T.C. Summary Opinion 2005-150

UNITED STATES TAX COURT

SANDRA J. WOLF, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 2010-05S. Filed October 12, 2005.

Sandra J. Wolf, pro se.

Jennifer S. McGinty, for respondent.

COHEN, Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

at the time that the petition was filed. The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority. Unless otherwise indicated,

all section references are to the Internal Revenue Code in effect

for the year in issue.
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Respondent determined a deficiency of $1,391 in petitioner’s

Federal income tax for 2002. Respondent also determined an

accuracy-related penalty under section 6662(a) of $278.20. After

hearing petitioner’s testimony at trial, respondent’s counsel

conceded the accuracy-related penalty. Therefore, the only

remaining issue for decision is whether petitioner received

taxable separate maintenance income under section 71(b). 

Background

Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference. 

Petitioner resided in East Rochester, New York, at the time that

she filed her petition.

Petitioner married Wayne T. Wolf (Wolf) on July 31, 1971. 

In 1998, Wolf filed for divorce from petitioner. Petitioner

allowed Wolf to proceed with a default divorce by oral

stipulation dated May 3, 1999. 

A Decree of Divorce (divorce decree) was entered by the

Supreme Court of the State of New York, County of Monroe, on

September 13, 1999. The stipulation into which petitioner and

Wolf had entered was incorporated in, but not merged with, the

divorce decree. Under the terms of the divorce decree and the

incorporated stipulation, by which petitioner and Wolf are bound,

Wolf is to pay as maintenance to petitioner $800 per month “until

such time as * * * [Wolf] is eligible to retire from his
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employment, approximately 9 years from this date.” The divorce

decree is silent as to whether the payments are to terminate upon

petitioner’s death. 

In 2002, petitioner received payments from Wolf totaling

$9,600. Wolf deducted the payments as alimony on his 2002 income

tax return. Petitioner did not include the $9,600 as alimony

income on her 2002 return.

Discussion

The parties dispute whether the payments received by

petitioner from Wolf are taxable to her under section 71. 

Resolution of this dispute depends on whether the payments, as a

matter of law, terminate on the death of petitioner. 

Section 71(a) provides that gross income generally includes

amounts received as alimony or separate maintenance payments.

Section 71(b)(1) defines “alimony or separate maintenance

payment” as any payment in cash if-- 

(A) such payment is received by (or on behalf of)

a spouse under a divorce or separation instrument, 

(B) the divorce or separation instrument does not

designate such payment as a payment which is not

includible in gross income under this section and not

allowable as a deduction under section 215, 

(C) in the case of an individual legally separated

from his spouse under a decree of divorce or of

separate maintenance, the payee spouse and the payor

spouse are not members of the same household at the

time such payment is made, and

(D) there is no liability to make any such payment

for any period after the death of the payee spouse and
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there is no liability to make any payment (in cash or

property) as a substitute for such payments after the

death of the payee spouse.

If the payor is liable for any qualifying payment after the

recipient’s death, none of the related payments required will be

taxed as alimony. Sec. 1.71-1T(b), Q&A-13, Temporary Income Tax

Regs., 49 Fed. Reg. 34456 (Aug. 31, 1984). Whether a postdeath

obligation exists may be determined by the terms of the divorce

or separation instrument or, if the instrument is silent on the

matter, by State law. Morgan v. Commissioner, 309 U.S. 78, 80-81

(1940); see Kean v. Commissioner, 407 F.3d 186 (3d Cir. 2005),

affg. T.C. Memo. 2003-163; Megibow v. Commissioner, T.C. Memo.

1998-455. 

The parties dispute whether the payments at issue meet the

requirement of section 71(b)(1)(D). The parties are in agreement 

that the divorce decree does not provide any conditions for the

termination of these payments. Respondent maintains that the

payments received by petitioner are gross income under section

71(a) because the payments were for separate maintenance. 

Petitioner contends that the payments are not taxable because the

divorce decree did not specifically state that the payments

should terminate at the death of petitioner or her former spouse. 

In 1986, however, Congress amended section 71(b)(1)(D)

specifically to remove the requirement that a divorce or

separation instrument affirmatively state that liability
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terminates upon the death of the payee spouse, effective for

instruments executed after December 31, 1986. See Tax Reform Act

of 1986, Pub. L. 99-514, sec. 1843(b), 100 Stat. 2085, 2853;

Leventhal v. Commissioner, T.C. Memo. 2000-92. Therefore,

payments are included in the recipient’s gross income if

termination at death would occur under State law. See Leventhal

v. Commissioner, supra.

In New York, actions for divorce are governed by part B of

section 236 of the Domestic Relations Law. N.Y. Dom. Rel. Law

sec. 236B (McKinney 1999 & Supp. 2005). New York Domestic

Relations Law section 236B(1)(a) provides:

The term “maintenance” shall mean payments provided for

in a valid agreement between the parties or awarded by

the court in accordance with the provisions of

subdivision six of this part, to be paid at fixed

intervals for a definite or indefinite period of time,

but an award of maintenance shall terminate upon the

death of either party or upon the recipient’s valid or

invalid marriage, or upon modification pursuant to

* * * [section 236B9.b.]. 

The statute differentiates between maintenance payments made

pursuant to an agreement and those made under court decree. See

Leventhal v. Commissioner, supra (citing Scheinkman, Practice

Commentaries, in McKinney's Consol. Laws of N.Y., Book 14,

Domestic Relations Law C236B:10, at 330-331 (1999)). With

respect to court-awarded maintenance, the payments automatically

terminate upon any of the events listed in the statute

(terminating events). See id. With respect to maintenance
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payments made pursuant to an agreement, the obligation generally

terminates upon the death of either spouse, but the parties may

modify or extend the duration of payments by agreement. See In

re Riconda, 90 N.Y.2d 733, 736-737, 688 N.E.2d 248, 250-251

(1997). 

The court decree provided for separate maintenance payments,

and, pursuant to State law, the payments would terminate upon the

death of either party, and there was no language in the

incorporated agreement to provide otherwise. See N.Y. Dom. Rel.

Law sec. 236B(1)(a). We conclude that the $9,600 that petitioner

received from Wolf in 2002 is separate maintenance and is gross

income to petitioner under section 71(a).

To reflect the foregoing,

Decision will be entered

for respondent.