-D have $20,000 of income and $2,000 of tax liability whether the individual or the couple is the tax unit. The choice of tax unit, then, does not affect the amount of tax due under a proportional tax system.

If the tax system is altered so that it is progressive—one in which the rate of tax increases as the amount of income increases, then the choice of tax unit does make a difference. Suppose instead of imposing a flat 10 percent tax on all income, the tax was 10 percent on all income above $10,000; income $10,000 and below would not be subject to tax. This is a progressive tax because the rate of tax increases from 0 percent to 10 percent as income increases. A, B, and C would pay no tax if the tax unit were the individual. D would owe $1,000. As couples, A-B would pay no tax and C-D as a couple would pay $1,000 even though both couples have equal incomes.

5. Witte, J., The Politics and Development of the Federal Income Tax 117–18 (1985).Google Scholar

6. Pub. L. No. 471, 80th Cong., 2d Sess. (passed April 2, 1948, over presidential veto).

7. Surrey, supra note 2, at 1114.

8. Id. at 1106-7. A simplified example illustrates the operation of the joint return. Suppose that A and Mrs. A each earn $10,000 and that C earns $20,000 and Mrs. C nothing. The tax rate is progressive—on income $10,000 and below the tax is $0 and amounts over $10,000 are taxed at 10 percent. If everyone files an individual return, only C would pay any income tax—$1,000. Under the 1948 type of joint return, A and Mrs. A add their incomes for a total of $20,000. The $20,000 would be divided in half ($10,000). The tax on $10,000 is $0, this tax would then be doubled and the As would pay no tax. The Cs also have a total taxable income between them of $20,000. Because no tax is payable on $10,000, doubling the tax produces no tax liability for the Cs— a different result than under the individual filing system. The Cs under the joint return pay the same tax as Mr. and Mrs. A even though the distribution of income between the spouses differs.

9. Id. at 1104-7.

10. I. R. C. sec. 6013 (1986).

11. Druker v. Comm'r, 697 E 2d 46 (1982), cert. den. 461 U.S. 957 (1983), reprinted in Graetz, M., Federal Income Taxation 457, 458 (1985)Google Scholar.

12. Andrews, W., Basic Federal Income Taxation 789 (3d ed. 1985)Google Scholar.

13. 3 Bittker, B., Federal Taxation of Income, Estates and Gifts, at 85-19.Google Scholar

14. See infra text accompanying note 148.

15. See, e.g., McIntyre, , Individual Filing in the Personal Income Tax: Prolegomena to Future Discussion, 58 N.C.L. Rev. 469 (1980)Google Scholar; McIntyre, & Oldman, , Taxation of the Family in a Comprehensive and Simplified Income Tax, 90 Harv. L. Rev. 1573 (1977)CrossRefGoogle Scholar.

16. Gann, , Abandoning Marital Status as a Factor in Allocating Income Tax Burdens, 59 Tex. L. Rev. 1, 25 (1980)Google Scholar.

17. McIntyre & Oldman, supra note 15, at 1574.

18. The use of the term “endogenous” in analysis of the tax system derives from Clark, , The Morphogenesis of Subchapter C: An Essay in Statutory Evolution and Reform, 87 Yale L. J. 90 (1977)CrossRefGoogle Scholar.

19. Surrey, , Family Income and Federal Taxation, 24 Taxes 980 (1946)Google Scholar.

20. See, e.g., Bittker, supra note 3, at 1392.

21. Anderson, K., Wartime Women (1981)Google Scholar; Campbell, D., Women at War With America: Private Lives in a Patriotic Era (1985)Google Scholar; Chafe, W., The American Woman: Her Changing Social, Economic and Political Roles, 1920-1970 (1972)Google Scholar; Chafe, W., Women and Equality: Changing Patterns in American Culture (1977)Google Scholar; Hartmann, S., The Home Front and Beyond: American Women in the 1940's (1982)Google Scholar; Honey, M., Creating Rosie the Riveter: Class, Gender, and Propaganda During World War II (1984)Google Scholar; Oppenheimer, V., The Female Labor Force in the United States (1970)Google Scholar; Rupp, L., Mobilizing Women for War: German and American Propaganda 1939-1945 (1978)Google Scholar; Hartmann, , Prescriptions for Penelope: Literature on Women's Obligations to Returning World War II Veterans, 5 Women's Stud. 223 (1978)CrossRefGoogle Scholar; Milkman, , Redefining Women's Work: The Sexual Division of Labor in the Auto Industry during World War II 8 Feminist Stud. 337 (1982)CrossRefGoogle Scholar; Skold, , The Job Left Behind: American Women in the Shipyards during World War II in Women, War, and Revolution (Berkin, C. and Lovett, C. eds. 1980).Google Scholar

22. Campbell, supra note 21, at 72 (1984); Weiner, L., From Working Girl to Working Mother: The Female Labor Force in the United States, 1820-1980, at 98 (1985)Google Scholar.

23. RUPP, supra note 21, at 61 (1978). One 1936 Gallup poll indicated that 82 percent of those responding believed that wives with employed husbands should not be employed outside the home; 75 percent of the women polled agreed with that proposition.

24. Campbell, supra note 21, at 73.

25. Hartmann, supra note 21, at 21-24.

26. Anderson, supra note 21, at 5.

27. See notes 168-72 and accompanying text. The shortage of clerical workers did, however, prompt the Magazine Bureau of the Office of War Information to urge editors to encourage unemployed women to take jobs as clerks and stenographers. Such a propaganda effort was necessary because, according to the Magazine Bureau, “By and large, women do not view work of this kind as war work.” Honey, supra note 21, at 40.

28. See Campbell, supra note 21, at 103-37; Fink, D., Open Country, Iowa: Rural Women, Tradition and Change 103-34 (1986).Google Scholar

29. Campbell, supra note 21, at 72, 73, 108.

30. Anderson, supra note 21, at 6, 48, 59-62.

31. Campbell, supra note 21 at 109-10, 131.

32. Hartmann, supra note 21, at 24.

33. Id. at 25. The discontents of homemaking were reflected in Friedan, B., The Feminine Mystique (1963).Google Scholar

34. Campbell, supra note 21, at 86.

35. Id. at 91-96.

36. Hartmann, supra note 21, at 168.

37. See Graebner, , The Unstable World of Benjamin Spock: Social Engineering in a Democratic Culture, 1917-1950, 67 J. of Am. Hist. 612, 620–22 (1980)CrossRefGoogle Scholar; Weiss, , Mother, The Invention of Necessity: Dr. Benjamin Spock's Baby and Child Care 29 Am. Q. 519 (1977)CrossRefGoogle Scholar; See also, Zuckerman, , Dr. Spock: The Confidence Man in The Family in History 179 (Rosenberg, C. ed. 1975)Google Scholar. [Dr. Spock is portrayed as the representative of a “mutually supportive,” “benign and blank,” “postindustrial order”].

38. Campbell, supra note 21, at 230.

39. Hartmann, supra note 21, at 94.

40. Anderson, supra note 21, at 168.

41. Campbell, supra note 21, at 239. The effects of reconversion were even more marked in particular industries. For example, in the automobile industry, women were one-fourth of all workers during the war (when the auto companies had been producing military goods), but only 7.5 percent of the work force by April 1946. Hartmann, supra note 21, at 24, 66-70.

42. Campbell, supra note 21, at 239.

43. The tax savings from income splitting ranged from $38 or 4.8 percent for those with net income before exemption of $5,000 to $2,622 or 28.9 percent for those with net incomes before exemption of $25,000. For those with net income of $1,000,000 the amount saved by income splitting was $23,921 or 2.8 percent. U.S. Treasury Dept., The Tax Treatment of Family Income, reprinted in Revenue Revisions, 1947-48, Hearings Before the House Comm. on Ways and Means, 80th Cong., 1st Sess. 849.

44. 1 De Funiak, W., Principles of Community Property 136–37, 179–84 (1943)Google Scholar.

45. Office Dec. 426, 13-20-815, C.B. No. 2, p. 198; Office Dec. 285, 21-19-528, C.B. No. 1, p. 189, 32 Op. Att'y Gen. 298, 32 Op. Att'y Gen. 435, T.D. 3071, 39-20-1218, C.B. No. 3 p. 221; T.D. 3138, 11-21-1515. C.B. No. 4, p. 238; Maggs, , Community Property and the Federal Income Tax, 14 Calif. L. Rev. 351, 354 (1926)Google Scholar.

46. Poe v. Seaborn, 282 U.S. 101,111-12 (1930) (Washington); Goodell v. Koch, 282 U.S. 118 (1930) (Arizona); Hopkins v. Bacon, 282 U.S. 122 (1930) (Texas); Bender v. Pfaff, 282 U.S. 127 (1930) (Louisiana).

47. Editorial, New York Times, May 31, 1947, at 12, col. 3.

48. Act of May 10, 1939, ch. 62, art. 2, 1939 Okla. Sess. Laws 356.

49. Income Tax Detour, Bus. Week, Dec. 21, 1946, at 34-35; Yoder, How Nine States Beat the Income Tax, Saturday Evening Post, May 24, 1947, at 23, 153.

50. Act of May 10, 1939, ch. 62, art. 2, 1939 Okla. Sess. Laws 356.

51. Comm'r v. Harmon, 323 U.S. 44 (1944).

52. Id. at 323 U.S. 44, 45-47 (1944).

53. Lucas v. Earl, 281 U.S. 111 (1930).

54. This characterization of the Oklahoma law as a contract rather than property law drew a cogent dissent from Justice Douglas:

It is said that the elective feature of the Oklahoma statute causes it to run afoul of Lucas v. Earl… which held that an assignment of income to be earned or to accrue in the future was ineffective to render the income immune from taxation as that of the assignor. But the court was not troubled with Lucas v. Earl in Poe v. Seaborn. It disposed of that argument by saying that in Lucas v. Earl the “very assignment” was bottomed on the fact that “the earnings would be the husband's property, else there would have been nothing on which it could operate. That case presents quite a different question from this, because here, by law, the earnings are never the property of the husband, but that of the community.” … By the same reasoning we should say that Oklahoma has made these earnings the “property” of the community once the written election has been filed and that income which accrues thereafter never becomes the sole “property” of the husband.

Comm'r v. Harmon, 323 U.S. 44, 51-52 (1944).

55. Id. at 46-47.

56. Tax Detour Lost, Bus. Week, Dec. 2, 1944, at 20.

57. Mr. Whiskers Breathes Easier, Saturday Evening Post, Dec. 23, 1944, at 80. The term “Mr. Whiskers” refers to the “U.S. government, or any of its law-enforcement officers, such as an internal revenue man….” Wentworth, Dictionary of American Slang 575 (1975)Google Scholar.

58. Act of Apr. 28, 1945, tit. 32, ch. 1, 1945 Okla. Sess. Laws 118. The passage of this Act was reported in the popular press. Joint Property Act, Bus. Week, May 5, 1945, at 79-80.

59. I.T. 3782, 1946-1 C.B. 84. Tax Saving Due, Bus. Week, Jan. 5, 1946, at 27-28.

60. Act of March 29, 1943, ch. 440, 1943 Or. Laws 656. This was reported in the popular press in Oregon Tax Balm, Newsweek, June 21, 1943, at 75. This elective provision was repealed in 1945. Act of March 20, 1945, ch. 270, 1945 Or. Laws 409. A mandatory community property system was then adopted in 1947. Act of April 19, 1947, ch. 525, 1947 Or. Laws 910. This scheme was given the Treasury's blessing in I.T. 3868, 1947-2 C.B. 49.

61. Act of May 22, 1945, act 273, 1945 Hawaii Sess. Laws 312 (approved by the Internal Revenue Bureau in I.T. 3784, 1946-1 C.B. 85).

62. Act of June 12, 1947, ch. 156, 1945 Neb. Laws 426 (approved by the Internal Revenue Bureau in I.T. 3869, 1947-2 C.B. 56).

63. Act of July 1, 1947, no. 317, 1947 Mich. Publ. Acts 517 (approved by the Internal Revenue Bureau in I.T. 3867, 1947-2 C.B. 49). This approval was noted in the financial pages of the New York Times. Community Property Tax Approved for Michigan, New York Times, Aug. 23, 1947, at 17, col. 7.

64. Act of July 7, 1947, no. 550, 1947 Pa. Laws 1423 (approved by the Internal Revenue Bureau in I.T. 3879, 1947-2 C.B. 58).

65. Tax savings in Hawaii were reported to be $3.5 million; in Nebraska, $6.3 million; in Michigan, $65.1 million; and in Pennsylvania, $81.2 million. McClellan Where You Pay Less Income Tax, Am. Mag., Jan. 1948, at 36. These figures were said “to show in dollars what 1946 taxpayers saved in the 13 community property states and Hawaii.” This is inaccurate because of the states above, only Hawaii had a community property regime in 1946.

66. Letter from George Werning to Bourke B. Hickenlooper (Jan. 6, 1948) (available in “Tax, Income, 1948,” Bourke B. Hickenlooper Papers, Herbert Hoover Presidential Library, West Branch, Iowa. Hereinafter cited as Hickenlooper Papers). Senator Hickenlooper received other letters on the subject of community property as well. Out of 53 letters in his “Tax, General 1948” topical file, five related to community property. These letters included: Letter from A. L. Killian to Bourke B. Hickenlooper (Feb. 21, 1948); Letter from E. B. Oyaas to Bourke B. Hickenlooper (Jan. 22, 1948); Letter from Geo. H. Jones to Bourke B. Hickenlooper (Jan. 23, 1948) (all available in “Tax, General, 1948,” Hickenlooper Papers).

67. See, e.g., McClellan, supra note 65; Treasury Loses, Bus. Week, Dec. 11, 1943, at 32-33; Tax Detour Lost, supra note 56; Joint Property Act, supra note 58; Tax Saving Due, supra note 59; Income Tax Detour, supra note 49; Trend Toward Income-Splitting Tax Laws, Bus. Week, Dec. 27, 1947, at 22-24; His Taxes and Hers, Collier's, Aug. 17, 1946, at 82; The Worth of a Wife, Fortune, Sept. 1948, at 122; Smith, Divorce Is Cheaper Than Marriage, Harper's, Sept. 1947, at 232-33; Wood, Share Bed, Board and Taxes, Nation's Bus., June 1947, at 54; Oregon Tax Balm, supra note 60; Community Dilemma, Newsweek, Oct. 13, 1947, at 64-65; Mr. Whiskers Breathes Easier, supra note 57; Yoder, How Nine States Beat the Income Tax, supra note 49; Family Split, Time, Nov. 3, 1947, at 20; Split Tax to Aid Families?, U.S. News & World Rep., May 16, 1947, at 14; New Support for Tax Splitting, U.S. News & World Rep., June 27, 1947, at 45; Spread of Income Splitting, U.S. News & World Rep., Sept. 12, 1947, at 44; Community-Property Tangles, U.S. News & World Rep., Oct. 17, 1947, at 40; States' Troubles over Income Split, U.S. News & World Rep., Dec. 5, 1947, at 51; How Income Splitting Works, U.S. News & World Rep., Jan. 9, 1948, at 43.

68. The National Woman's Party was formed in 1916 to place pressure on the Democratic party for women's suffrage. After passage of the Nineteenth Amendment, the NWP worked primarily for passage of the Equal Rights Amendment. See Rupp, L. & Taylor, V., Survival in the Doldrums (1987)Google Scholar; Rupp, , The Survival of American Feminism: The Women's Movement in the Postwar Period, in Reshaping America: Society and Institutions, 1945-1960, at 333 (Bremner, R. & Reichard, G. eds. 1982)Google Scholar.

69. Telegram from Mrs. Harvey W. Wiley to Walter F. George (Aug. 26, 1941) reprinted in Revenue Revisions, 1947-48: Hearings Before the House Comm. on Ways and Means, 80th Cong., 1st Sess. 917.

70. 2 Revenue Revision of 1942: Hearings Before the House Comm. on Ways and Means, 77th Cong., 2d Sess. 1475-76 (brief of Burnite [sic] Shelton Matthews, chairman of the lawyers council, National Woman's Party reprinted from 77th Cong., 1st Sess., Senate Comm. Print, Comm. on Judiciary, August 4, 1941).

71. Id. at 1475.

72. Id. at note 30.

73. Mckay, G., A Treatise on the Law of Community Property 765, 772–75Google Scholar. This trend away from community of family and to a preeminence of the individual is well-documented in Glendon, M., The New Family and the New Property (1981)Google Scholar.

74. 1 De Funiak, supra note 44, at 6-7 (1943).

75. Id. at 341.

76. Id. at 379.

77. Id. at 6.

78. With regard to New York proposals, see Editorial, New York Times, Oct. 6, 1947, at 20, col. 3; Annual Report of the State Tax Commission, 27-43 (New York, 1947). The Indiana Senate's consideration of community property legislation was covered in Indiana Senate for Tax Change, New York Times, Mar. 7, 1947, at 2, col. 8.; Trend Toward Income-Splitting Tax Laws, supra note 67; Wood, supra note 67, at 71.

79. See, e.g., Revenue Revisions, 1947-48: Hearings Before the House Comm. on Ways and Means, 80th Cong., 1st Sess. (testimony of Dwight Rogers and questioning by Rep. Gearhart of California).

80. Community Dilemma, supra note 67.

81. Wood, supra note 67, at 54, 71.

82. Phipps, Community Property Can Aid Wives in Putting Mates Over Barrel, Omaha Evening World-Herald, June 13, 1947, at 15, col. 2.

83. Editorial, Omaha Evening World-Herald, June 6, 1947, at 10, col. 1.

84. Omaha Evening World-Herald, June 9, 1947, at 6, col. 6.

85. McClellan, supra note 65, at 37.

86. Id. at 146-47.

87. Id. at 36-37, 147.

88. See supra note 8.

89. Community Property Tangles, supra note 67; States' Troubles Over Income Split, supra note 67.

90. Omaha Evening World-Herald, June 12, 1947, at 1, col. 5.

91. Editorial, supra note 83. Letter to Editor from Concerned, Omaha Evening World-Herald, June 10, 1947, at 8, col. 6.

92. Omaha Evening World-Herald, June 24, 1947, at 1, col. 4.

93. See, e.g., in Oregon, Dougherty, , Some Initial Comments on the Oregon Community-Property Law, 27 Or. L. Rev. 1 (1947)Google Scholar; Harsch, , Control of Property under the Oregon Community-Property Act, 27 Or. L. Rev. 257 (1948)Google Scholar; Ganong, , Community Property and Presumptions, 28 Or. L. Rev. 157 (1948)Google Scholar; 28 Or. L. Rev. 72 (1948).

94. See, e.g., in Oklahoma, , Evans, , The Community Property Act of 1945 and Its Effect on the Oil and Gas Industry, 16 Okla. B. J. 1606 (1945)Google Scholar; McKenzie, , Community Property As It Affects Titles, 16 Okla. B. J. 973 (1945)Google Scholar; Trice, , Conveyances Under the Community Property Act, 16 Okla. B. J. 1435 (1945)Google Scholar; Report of Title Lawyers Group, Necessary Showing of Facts in Conveyances of Real Estate Under Oklahoma Community Property Law, 16 Okla. B. J. 1265 (1945)Google Scholar; O'Neil, , The Community Property Law, 16 Okla. B. J. 1126 (1945)Google Scholar; Trice, , Community Property Law, 16 Okla. B. J. 163 (1945)Google Scholar.

95. Dougherty, supra note 93, at 2.

96. Id. at 8.

97. Or. Const, art. XV, 5.

98. Dougherty, supra note 93, at 10.

99. See cases cited Id. at 11.

100. Dougherty, supra note 93, at 8-13.

101. Willcox v. Penn Mut. Life Ins. Co., 357 Pa. 581, 55 A. 2d 521 (1947).

102. Id. at 586, 55 A. 2d at 524; Note, The Validity of Community Property Laws, 33 Cornell L. Q. 395, 396 (1948)Google Scholar.

103. Willcox, 357 Pa. at 585-86, 55 A. 2d at 523-24.

104. Id. at 590-93, 55 A. 2d at 524-27, at 594, 55 A. 2d at 528.

105. Harsch, supra note 93, at 258.

106. Note, supra note 102, at 406.

107. Willcox, 357 Pa. at 598, 55 A. 2d at 529.

108. Note, supra note 102, at 408.

109. Act of May 10, 1948, no. 39, 1948 Mich. Publ. Acts 1st Ex. Sess. 95; Act of Apr. 20, 1949, ch. 129, 1949 Neb. Laws 337; Act of June 2, 1949, tit. 32, 1949 Okla. Sess. Laws 229; Act of Apr. 11, 1949, ch. 349, 1949 Or. Laws 502; Act of April 26, 1949, act 242, 1949 Hawaii Sess. Laws 629. See Note, Epilogue to the Community Property Scramble: Problems of Repeal, 50 Colum. L. Rev. 332 (1950)CrossRefGoogle Scholar.

110. See supra notes 80-83 and accompanying text.

111. Hines, , Real Property Joint Tenancies: Law, Fact, and Fancy, 51 Iowa L. Rev. 582, 586 (1966)Google Scholar.

112. Vickery, supra note 4, at 278.

113. See supra note 15.

114. Gann, supra note 16.

115. McIntyre & Oldman, supra note 15, at 1596.

116. Campbell, supra note 21, at 229. Campbell argues that this pattern is a “statistical artifact: very dominant husbands disproportionately prevented their wives from working in the first place and conversely, more dominant wives could successfully insist on taking a job.” Campbell's argument may be too simplistic. This argument may not explain the differential in husband dominance between couples in which the wife is currently employed and couples in which the wife had once been employed. Anderson, supra note 21, at 83.

It may be argued that a woman's participation in the labor force may have a different impact upon family power relationships than an adjustment in legal rights to income and property because a woman who actively produces family income may feel she has greater power with respect to her wages. This does not, however, lead one to the conclusion that a change to a community property regime would have no impact upon family power distribution. It has been said that “[o]ne of the best documented examples of such renegotiation is the redistribution of family decision-making power that accompanies a change in the distribution of income or economic resources between spouses: an increase in the economic resources that a marital partner can offer leads to a corresponding increase in that partner's control over the uses of joint income.” Note, The Case for Mandatory Separate Filing By Married Persons, 91 Yale L. J. 363 (1981)CrossRefGoogle Scholar citing R. Blood & D. Wolfe, Husbands and Wives 12-13, 32; Heath, A., Rational Choice and Social Exchange 105-12 (1976)Google Scholar; Ross, H. & Sawhill, I., Time of Transition: The Growth of Families Headed by Women 42-45 (1975).Google Scholar

117. See supra note 70.

118. The following tabulation shows the increase in number of partnership returns filed for the income years 1930 through 1945:

In the case of the state of Iowa, the records indicate that for the tax year 1945 there was a total of approximately 26,500 partnership returns filed, or about 3.9 percent of the total for the country as a whole. Of the 26,500 partnership returns filed in Iowa, 15,160 have been estimated on the basis of the names shown as members of the partnership to be partnerships where there was a family connection between its members.

The Commissioner of Internal Revenue wrote to Senator Bourke Hickenlooper of Iowa that: “Our records indicate that at the present time we are able to make a detailed examination on something less than 10 percent of the total partnership returns filed annually…. The records indicate that only a few hundred family partnership returns in Iowa were examined by revenue agents during the past year. The significance of this comparison is that a relatively minor portion of all family partnerships in your State have been given a detailed examination. Conversely, the greater bulk of family partnerships are accepted as filed.” Letter from Commissioner of Internal Revenue to Bourke B. Hickenlooper 1-2 (May 20, 1947) (available in “Legislative File, Sponsored, Taxation, 1947, HR 1, Partnerships,” Hickenlooper Papers).

119. See supra notes 46-47 and accompanying text.

120. I.T. 3845, 1947-1 C.B. at 66.

121. See e.g., Id. at 67; Comm'r v. Tower, 327 U.S. 280 (1946); Lusthaus v. Comm'r, 327 U.S. 293 (1946); Comm'r v. Culbertson, 337 U.S. 733 (1947).

122. I.T. 3845, 1947-1 C.B. at 67.

123. Simons, H., Personal Income Taxation 49 (1938)Google Scholar.

124. Lucas v. Earl, 281 U.S. 111-15 (1930).

125. Poe v. Seaborn, 282 U.S. 101 (1930).

126. Income-producing property tends to be concentrated in the hands of the very wealthy. For example in 1939,.89 percent of the adult population held 29.1 percent of total personal wealth. See , Lampman, Changes in Share of Wealth Held by Top Wealth Holders, 1922-1956Google Scholar, National Bureau of Economic Research (1962).

127. See Eisner v. Macomber, 252 U.S. 189 (1920).

128. Corliss v. Bowers, 281 U.S. 376 (1930); Helveringv. Horst, 311 U.S. 112(1940).

129. Mertens,, J.The Law of Federal Income Taxation 157; 158; 118, n. 87; 114, n. 58; 115, n. 62-64; 114, n. 60-61 (1948 rev. vol.).Google Scholar

130. Burnet v. Leininger, 285 U.S. 136, 140, 141-42 (1932).

131. 2 Paul, R. & Mertens, J., Law of Federal Income Taxation 36 (1939)Google Scholar.

132. Comm'r v. Tower, 327 U.S. 280 (1946).

133. Lusthaus v. Comm'r, 327 U.S. 293 (1946).

134. Tower, 327 U.S. at 285-86.

135. Record at 45-46, Tower.

136. Tower, 327 U.S. at 285.

137. Record at 25, Lusthaus.

138. Lusthaus. 327 U.S. at 295-96.

139. Tower, 327 U.S. at 290.

140. Id. at 290-91 [citations omitted].

141. I.T. 3845, 1947-1 C.B. 66-67. There is some suggestion in Internal Revenue Field Procedure Memorandum No. 408 that the four criteria may predate Tower and Lusthaus. Field Procedure Memorandum No. 408, from Deputy Commissioner E. I. McLarney to Internal Revenue Agents in Charge of Field Divisions (Feb. 10, 1947) (available in “Legislative File, Sponsored, Taxation 1947 HR 1, Partnerships,” Hickenlooper Papers).

142. Id. at 68.

143. Id. at 66.

144. 2 Paul & Mertens, supra note 131, at 33.

145. In 1942, Michigan inserted language in its version of the Uniform Partnership Act allowing partnerships between husbands and wives. In Socony-Vacuum Oil Co. v. Texas Co., 113 F. Supp. 514 (E. D. Mich. 1953) it was held that the statutory language providing that “a partnership is an association of two or more persons, which may include husband and wife,” meant that a husband and wife may be members of a partnership with other persons but may not form a partnership alone. Massachusetts changed its prohibition on husband-wife partnerships by statute in 1963.

146. Comm'r v. Tower, 327 U.S. 280 (1946).

147. Id.

148. Unsuccessful taxpayers included Simons v. Comm'r, 7 T.C. 114 (1946) (Michigan); Comm'r v. Tenney, 120 F. 2d 421 (1st Cir. 1941) (Massachusetts). There were successful taxpayers in Michigan and Massachusetts. See, e.g., Anderson v. Comm'r, 6 T.C. 956 (1946) (Michigan); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948) (Michigan); Parker v. Comm'r, 6, T.C. 974 (1946) (Massachusetts); Zukaitis v. Comm'r, 3 T.C. 814 (1944) (Michigan).

149. Letter from Jack Shepard to Bourke B. Hickenlooper (Sept. 5, 1945) (available in “Legislative File, General, Taxation Partnerships 1945,” Hickenlooper Papers). Senator Hickenlooper's papers contain other letters expressing this opinion. Letter from G. A. Kent to Bourke B. Hickenlooper (May 26, 1948) (available in “Topical File, Tax, General, 1948”); Letter from F. H. Schierbrock to Bourke B. Hickenlooper (May 25, 1948); Letter from W. H. Nicholas to Bourke B. Hickenlooper (Jan. 23, 1948) (available in “Topical File, Tax, Income, 1948,” Hickenlooper papers).

150. Morris, Senate Aides Back July 1 for Tax Cuts, New York Times, May 8, 1947, at 17, col. 7.

151. Comm'r v. Culbertson, 337 U.S. 733, 736-37, 741-48, (1949).

152. Id. at 741-42.

153. In 1951, Congress imposed a statutory solution that remains in the Internal Revenue Code now as section 704(e). Basically this legislative measure provides that if a partnership interest is created by gift, the partnership agreement in family partnership cases will be respected, unless the donor of the capital is not given a reasonable allowance for services rendered to the business or unless the donee is receiving a disproportionately large allocation of income based upon a comparison of the donee's and donor's contributions of capital. Bruton, , Family Partnerships and the Income Tax—The Culbertson Chapter, 98 U. Pa. L. Rev. 143 (1949)CrossRefGoogle Scholar.

154. See Hartmann, supra note 21, at 163-81; Olsen, , The Family and the Market: A Study of Ideology and Legal Reform, 96 Harv. L. Rev. 1497 (1983)CrossRefGoogle Scholar.

155. Akers v. Comm'r, 6 T.C. 693, 698 (1946); Harvey v. Comm'r, 6 T.C. 653, 656 (1946).

156. Record at 41-42, Commissioner v. Tower, 327 U.S. 280 (1940).

157. Id. at 42.

158. Redd v. Comm'r, 46, 154 P-H Memo TC (1946).

159. Bowman, H., Marriage for Moderns 370 (2d ed. 1948)Google Scholar. Henry Bowman was chairman of the division of Home and Family and the Department of Marriage Education at Stephens College, a women's college in Columbia, Missouri.

160. Olsen, supra note 154.

161. Rupp, supra note 21, at 138.

162. Saturday Evening Post, March 25, 1944 at 51.

163. Furnas, , Womanpower, Ladies Home J. 21 (Nov. 1942)Google Scholar.

164. Anderson, supra note 21, at 90-91.

165. Campbell, supra note 21, at 165.

166. Such negative messages failed to account for demands upon homemakers created by the war. Campbell, supra note 21, at 165-86, 63-72 (discussing consumer shortages that raised difficulties for housewives and their volunteer efforts).

Housewives' efforts in dealing with shortages and doing volunteer work received some support from propagandists. An Office of War Information film praised housewives for preserving the family, which had become “a symbol of what the American system was all about.” A soldier in the film commends his mother by saying, “I'm glad you haven't turned the old house into just a headquarters, Mom; I'm glad you're keeping it our home, the way it was. That's the way I feel about it out here, that is also part of a woman's war job—keeping up the home, the homes we're fighting for, that some day we want to come back to.” Honey, supra note 21, at 133, 135. A Eureka Company advertisement entitled “Uniform, Slacks, Kitchen Apron” views servicewomen, factory workers, and housewives as equal contributors to the war effort. Saturday Evening Post, April 10, 1943, at 93. Both the film and the advertisement seemed to place a high value on the housewife's role during the war and presented homemakers as making important contributions to society.

167. Allen v. Comm'r, 6 T.C. 899 (1946); Lawton v. Comm'r, 6 T.C. 1093 (1946); Lorenz v. Comm'r, 3 T.C. 746 (1944); Schreiber v. Comm'r, 6 T.C. 707 (1946).

168. Allen v. Comm'r, 6 T.C. 899, 907 (1946). Harron was the only woman on the Tax Court at that time.

169. Hartmann, supra note 21, at 18; Kessler-Harris, A., Out to Work 234 (1982)Google Scholar.

170. Memorandum Relative to Proposed Amendments to the Sections of the Internal Revenue Code Dealing with the Taxation of Partners and Partnerships (undated) (available in “Legislative File, Sponsored, Taxation, 1947 HR 1 Partnerships,” Hickenlooper Papers).

171. Amendment to H. R. 1 (May 27,1947) (available in “Legislative File, Sponsored, Taxation, 1947 HR 1, Partnerships,” Hickenlooper Papers).

172. Campbell, supra note 21, at 77, 105-8, 31, 37-38.

173. Testimony of Zelma Mary Watson, U. S. Senate, Comm. on Education and Labor, Wartime Health and Education, Subcomm. of 78th Cong., 2d Sess., 1944, part 3, 1211, cited in Campbell, supra note 21, at 108.

174. Cary, A Pain in the Neck, Saturday Evening Post, Sept. 18, 1943, discussed in Honey, supra note 21, at 73.

175. Wherry, , Country Air, 70 Wallace's Farmer 233 (1945)Google Scholar, cited in FINK, supra note 28, at 114.

176. Graber v. Comm'r, 171 F. 2d 32 (10th Cir. 1948); Parker v. Comm'r, 6 T.C. 974 (1946); Singletary v. Comm'r, 155 F. 2d 207 (5th Cir. 1946); Wilson v. Comm'r, 161 F. 2d 661 (7th Cir. 1947).

177. Funai v. Comm'r, 13 T.C. 696, 699, 701, 704 (1949).

178. Eckhard v. Comm'r, 12 T.C. 384, 386, 391 (1949).

179. Larson v. Kraemer, 84 F. Supp. at 314. See Krauskopf, & Thomas, , Partnership Marriage: The Solution to an Ineffective and Inequitable Law of Support, 35 Ohio St. L. J. 558, 561–63 (1974)Google Scholar (dealing mostly with a wife's obligation to render services in the home without compensation). The article does, however, address services in a family business. “A typical decision held that a wife working in her husband's business would be an employee for purposes of workmen's compensation only if her labor was not of a nature generally required by the marriage relationship” [citing Reid v. Reid, 216 Iowa 882, 249 N.W. 387 (1933)]. Contrary authority existed in the 1940s and into recent years. See Note, 16 Wake Forest L. Rev. 235 (1980)Google Scholar.

180. E.g. Graber v. Comm'r, 171 F. 2d 32 (10th Cir. 1948); Larson v. Kraemer, 84 F. Supp. 313 (D.Conn. 1949); Wenig v. Comm'r, 177 F. 2d 62 (D.C. Cir. 1949); Wilson v. Comm'r, 161 F. 2d 661 (7th Cir. 1947).

181. Wenig v. Comm'r, 177 F. 2d 62, 65 (D.C. Cir. 1949).

182. Minow, , Forming Underneath Everything That Grows: Toward a History of Family Law, Wisc. L. Rev. 819, 869 (1985)Google Scholar.

183. Id. at 871.

184. Rupp, supra note 21, at 157.

185. Id. at 164.

186. Hartmann, supra note 21, at 163-81.

187. Estate of Depue v. Comm'r, 13 T.C. 463 (1949); Drew v. Comm'r, 12 T.C. 5 (1949); Matuszewski v. Comm'r, 13 T.C. 738 (1949); Merz v. Comm'r, 12 T.C. 1076 (1949).

188. Estate of Depue v. Comm'r, 13 T.C. 463, 464 (1949); Merz v. Comm'r, 12 T.C. 1076, 1077 (1949).

189. Parker v. Comm'r, 6 T.C. 974, 975 (1946).

190. Drew v. Comm'r, 12 T.C. 5, 7, 13 (1949). The Fifth Circuit took a different approach to a wife's childrearing duties by upholding a husband-wife partnership in a filling-station business even when the wife had a baby and ceased working in the business in the tax years in question. Singletary v. Comm'r, 155 F. 2d 207 (5th Cir. 1946).

191. Comm'r v. Tower, 327 U.S. 280, 290 (1946).

192. Barrett v. Comm'r, 13 T.C. 539 (1949); Cole v. Comm'r, 173 F. 2d 893 (6th Cir. 1949); Dawson v. Comm'r, 163 F. 2d 664 (6th Cir. 1947); Lusthaus v. Comm'r, 3 T.C. 540 (1944); Miller v. Comm'r, 150 E 2d 823 (2d Cir. 1945); Schroder v. Comm'r, 134 F. 2d 346 (5th Cir. 1943).

193. Dawson v. Comm'r, 163 F. 2d 664, 665 (6th Cir. 1947). In two cases, wives did participate in management decisions, but were not recognized as partners. In both of those cases, other factors were responsible for the negative decisions. In Eckhard, H. A., 12 T.C. 384 (1949)Google Scholar, the lack of written partnership agreement and intimations of unreliable testimony from the Eckhards were responsible for the unfavorable result in the Tax Court. In Ellery, E. C., 4 T.C. 407 (1944)Google Scholar, Mrs. Ellery took charge of the business while her husband was in prison. In large part, the nonrecognition of the partnership could be attributed to the fact that the business in which it engaged was the operation of illegal slot machines.

194. Matuszewski v. Comm'r, 13 T.C. 738 (1949); Larson v. Kraemer, 84 F. Supp. 313 (D. Conn. 1949); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

195. Averbuch v. Comm'r, 12 T.C. 32 (1949); Drew v. Comm'r, 12 T.C. 5 (1949); Goodman v. Comm'r, 13 T.C. 385 (1949).

196. Merz v. Comm'r, 12 T.C. 1076 (1949); Wenig v. Comm'r, 177 F. 2d 62 (D.C. Cir. 1949); Woosley v. Comm'r, 168 F. 2d 330 (6th Cir. 1948).

197. Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948).

198. Id. at 912.

199. These same sorts of arguments were apparently used at an earlier time in our history. Professor Linda K. Kerber in her book on women during the Revolution and early Republic recounts Henry De Saussure's description of a 1795 South Carolina case that explains how feme sole status could be established. Such status was necessary in order for married women to engage in commercial transactions as traders independent of their husbands.

John Robertson and Ann his wife lived together many years in Charleston…. There was no deed from the husband formally constituting the wife a sole dealer, nor any writing agreeing that the acquisitions of her industry should be her own separate property. But there was ample proof that she acted with her husband's privity, acquiescence and verbal permission; and she always claimed the property acquired as her own. Some of the witnesses proved he acquiesced merely for peace sake, as she was of a violent temper.

Kerber, L., Women of the Republic: Intellect and Ideology in Revolutionary America, at 148 (1980)Google Scholar.

200. Canfield v. Comm'r, 7 T.C. 135 (1946); reh'g, Canfield v. Comm'r, 7 T.C. 944 (1946).

201. Comm'r v. Tower, 327 U.S. 280, 290 (1946).

202. Mertens, supra note 129, at 140. In one case, a family partnership between a husband, his three brothers, his wife, son, and daughter was upheld by the Eighth Circuit because when the wife and children entered the partnership, the source of their shares was the three brothers, not the husband's share. Durwood v. Comm'r, 159 F. 2d 400 (8th Cir. 1947).

203. Yoder, She's Dear, But Is She Deductible?, Saturday Evening Post, Oct. 12, 1946, at 141.

204. Record at 45-46, Tower.

205. Record at 28, Lusthaus v. Comm'r, 327 U.S. 293 (1946).

206. Mauldin v. Comm'r, 155 F. 2d 666, 672 (4th Cir. 1946).

207. Goldberg, , The Supreme Court and the Federal Income Tax Since Pearl Harbor: A Study in Trends of Decision, 33 Iowa L. Rev. 22, 36–38 (1947)Google Scholar; Hellerstein, , The Tax Status of Family Partnerships, 17 Rocky Mtn. L. Rev. 197, 211 (1945)Google Scholar; 46 Mich. L. Rev. 703 (1948)CrossRefGoogle Scholar.

208. It should be noted that in one case, it was the wife who allegedly transferred capital to her husband (although there was no transfer of title). The husband-wife partnership in that case was not recognized. Commissioner v. Tenney, 120 F. 2d 421 (1st Cir. 1941).

209. Belcher v. Comm'r, 162 F. 2d 974 (5th Cir. 1947); Cole v. Comm'r, 173 F. 2d 893 (6th Cir. 1949) (husband conveyed an interest in assets and undistributed profits of a partnership that had a third partner to his wife); Simons v. Comm'r, 7 T.C. 114 (1946); Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946).

210. Lawton v. Comm'r, 6 T.C. 1093 (1946); Lowry v. Comm'r, 154 F. 2d 448 (6th cir. 1946); Comm'r v. Tower, 327 U.S. 280 (1946).

211. Akers v. Comm'r, 6 T.C. 693 (1946); Lorenz v. Comm'r, 3 T.C. 746 (1944); Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946).

212. Lusthaus v. Comm'r, 327 U.S. 293 (1946).

213. Barrett v. Comm'r, 13 T.C. 539 (1949).

214. Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948); Wenig v. Comm'r, 177 F. 2d 62 (D.C. Cir. 1949); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

215. Funai v. Comm'r, 13 T.C. 696 (1949); Merz v. Comm'r, 12 T.C. 1076 (1949); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

216. Anderson v. Comm'r, 6 T.C. 956 (1946); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948); Huffv. Glenn, 85 F. Supp. 386 (W.D. Ky. 1949); Matuszewski v. Comm'r, 13 T.C. 738 (1949); Parker v. Comm'r, 6 T.C. 974 (1946). In one case, however, one-third of the business capital had been invested by the wife's father. The husband-wife partnership was struck down in part because “[t]his gift… was not expressly made on behalf of Mrs. Moore and cannot be construed as being within the definition of ‘capital originating with her.’ “ In a case where the Commissioner was challenging the validity of an express partnership agreement between husband and wife, the court's rationale seems a bit facile. This sort of situation is often repeated in other tax cases and demonstrates the common law tax doctrine of substance over form and its corollary—that taxpayers are often trapped by form. Moore v. Comm'r, 170 F. 2d 191 (4th Cir. 1948).

217. Rupple v. Kuhl, 81 F. Supp. 318 (E.D. Wis. 1948) afTd 177 F. 2d 823 (7th Cir. 1949).

218. Rupple, 81 F. Supp. at 320.

219. Wenig v. Comm'r, 177 F. 2d 62 (D.C. Cir. 1949).

220. Wilson v. Comm'r, 161 F. 2d 661 (7th Cir. 1947).

221. Matuszewski v. Comm'r, 13 T.C. 738, 740 (1949).

222. Id. at 741.

223. Commissioner v. Tower, 327 U.S. 280, 290-91 (1946).

224. See, e.g. Allen v. Comm'r, 6 T.C. 899, 908 (1946); Simons v. Comm'r, 7 T.C. 114, 120 (1946); Werner v. Comm'r, 7 T.C. 39, 45 (1946).

225. Yoder, supra note 203, at 141.

226. Krauskopf & Thomas, supra note 179, at 564, 578.

227. Akers v. Comm'r, 6 T.C. 693 (1946); Simons v. Comm'r, 7 T.C. 114 (1946).

228. Dawson v. Comm'r, 163 F. 2d 664 (6th Cir. 1947); Eckhard v. Comm'r, 12 T.C. 384 (1949); Schreiber v. Comm'r, 6 T.C. 707 (1946); Anderson v. Comm'r, 6 T.C. 956 (1946); Wilson v. Comm'r, 161 F. 2d 661 (7th Cir. 1947); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

229. Anderson v. Comm'r, 6 T.C. 956 (1946); Middlebrook v. Comm'r, 12 T.C. 385 (1949); Parker v. Comm'r, 6 T.C. 974 (1946).

230. Akers v. Comm'r, 6 T.C. 693 (1946); Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946); Werner v. Comm'r, 7 T.C. 39 (1946); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948).

231. Akers v. Comm'r, 6 T.C. 693 (1946); Werner v. Comm'r, 7 T.C. 39 (1946); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948); Parker v. Comm'r, 6 T.C. 974 (1946); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

232. Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946); Parker v. Comm'r, 6 T.C. 974 (1946); Zukaitis v. Comm'r, 3 T.C. 814 (1944).

233. Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948); Parker v. Comm'r, 6 T.C. (1946).

234. Grant v. Comm'r, 150 F. 2d 915 (10th Cir. 1945); Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946); Werner v. Comm'r, 7 T.C. 39 (1946); Anderson v. Comm'r, 6 T.C. 956 (1946); Canfield v. Comm'r, 168 F. 2d 907 (6th Cir. 1948); Johnston v. Comm'r, 3 T.C. 799 (1944).

235. Allen v. Comm'r, 6 T.C. 899 (1946); Grant v. Comm'r, 150 F. 2d 915 (10th Cir. 1945); Lawton v. Comm'r, 6 T.C. 1093 (1946); Simons v. Comm'r, 7 T.C. 114 (1946); Comm'r v. Tower, 327 U.S. 280 (1946); Johnston v. Comm'r, 3 T.C. 799 (1944).

236. H. V. Funai, was a 1949 Tax Court case in which the wife had contributed capital and substantial services. She received some checks representing partnership earnings in 1940 and deposited them to the credit of her husband. It seemed to the court that Mrs. Funai received only $300 and an undetermined amount she took from the cash register from time to time. The Tax Court concluded that the husband “dominated the income of the partnership and the partnership capital,” and that no partnership between the Funais would be recognized for tax purposes. Funai v. Comm'r, 13 T.C. 696 (1949).

237. Lorenz v. Comm'r, 3 T.C. 746, 753 (1944).

238. Briley v. Briley, 288 So. 2d 733 (Ala. App. 1974); Claude v. Claude, 228 P. 2d 776 (Or. 1951).

239. Gruneberg, , Husband and Wife Partnerships, 26 Taxes 703, 703–4 (1948)Google Scholar.

240. Grant v. Comm'r, 150 F. 2d 915 (10th Cir. 1945); Munter v. Comm'r, 4 T.C. 1210 (1945); Thorrez v. Comm'r, 155 F. 2d 791 (6th Cir. 1946); Middlebrook v. Comm'r, 13 T.C. 385 (1949).

241. Stone v. Stone, 319 Mich. 194, 29 N.W. 2d 271 (1947).

242. Id. at 194, 29 N.W. 2d at 271.

243. Heaton v. Heaton, 55 N.Y.S. 2d 154 (1945); Rubardt v. Salzman, 314 111. App. 189, 40 N.E. 2d 846 (1942). With regard to the creation of a trust see Miller v. Nat'l Bank of Detroit, 325 Mich. 395, 38 N.W. 2d 863 (1949).

244. Lowry v. Kavanagh, 322 Mich. 532, 34 N.W. 2d 60 (1949). Mrs. Sara Lowry was a defendant in the case, but this may not have been the result of her resistance to her husband's desire to end the partnership. Giles Kavanagh, Collector of Internal Revenue for the collection district of Michigan, was also named as defendant and the implication is that the Lowries may have viewed the state court action as an opportunity to relitigate the tax issue. Brief for Defendant-Appellee at 3-4, Lowry v. Kavanagh, 322 Mich. 532, 34 N.W. 2d 60 (1949).

245. Gruneberg, supra note 239; Mandell, & Rubinroit, , Rescinding Trusts of Family Partnership Interests, 26 Taxes 11 (1948)Google Scholar; 46 Mich. L. Rev. 1079 (1948)CrossRefGoogle Scholar.

246. Gruneberg, supra note 239, at 706 (1948).

247. Melvoin, , Family Partnership Which Has Not Been Recognized for U. S. Income Tax Purposes—What to Do With It, 7 N.Y.U. Inst. on Fed. Tax 27 (1949)Google Scholar; Grand, , Unraveling a Partnership After the Tower Case, 5 N.Y.U. Inst. Fed. Tax 829 (1947)Google Scholar.

248. Witte, supra note 5, at 132.

249. Id. at 133.

250. Surrey, supra note 2, at 1097.

251. Witte, supra note 5, at 134.

252. S. Rep. No. 1013, 80th Cong., 2d Sess. 26 (1948).

253. Editorial, Omaha Evening World-Herald, June 19, 1947, at 8, col. 1.

254. Bittker, supra note 3, at 1413.

255. H. R. 3842, 80th Cong., 1st Sess., 93 Cong. Rec. 813 (1947).

256. The relevant portion of the Gearhart bill is as follows:

(0)(1) If husband and wife shall enter into a marital partnership agreement as hereinafter defined, income taxes of the spouses shall be levied and collected in accordance with the ownership of income as established by such agreement….

(3) MARITAL PARTNERSHIP AGREEMENTS.—The term “marital partnership agreement” means any bona fide antenuptial or postnuptial agreement, valid under the applicable local law, between husband and wife, whereby it is provided that the gross income (as defined in section 22(a)) of both spouses, thereafter earned or acquired, shall be owned by the spouses in equal shares, subject to such provisions respecting managerial control over the common property as the parties may from time to time agree upon. Any such agreement, in order to be effective for the purposes of this subsection, shall be irrevocable, shall be terminated only by death, divorce or operation of law, and shall be filed for record in the deed or other appropriate records of the county where the parties reside at the time of making thereof. No such agreement shall be subject to modification or amendment except in respect of the provisions relating to managerial control. At the election of the spouses, any such agreement may be limited to all, not part, of the income thereafter acquired from any one or more of the following sources: (A) salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, not including capital gains; (B) interest, rent, dividends, including any and all income derived from the use of property or the lending, use or investment of money; (C) all capital gains as defined in section 117.

257. Revenue Revisions, 1947-48 at 765.

258. Surrey, supra note 2.

259. See supra note 87.