Spouses "Living Apart" Require Separate Residences

Tmarried W in 1947. T and W were not legally separated or divorced.

During 1998, W lived in Boise, Idaho. During 1998, T used the Boise address as a mailing address. He received mail and telephone messages at the Boise address and kept "things" there. From approximately April 15 through October 15, he lived in Alaska. During the rest of the year, T resided in "the lower 48." When in the lower 48, T traveled in a "fifth-wheel" trailer to Wyoming, Arizona, Utah, Nevada and California. When he was in Boise, he stayed at the Boise address.

During 1998, T stayed at the Boise address in excess of 30 days. He parked his trailer at the Boise address and slept inside the house located there. T and W maintained separate bedrooms at the Boise address.

During 1998, T's main source of income was his military retirement pay. During 1998, he also received Social Security income and a Form SSA-1099, Social Security Benefit Statement, reporting benefits paid in 1998 and net benefits for 1998 of $11,181.60.

T filed his 1998 return, claiming married filing separately. When he prepared his 1998 tax return, T filled out the Social Security Benefits Worksheet. He listed $25,000 as his "base amount" because he believed that he lived apart from his spouse for the entire year. On his return, he reported $11,181.60 of Social Security benefits and zero as the taxable amount. In the notice of deficiency, the IRS reduced T's "base amount" to zero, thereby increasing the taxable amount of his Social Security benefits.

Sec. 86 provides for the taxability of Social Security benefits pursuant to a formula. If a taxpayer's "modified adjusted gross income" plus half of the Social Security benefits received during the tax year exceed the "base amount," a portion of the taxpayer's Social Security benefits is includible in gross income.

Under Sec. 86(c)(1), the term "base amount" means:

(A) except as otherwise provided in this paragraph, $25,000,
(B) $32,000 in the case of a joint return, and
(C) zero in the case of a taxpayer who--
(i) is married as of the close of the tax year (within the meaning of section 7703) but does not file a joint return for such year and
(ii) does not live apart from his spouse at all times during the taxable year.

When he prepared his 1998 tax return, T filled out the Social Security Benefits Worksheet and listed $25,000 as his "base amount" because he was married and believed that he lived apart from his spouse for the entire year. The Service contends that T did not live apart from his wife at all times during the tax year, within the meaning of Sec. 86(c)(1)(C)(ii).

Neither the statute nor the legislative history defines what "live apart" means. Similar language to that contained in Sec. 86(c)(1)(C)(ii) is contained in Secs. 22(e)(1), 66(a)(2)(A), 152(e)(1)(A)(iii), 219(g)(4)(B) and 469(i)(5)(B)(ii).

In determining what "living apart" meant, courts have held that it meant living in separate residences; living apart required geographical separation.

Further, prior to amendment by the Tax Reform Act of 1986, Sec. 85(b) defined a "base amount" for purposes of computing the taxable amount of unemployment compensation similarly to Sec. 86(c)(1). Regs. Sec. 1.85-1(b)(4), which was still in effect during the year in issue, provided:

A taxpayer does not "live apart" from his or her spouse at all times during a taxable year if for any period during the taxable year the taxpayer is a member of the same household as such taxpayer's spouse. A taxpayer is a member of a household for any period, including temporary absences due to special circumstances, during which the household is the taxpayer's place of abode. A temporary absence due to special circumstances includes a nonpermanent absence caused by illness, education, business, vacation, or military service.

Thus, for purposes of Sec. 86(c)(1)(C)(ii), "living apart" means living in separate residences.

T contends that, because he and his wife maintained separate bedrooms, this is sufficient to find that they "lived apart." We disagree. We decline to explore the quality of a marriage, or to infer some form of constructive absence of one spouse, when the spouses live under one roof.

T also argues that he merely "visited" his wife and did not live with her. In this case, T's "visits" lasted in excess of 30 days. Even if T's stay at the Boise address could be called a visit, he re-sided in the same house with his wife during this time. For purposes of Sec. 86(c)(1)(C)(ii), T did not live apart from his spouse at all times during the tax year. Accordingly, his "base amount" for 1998 was zero.

Thomas W. McAdams, 118 TC No. 24