Rev. Rul. 76-255

Advice has been requested concerning the marital status of certain taxpayers for Federal income tax purposes under the circumstances described below.

Situation 1

A and B were married in 1975 and filed a joint 1975 Federal income tax return on April 15, 1976, which included their combined incomes. On April 16, 1976, a state court of competent jurisdiction annulled the marriage and decreed that no valid marriage ever existed.

Situation 2

C and D were married in 1964 and filed joint Federal income tax returns for the years 1964 through 1974. In 1975, C and D determined that for Federal income tax purposes it would be advantageous for them to be unmarried so that each of them could file a separate Federal income tax return as an unmarried individual.

On December 30, 1975, C and D secured a divorce under the laws of a foreign jurisdiction. For purposes of this ruling, it is assumed that such divorce was valid. However, at the time of the divorce, they intended to remarry each other and did so in January 1976.

Section 143(a)(1) of the Internal Revenue Code of 1954 provides generally that the determination of whether an individual is married shall be made as of the close of the taxable year.

Section 6013 of the Code permits a husband and wife to file a joint income tax return.

Section 1.143-1(a) and section 1.6013-4(a) of the Income Tax Regulations provide that status as husband and wife under these sections is determined as of the close of the year for two individuals having the same taxable year. These sections also provide that an individual shall be considered as married even though living apart from the individual's spouse unless legally separated under a decree of divorce or separate maintenance.

Rev. Rul. 67-442, 1967-2 C.B. 65, provides that the Internal Revenue Service generally will not question for Federal income tax purposes the validity of any divorce decree until a court of competent jurisdiction declares the divorce to be invalid.

In Situation 1, a state court having competent jurisdiction has annulled the marriage and, in accordance with state law, has decreed that no valid marriage ever existed.

Accordingly, since no valid marriage ever existed A and B were single individuals as of the close of the taxable year 1975. Thus, they must file amended Federal income tax returns for 1975 as unmarried individuals.

In Situation 2, although C and D were divorced under the laws of the foreign jurisdiction, the divorce was not intended by them to have effect except to enable them to qualify as unmarried individuals who would be eligible to file separate returns. In addition, C and D intended to and did remarry each other early in the succeeding taxable year.

The true nature of a transaction must be considered in light of the plain intent and purpose of the statute. Such transaction should not be given any effect for Federal income tax purposes if it merely serves the purpose of tax avoidance. In determining whether it serves the purpose of tax avoidance all of the surrounding facts and circumstances are to be considered. Neither section 143 nor section 6013 of the Code or the applicable regulations thereunder contemplates a "sham transaction" designed to manipulate for Federal income tax purposes an individual's marital status as of the close of a taxable year. See Gregory v. Helvering, 293 U.S. 465 (1935), XIV-1 C.B. 193 (1935).

Accordingly, C and D for purposes of sections 143 and 6013 of the Code were married individuals as of the close of the taxable year 1975. Therefore, for 1975 they must file either a joint Federal income tax return or separate returns using rules for married individuals filing separate returns.

¹ Also released as News Release IR-1632, dated July 1, 1976.