The opinion of the court was delivered by: TENNEY
Under Section 202(e)(1) of the Social Security Act (hereinafter cited as the "Act"), 42 U.S.C. § 402(e)(1) (1964), the widow of an individual who died a "fully-insured individual" is entitled to a widow's insurance benefit.
This case presents the issue of whether the deceased husband herein may be credited for social security purposes with self-employment income for 1957, the year of his death, where such self-employment income was derived from a partnership of which he was a member - the partnership year of which did not close until after his death.
The undisputed facts are as follows:
Plaintiff Agnes B. Young was born on November 4, 1898, and on November 27, 1920 was married to George B. Young, with whom she lived until his death on July 3, 1957.
Mr. Young was a partner in the law firm of Jones, Day, Cockley and Reavis, Esqs., of Cleveland, Ohio, from November of 1938 until the time of his death.
Prior to the Social Security Amendment of 1956, 70 Stat. 807 (1956), self-employed attorneys were not covered by the Social Security Program; therefore Mr. Young did not earn any quarters of coverage in such occupation for the years prior to 1956. His Social Security record credits him with four (4) quarters of coverage for the taxable year 1956, based on self-employment income derived by him during the year. However, except as hereinafter noted, such record is devoid of any entry for the taxable year 1957.
Following Mr. Young's death on July 3, 1957, plaintiff and Richard H. Stewart, Executor of Mr. Young's estate, on March 6, 1958 filed jointly on behalf of plaintiff and her deceased husband an Individual Income Tax Return Form 1040 for the year 1957. The only income from a trade or business reported on such form was that attributable to the plaintiff's activities as an author. Only one Schedule C (Schedule of Profit (or Loss) from Business or Profession) was attached to Form 1040 and listed only plaintiff's income. The only income reported therein as attributable to Mr. Young consisted of gains from sales or exchanges of property, stock dividends, interest on bank accounts and bonds, and rental income. This March 1958 return was totally devoid of reference to a partnership interest held by Mr. Young or to any income derived by him from such partnership.
Subsequently, on April 18, 1958, the Executor of Mr. Young's estate took steps preliminary to the filing of an Amended Individual Income Tax Return on the part of Mr. Young and his widow, the plaintiff herein. This return was substantially the same as the previously discussed original filing.
The only change was the listing in Schedule H (Other Income) of $6,053.75 as income derived from the estate of Mr. Young, an amount which had not been listed on the previous Form 1040. Mr. Young's Executor has explained that "this amount represented distribution of $6,000 of anticipated income from the firm, plus $53.75 dividends distributed to [plaintiff]. This distribution was made so as to reduce the income tax for the estate * * *."
The fiduciary tax return filed on behalf of Mr. Young's estate reported the receipt of income from the partnership in the total amount of $14,633.42, this being the total amount distributed in respect of Mr. Young's partnership interest for the year 1957. The estate claimed as a deduction from this sum $6,053.75, listed as a distribution to the beneficiary of the estate, the plaintiff herein.
Aside from the three above-mentioned tax returns, and except as hereinafter set forth, there is no evidence that any other tax return relating to Mr. Young's income for the year 1957 has ever been filed, and neither the original nor the amended filing of Form 1040 included a Schedule C (Self-Employment Tax Return) on his behalf.
Mr. Young's Executor has stated, as noted above, that the 1957 return did not report any taxable income to Mr. Young from his law firm partnership because of the partnership arrangement, which provided for the continuance of the partnership after the death of any partner, and that under the applicable income tax laws, income of a partnership is taxed to the person entitled to the income at the close of the partnership's taxable year. In other words, that at the end of the taxable year 1957 ...