T.C. Sum m ary Opi ni on 20 15 -1 2

UNITED STAT ES TAX COURT JOHN SANGER RINGBLOOM, Pe ti ti on er v . COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 13 9- 13 S. Fi le d F eb ru ary 23 , 20 15 . Jo hn San ge r Ri ng bl oo m , pro se. Pat sy A. Cla rk e an d S ha ranSekho n (s tu de nt ), fo r res po nd en t.

SUMM ARY OPINION GUY, Spec ia l Tri al Ju dg e: Thi s ca se was h eardpu rs uantto th e p ro vi si on s of sec ti on 74 63 of t he Int ern al Rev enue Co de ineffe ctwhenth e p et it io n was fil ed . Pur su an t t o s ect io n 7 46 3( b) , th e d eci si on to be en te redis no t re vi ewab le by 1 Unl es s o th erwi se in di cat ed , sec ti on refe ren ces are t o the Int ern al Rev enue 1 Co de , as a m en de d a ndineffe ctfor20 10 , andRu le refe ren ces are t o t he Tax C ou rt (co nt in ue d...)-2 -

an y othe r co urt, an d thi s o pi ni on sh al l n otbe tre at edas p rece de ntforan y ot he r cas e. Res po nd en t d et erm in eda de fic ie nc y of $ 4,1 77 inpe ti ti on er’s Fed eral in co m e ta x fo r 20 10 . Peti ti on er fi le d ati m el y pe ti ti on forred et erm in at io n wi th th e Co urt p ur su an t t o s ect io n 6 21 3( a). At the ti m e th e p et it io n was fil ed , pet it io ne r res id edinOreg on . The so le is su e fo r de ci si on is whet he r pe ti ti on er i s en ti tl edto anali m on y de du ct io n i n e xc es s o f th e $ 6,9 20 th atres po nd en t co nc ed ed . Bac kg ro un d So m e o f th e fac ts ha ve be enst ip ul at edan d a re s o fo un d. Th e st ip ul at io n o f fact s an d the acco m

pa nyin g e xh ib it s ar e in co rp or at edhe rei n b y th is refe ren ce. I. Pet it io ne r’s Marria ge an d Di vo rce Pet it io ne r m arri edBeat rix Rin gb lo om inSep te m

be r 19 92 . The co up le le ga ll y sep arat edinOcto be r 20 08 , andth ey were d iv or cedinMay 201 3. II. Agr eedAm en de d Dec ree o f Leg al Sep arat io n InApri l 2 00 9, wh enpe ti ti on er was un em pl oyed, h e an d M s. Ri ng bl oo m ex ecu te d a n a gr eedam en de d d ecre e o f le ga l s ep arat io n (a m en de d d ecre e) t o (...co nt inue d) 1 Ru le s o f Prac ti ce an d P ro cedur e. Mo ne tary am ount s ar e ro un de d t o t he ne ares t do ll ar.-3 -

en su re tha t M s. Ri ng bl oo m wou ldrece iv e sp ou sa l m ai nt en an ce p aym en ts . Sp eci fic al ly, pe ti ti on er ag reedto m ak e 4 8 m on th ly mai nt en an ce p aym en ts of $2 ,28 9 t o M s. Ri ng bl oo m , in cl ud in g an a dv an ce p aym en t i n t he form of atrans fer of anin te res t i n h is in di vi du al ret ire m en t ac co un t (I RA). The am en de d d ecre e st at es inrel ev an t p art : THE HUSBAND H AS AGREED TO A PREPAYMENT OF SPOUSAL MAINTENANCE FOR A PERIOD OF 17 MONTHS. THE HUSBAND IS TRANSFERRING HIS INTEREST IN HIS IRA TOTALL ING $3 8,9 13 FOR 1 7 M ONTHS OF SPOUSAL MAINTENANCE PAYMENTS. THEHUSBAND’ S FIRS T TRANSFER PAYMENT AFTER ENTRY OF THIS ORDER SHALL BE DUE ON SEPT. 1, 2 01 0. Exh ib itM to th e am en de d d ecre e st at es th atm ai nt en an ce p aym en ts are co ns id ered ta xabl e in co m e to Ms . Rin gb lo om an d t ax de du ct ib le by pet it io ne r. Furth er, pe ti ti on er’s o bl ig at io n t o m ak e m ai nt en an ce p aym en ts wou ldterm in at e upo n M s. Ri ng bl oo m ’s rem arri ag e o r de ath. Pet it io ne r co m

pl ie d wi th th e am en de d d ecre e an d tran sf erre d a n i nt eres t i n hi s IRA to ta li ng $3 8,9 13 to Ms . Rin gb lo om inApri l 2 00 9. Whil e p et it io ne r co ul d no t re cal l wh ethe r he ha d c la im eda de du ct io n o n h is 20 09 Fed eral in co m e ta x return fo r al im on y

pa id , res po nd en t’s re co rd s i nd ic at e th athe di d n ot . Pet it io ne r te st ifi edth ataft er the tra ns fer, M s. Ri ng bl oo m m ad e m on th ly withd rawal s o f $2 ,28 9 fr om th e IRA, p res um ab ly unt il $3 8,9 13 was e xh au st ed .-4 -

The reco rd , ho wev er, d oe s n otrefl ectth e ti m in g o r th e am ou nt s o f an y pa ym en ts ordi st rib ut io ns fro m

th e IRA t o M s. Ri ng bl oo m . Peti ti on er m ad e m on th ly m ai nt en an ce p aym en ts by checkto Ms . Rin gb lo om durin g t he las t fo urm on th s o f 20 10 . III. Tax Return Pet it io ne r ti m el y

fil eda Fo rm

10 40 , U.S. Ind iv idua l In co m e Tax Return, fo r 20 10 , deduc ti ng $2 7,4 68 forali m on y pa id . Peti ti on er co m

pu te d t he de du ct io n b y m ul ti pl y in g $ 2,2 89 (hi s m on th ly alim on y ob li ga ti on ) by 12 (m on th s) inaneffo rt t o acco un t fo r am ou nt s tha t h e as su m edMs . Rin gb lo om withd rew fro m

th e IRA i n 20 10 an d c as h p aym en ts th athe m ad e to he r du rin g the las t fo urm on th s o f th e y ear. IV. Deve lo pm en ts at Tri al Res po nd en t co nc ed edat t ria l tha t p et it io ne r pa id$6 ,92 0 i n a li m on y to Ms . Ri ng bl oo m

(by chec k) in20 10 . Res po nd en t m ai nt ai ne d, h owe ve r, th atan y 2 am ount s tha t M s. Ri ng bl oo m m ay ha ve withd rawnfro m

th e IRA dur in g 2 01 0 d id no t qua li fy

as a li m on y

pa idby pet it io ne r fo r th aty ear. 3 Pet it io ne r do es no t as se rt t ha t h e p ai d a ny m or e th an$6 ,92 0 b y ch eckto 2 Ms . Rin gb lo om

in20 10 . The reco rddo es no t i nc lu de co pi es of M s. Ri ng bl oo m ’s Fed eral in co m e ta x 3 (co nt in ue d...)-5 - Dis cu ss io n I. Burd enof P ro of As a g en eral rul e, th e Co m m is si on er’s d et erm in at io n o f a t ax pa y er’s l iabi li ty in a no ti ce o f de fic ie nc y

is pre su m edco rrec t, an d t ax pa y ers ge ne ral ly bear the bu rd enof p ro vi ng th ei r en ti tl em en t t o a ny deduc ti on s the y cla im . Rul e 1 42 (a); W el chv. Hel ve rin g, 2 90 U.S. 11 1, 1 15 (19 33 ); I NDOPCO, Inc . v. Co m m is si on er, 50 3 U.S. 7 9, 8 4 (1 99 2) . Peti ti on er d oe s n otco nt en d tha t the bu rd enof p ro of sh ou ldbe sh ift edto res po nd en t u nd er s ect io n 7 49 1( a). II. Non reco gn it io n o f IRA Tran sf er As a g en eral rul e, no ga inor l os s i s re co gn iz edon a tr an sf er o f pr op erty fro m anin di vi du al to hi s o r he r fo rm er s po us e if th e tr an sf

er i s i nc id en t t o d iv or ce. Sec. 1 04 1( a). Inacco rdwith thi s p ro po si ti on , sec ti on 40 8( d) (6 ) pr ov id es :

(6 ) Tran sf

er o f acc ou ntin ci de ntto di vo rce.- -The tra ns fer o f an in di vi du al ’s in te res t i n a n i nd iv idua l re ti rem en t ac co un t o r an in di vi du al ret ire m en t an nu ity to hi s s po us e o r fo rm er s po us e und er a di vo rce o r se pa rat io n i ns tru m en t d es cri be d i n s ub pa rag rap h (A) of se ct io n 7 1( b) (2 ) is no t t o b e co ns id ereda ta xabl e tr an sf er m ad e b y su chin di vi du al no twi th st an di ng an y ot he r pr ov is io n o f th is subt it le , an d s uc h i nt eres t atth e ti m e o f th e tr an sf er i s t o b e tr eat edas a n in di vi du al ret ire m en t ac co un t o f su chsp ou se , andno t o f su ch (...co nt inue d) 3 return fo r 20 09 or 2 01 0, an d the pa rti es di d n otpro vi de an y ot he r do cu m en ta ti on id en ti fy in g the in co m e, if an y , th atsh e rep orte d i n re sp ectof a li m on y or s ep arat e m ai nt en an ce p aym en ts th atsh e rec ei ve d i n 2 00 9 and20 10 .-6 -

in di vi du al . There aft er s uc h a cco un t o r an nu ity forpurp os es of t hi s subt it le is to be tre at edas m ai nt ai ne d fo r th e b en efi t o f su chsp ou se . Co ns is te ntwith s ect io n 4 08 (d )(6 ), th e tr an sf er o f anin te res t i n p et it io ne r’s IRA t o M s. Ri ng bl oo m

inApri l 2 00 9 i n a cco rd an ce wi th th e p ro vi si on s o f th e am en de d d ecre e was a no nt ax ab le ev en t t o b oth p art ie s. See Bunn ey v. Co m m is si on er, 1 14 T.C. 25 9, 2 64 -2 65 (20 00 ). Und er the cir cu m st an ces , Ms . Ri ng bl oo m

was o bl ig edto in cl ud e in he r gr os s i nc om e (i n t he m an ne r pr ov id ed un de r se ct io n 7 2) th os e am ou nt s, i f an y , subs eque nt ly pai d o r di st rib ut edto he r fro m th e IRA. See sec . 40 8( d) (1 ). As p rev io us ly m en ti on ed , th e rec or d d oe s n ot in cl ud e an y

ob jecti ve ev id en ce o f th e ti m in g o r am ou nt s o f an y di st rib ut io ns th at Ms . Rin gb lo om

m ay ha ve tak enfro m

th e IRA i n 2 00 9 o r 20 10 . III. Ali m on y

Pai d Deduc ti on Inco nt ras t t o the tre atm en t n orm al ly affor de d d iv is io ns of m ari ta l p ro pe rty in ci de ntto di vo rce, s ect io n 2 15 (a) and(b) all ows a de du ct io n t o t he pa y in g s po us e fo r th e al im on y

or s ep arat e m ai nt en an ce p aym en ts , as d efi ne d i n s ect io n 7 1( b) , m ad e dur in g the pa y in g s po us e’s ta x year th atare i nc lu di bl e in th e rec ip ie nt sp ou se ’s gro ss in co m e und er s ect io n 7 1. Th e te rm “ al im on y or s ep arat e m ai nt en an ce p aym en t” is de fin edinsec ti on 71 (b )(1 ) as fol lo ws:

(1 ) Inge ne ral .--Th e te rm “ al im on y or s ep arat e m ai nt en an ce pa ym en t” m ean s an y

pa ym en t i n c as h i f---7 - (A) s uc h p aym en t i s re cei ve d b y (oron be ha lf o f) a sp ou se un de r a d iv or ce o r se pa rat io n i ns tru m en t, (B) the di vo rce o r se pa rat io n i ns tru m en t d oe s n ot de si gn at e su chpaym en t as a pa y m en t wh ic h i s n otin cl ud ib le in gr os s i nc om e und er thi s s ect io n a ndno t al lo wab le as a de du ct io n u nd er s ect io n 2 15 , (C) i n the cas e o f anin di vi du al leg al ly sep arat edfro m hi s sp ou se un de r a d ecre e o f di vo rce o r of sep arat e m ai nt en an ce, th e p ay ee s po us e an d t he pa y orsp ou se are n otm em be rs of t he sa m e h ou se ho ldat the ti m e su chpa ym en t i s m ad e, an d (D) th ere i s n o l iabi li ty to m ak e an y su chpa ym en t fo r an y pe rio d a fte r th e d eath o f th e p ay ee s po us e an d t he re i s n o li ab il ity to m ak e an y

pa ym en t (i n c as h o r pr op erty) as a subs ti tu te for

su chpa y m en ts aft er the de ath o f th e p ay ee sp ou se . Eachof t he ele m en ts pre sc rib edinsec ti on 71 (b )(1 ) m us t b e sa ti sf

ie d b efo re a p aym en t qua li fie s as ali m on y or s ep arat e m ai nt en an ce. See Sa’d v . Co m m is si on er, T.C. Mem o. 2 01 2- 34 8, at*9 . The ch arac te riz at io n o f paym en ts in a d iv or ce o r se pa rat io n i ns tru m en t as ali m on y or s ep arat e m ai nt en an ce i s n ot co nt ro ll in g. Se e Bak er v . Comm is si on er, T.C. Mem o. 2 00 0- 16 4. Onl y pa ym en ts incas h qua li fy as a li m on y

or s ep arat e m ai nt en an ce pa ym en ts as d efi ne d i n s ect io n 7 1( b) . See Lo fs tro m v. Co m m is si on er, 1 25 T.C. 27 1, 2 76 (20 05 ). “ Thi s re qu ire m en t i s o ne of s ev eral rul es de si gn edto est ab li sh anob jecti ve , alb ei t ro ug h, d is ti nc ti on be twee n s up po rt p aym en ts an d p ro pe rty-8 -

se tt le m en ts . Prop erty

set tl em en ts typic al ly con si stof i n k in d d iv is io ns of a co up le ’s pro pe rty, whil e supp ort p aym en ts are u su al ly in ca sh .” Bo ris I. Bit tk er & Lawren ce Lo kk en , Fed eral Taxa ti on of I nc om e, Est at es an d Gi fts , par a. 77 .1.2 , at 77 .7 (3 d e d. 2 00 3) . In thi s re ga rd , sec ti on1.7 1- 1T(b ), Q&A-5 , Tem po rary Inco m e Tax Reg s., 4 9 F ed . Reg . 34 45 5 (Au g. 3 1, 1 98 4) pro vi de s:

Q-5 . May

ali m on y or s ep arat e m ai nt en an ce p aym en ts be m ad e in a fo rm othe r th ancas h? A-5 . No. Onl y

cas h p aym en ts (in cl ud in g c he ck s an d m on ey or de rs pa y ab le on de m an d) qu al ify as al im on y or s ep arat e m ai nt en an ce p aym en ts . Trans fers of s erv ic es or p ro pe rty (in cl ud in g a de btin st ru m en t o f a thi rdpa rty or anannu ity co nt ract ), ex ecu ti on of a de btin st ru m en t b y

th e p ay or , or the us e o f pr op erty of t he pa y ordo no t qua li fy

as a li m on y

or s ep arat e m ai nt en an ce p aym en ts . Co ns is te ntwith the term s o f th e am en de d d ecre e, pe ti ti on er’s tran sf er o f an in te res t i n h is IRA to Ms . Rin gb lo om serve d t o s at is fy

hi s l eg al ob li ga ti on to m ak e m ai nt en an ce p aym en ts to he r fo r 17 m on th s s pann in g t he tax ab le y ears 20 09 an d 20 10 . Alth ou gh itis de ba tabl e whe th er the trans fer c on st itut eda “pa ym en t i n cas h” withi n the m ean in g o f se ct io n 7 1( b) , we nee d n otres ol ve th atqu es ti on he re. Rathe r, as su m in g fo r th e sa ke of a rg um en t tha t the trans fer a m ou nt edto a pa ym en t in cas h, p et it io ne r m ad e th e p aym en t dur in g t he tax ab le y ear 2 00 9, as op po se d t o 20 10 . See Me lv in v. Co m m is si on er, T.C. Mem o. 2 00 8- 11 5 (alum p- su m ali m on y pa ym en t n orm al ly is d educ ti bl e in th e y ear p ai d) , aff’d, 3 03 Fed . App x. 7 91 (11 th-9 -

Ci r. 20 08 ). Co ns eque nt ly, an y de du ct io n fo r th e al im on y th atpe ti ti on er p ai d i n co nn ect io n wi th th e tr an sf er o f anin te res t i n h is IRA to Ms . Rin gb lo om is pro pe rly cl ai m edun de r se ct io n 2 15 (a) and(b) , if atall , forth e ta xabl e y ear 2 00 9. Equ al ly im

po rta nt , we no te th atno pro vi si on inth e am en de d d ecre e ad dr es se d the di sp os it io n o f th e tr an sf erre d i nt eres t i n t he IRA in th e ev en t o f Ms . Rin gb lo om ’s un ti m el y de ath (i .e., bef

or e th e expi rat io n o f th e 1 7- m on th pe rio d e nd in g S ep te m

be r 1, 2 01 0) . Con si de rin g a ll of t he cir cu m st an ces , we as su m e th atan y

ass et s re m ai ni ng inth e IRA wo ul d h av e b eenpa idto Ms . Ri ng bl oo m ’s est at e o r to an y be ne fic iarie s s he m ig htde si gn at e--adi sp os it io n tha t wou ldbe co nt rary to the requi rem en t i n s ect io n 7 1( b) (1 )(D) tha t the re b e “ no li ab il ity to m ak e an y

su chpa ym en t fo r an y

pe rio d a fte r th e d eath o f th e p ay ee sp ou se ”. See Su ga rm anv. Co m m is si on er, T.C. Mem o. 1 99 6- 41 0 (a na lyzin g S tate law andfin di ng pa ym en ts to be inth e n atur e o f a p ro pe rty set tl em en t ra th er tha n al im on y /s ep arat e m ai nt en an ce wh ere p aym en ts wou ldno t n eces saril y ha ve te rm in at edif the tax pa y er d ie d b efo re the en d o f th e p aym en t s tre am be cau se th e ta xp ay er’s es ta te wou ldhave ha d ava li d c la im for th e rem ai nd er o f th e pa ym en ts ). 4
Pet it io ne r ha s n otin vi te d t he Co urt’s at te nt io n t o a ny app li cab le pro vi si on 4 of Sta te law tha t wo ul d a lt er o urho ld in g i n t hi s ca se .-1 0-

Co ns is te ntwith the pre ced in g d is cu ss io n, we co nc lu de th atpe ti ti on er i s n ot en ti tl edto a de du ct io n fo r al im on y pa idinex ces s o f th e am ou ntres po nd en t h as co nc ed ed . To re fle ctth e fo reg oi ng , Deci si on wil l b e en te red un de r Ru le 15 5.