TAX COURT OPINION

Case: Julianne Englander
Docket Number: 12735-18
Judge: Kerrigan
Opinion Type: bench
Filed: 04/04/2019
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 DRC JULIANNE ENGLANDER, Petitioner, v. ) ) ) ) Docket No. 12735-18. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Kathleen Kerrigan at St. Paul, Minnesota, containing her oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Tax Court Rule 155. Dated: Washington, D.C. April 4, 2019 (Signed) Kathleen Kerrigan Judge SERVED Apr 04 2019 RECBIVED 2 IN THE UNITED STATES TAX COURT DRC In the Matter of: JULIANNE ENGLANDER, Petitioner, ). ) ) ) Docket No. 12735-18 ) ) v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) Pages: 1 through 8 Place: St. Paul, Minnesota Date: March 13, 2019 IN THE UNITED STATES TAX COURT In the Matter of: JULIANNE ENGLANDER, ) ) ) ) Docket No. 12735-18 Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) & U.S. Cthse. W. E. Burger Federal Bldg. 316 North Robert Street Room 444, 4th Floor St. Pául, Minnesota 55101 March 13, 2019 The ábove-entitled matter came on for bench opinion, pursuant to notice at 5:52 p.m. BEFORE: HONORABLE KATHLEEN KERRIGAN Judge APPEARANCES: For the. Petitioner: No Appearance the Respondent: For No Appearance 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S 2 (5:52 p.m.) THE CLERK:, Recalling docket number 12735-18, Julianne Englander. (Whereupon, a bench opinion was rendered.) . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Bench Opinion by Judge Kathleen Kerrigan March 13, 2019 3 Julianne Englander v. Commissioner of Internal Revenue Docket No. 12735-18 THE COURT: The Court has decided to render in .this case the following as its oral Findings of Fact and Opinion, which*w-in not be relied upon as precedent in any fhd f* tÄ. other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal 1 2 3 4 5 6 7 8 9 10 Revenue Code and Rule 152 of the Tax Court Rules of 11 Practice and Procedure. Unless otherwise indicated, all 12 section references are to the Internal Revenue Code in 13 effect for the tax year in issue, and all Rule references 14 15 16 17 18 19 are to the Tax Court Rules of Practice and Procedure. By notice of deficiency April 4, 2018, respondent determined a deficiency of $3,650 for 2015 and a penalty pursuant to section 6662(a) of $730. Respondent has conceded the penalty. The only issue for our consideration is whether petitioner failed to report 20 alimony of $14,581. 21 Trial in this case was conducted in St. Paul, 22 Minnesota on March 12, 2019. Petitioner represented 23 herself. Respondent was represented by Melissa J. Hedtke. 24 25 The parties' stipulation of facts was admitted into evidence along with the attached exhibits. We find the 4 1 2 3 4 5 6 7 8 9 following facts: FINDINGS OF FACT Petitioner resided in Minnesota when she timely filed the petition. Manuel Englander (Mr. Englander) is petitioner's former husband. They were married on May 6, 1989. A divorce decree for petitioner and Mr. Englander was filed on June 6, 2014, in Hennepin County, Minnesota. At the time of the divorce decree petitioner and Mr. Englander had a minor child. During 2015 petitioner and 10 Mr. Englander lived in separate households. 11 The divorce decree provides for Tier 1 spousal 12 maintenance of 00,225 a month which was reduced to $5,000 A0176 våt 13 14 starting on May 31, 2015. Mr. Englander paid petitioner $76,425 for Tier 1 spousal maintenance in 2015. The 15 divorce degree provides for Tier 2 spousal maintenance of 16 $2,083 per month. These payments were to last for 24 17 months or until petitioner's death, whichever occurred 18 first. Mr. Englander paid petitioner $14,581 for Tier 2 19 benefits in 2015. He claimed a deduction for alimony of 20 21 $91,006 on his 2015 tax return. The divorce decree refers to both Tier 1 and 22 Tier 2 payments as spousal maintenance. The divorce 23 24 25 decree specifically provides language that maintenance paid to petitioner by Mr. Englander is gross income pursuant to section 71. The divorce decree also provides 5 that maintenance payments by Mr. Englander are deductible pursuant to section 215. OPINION Generally, the Commissioner's determination in-A notice of deficiency are presumed correct, and the taxpayer bears the burden of proving those determinations are incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115(1933). Petitioner has neither claimed nor shown that she meets the specifications of section 7491(a) to 1 2 3 4 5 6 7 8 9 10 shift the burden of proof to respondent as to any rel'evant 11 12 13 14 15 16 17 18 19 20 factual issue. The Federal tax consequences of a payment made incident to divorce depend upon the characterization of such payment. Property settlements incident to divorce, and equitable divisions of the marital property, generally are neither deductible from the income of the paying spouse nor includible in the income of the receiving spouse. Sec. 1041(a); Estate of Goldman v. Commissioner, 112 T.C. 317, 322(1999), aff'd without 4 published opinion sub. nom., Schutter v. Commissioner, 242 F.3d 390 (10th 21 Cir. 2000). Conversely, payments made or received as 22 23 24 alimony generally are deductible by the paying spouse under section 215(a) and are includible in gross income by the receiving spouse under sections 61(a)(8) and 71. See 25 Estate of Goldman v. Commissioner, 112 T.C. at 322. Section 61 defines gross income as all income 6 2 3 from whatever source derived, including alimony payments. Sec. 61(a)(8). Whether a payment constitutes alimony 4 within the meaning of section 61(a)(8) is determined by 5 6 7 8 9 10 11 12 13 reference to section 71. See sec. 61(b). Section 71(b) (1) defines alimony in a conjunctive, four-part test as a cash payment that is: (1) received by (or on behalf of) a spouse under a divorce or A separation agreement, (2) the divorce or separation agreement does not designate the payment as a payment not includible in gross income and not allowed as a deduction under section 215, (3) the payee and payor spouses are not members of the same household on the date payment is made, and (4) there is no 14 liability to make such payment(s) for any period after the 15 death of the payee spouse. The payments Mr. Englander 16 made to petitioner meet these four requirements. 17 Petitioner contends that Tier 2 spousal 18 maintenance payments were for the division of property and | 19 should not be treated as alimony. She testified that she 20 21 had a spreadsheet that was made during the divorce proceedings which labeled these payments as payment for 22 property. The subjective intent of the parties is not 23 determinative of whether the payment constitutes alimony. t 24 25 See Hoover v. Commissioner, 102 F.3d 842, 845 (6th Cir. 1996), aff'g T.C. Memo. 1995-183. 7 Since the divorce decree specifically states the Payments made to petitioner should be treated as income pursuant to section 71 and the payments meet all the requirements of section 71 (b) , the payment of $14, 581 Tier 2 spousal maintenance payments should have been included in income pursuant to section 61(a)(8). A decision will be entered under Rule 155. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 5:58 p.m., the above-entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF TRANSCRIBER AND PROOFREADER CASE NAME: Julianne Englander v. Commissioner ' DOCKET NO.: 12735-18 We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 8 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Jennifer Lindeman on March 13, 2019 before the United States Tax Court at its session in St. Paul, MN, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Meribeth Ashley, CET-507 Transcriber Jessica Hernandez Proofreader 3/18/19 Date 3/18/19 Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25