TAX COURT OPINION

Case: Mary C. Theurer
Docket Number: 3629-06
Judge: Swift
Opinion Type: memo
Filed: 03/11/2008
Pages: 6

T .C . Memo . 2008-61 UNITED STATES TAX COUR T MARY C . THEURER, Petitioner v . COMMISSIONER OF INTERNAL REVENUE , Respondent Docket No . 3629-06 . Filed March 11, 2008 . Jeffrey D . Moffatt , for petitioner . John D . Faucher , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINIO N SWIFT, Judge : Respondent determined a $73,524 deficiency in petitioner ' s 1999 Federal income tax , a section 6662(a) accuracy- related penalty of $14 , 705, and a section 6654 addition to tax of $44 . Unless otherwise indicated, all section references are,t o the Internal Revenue Code in effect for the year in issue . SERVED MAR 11 2008 'The primary issue for decision is whether $240,000 petitioner received from her husband in 1999 is to be treated as - 2 - taxable alimony . FINDINGS OF FAC T Some of the facts have been stipulated and are so found . At the time the petition was filed, petitioner resided in Palmdale, California . On February 25, 1998, after 21 years of marriage and after having three children together, petitioner and her husband separated . On April 22, 1998, petitioner filed for divorce in Los Angeles Superior Court . On July 7, 1998, in the above divorce proceeding, the Los Angeles Superior Court ordered petitioner's husband to pay to petitioner $20,000 per month continuously "until further order of court, death of either party, [or] remarriage o f [petitioner], whichever first occurs" . The July 7, 1998, court order also provided that "It will be determined at a future date by settlement, or court order, if the [$20,000 monthly] su m constitutes child or spousal support or some combination thereof" . In 1999, pursuant to the above court order, petitioner received from her husband a total of $240,000 . On January 12, 2000, the Los Angeles Superior Court amended the July 7, 1998, order by entering a minute order stating that petitioner ' s husband had to pay to petitioner " the sum of $7,507 and for spousal support the sum of $ 26,850, retroactive to May 1, 3 - 199811 . 1 On her 1999 individual Federal income tax return , petitioner reported none of the $240,000 she received from her husband in 1999 . On her 2000 individual Federal income tax return, petitioner reported as alimony income $531 , 713 that she received from her husband . The $531,713 included the $240 , 000 petitioner received in 1999, plus $ 291,713 petitioner apparently received from her husband in 2000 . 1 On December 20, 2006 , the divorce of petitioner and her husband became final . OPINION The amount of any item of gross income , including alimony , must be included in a cash basis taxpayer ' s gross income for the taxable year in which the taxpayer receives it . Sec . 451(a) . Generally , cash payments a taxpayer received from a spous e or former spouse under a divorce or separation agreement are t o 1 It is unclear from the record whether the amounts specified in the Jan . 12, 2000, minute order were to be paid one time or monthly and whether petitioner actually received them . 2 The record and petitioner ' s counsel provide no credible explanation as to why petitioner reported the $240,000 petitioner received from her husband in 1999 on her individual Federal income tax return for 2000 . - 4 - be treated as taxable alimony unless the payments are designated as nontaxable child support or unless the payments are to continue after the death of the taxpayer . Sec . 71(a), (b)(1)(D), (c) (1) . In determining whether a payment obligation is to end upon the death of a taxpayer , we first examine the applicable divorce order , which, if unambiguous, is dispositive of the issue . Okerson v . Commissioner , 123 T .C . 258, 264 (2004 ) ( citing Hoover v . Commissioner , 102 F . 3d 842 (6th Cir . 1996), affg . T .C . Memo . 1995-183) . Petitioner testified that if she died , her husband would be obliged, after her death , to continue making to their children the $20,000 monthly payments due under the July 7 , 1998, court order, and therefore petitioner argues that the $240,000 she received in 1999 from her husband should not be treated as taxable alimony income . Alternatively , petitioner argues that the January 12, 2000, minute order of the superior court somehow retroactively established that a portion of the $240,000 she received in 1999 represented child support and should not be included in her 1999 income . Respondent argues that because the July 7, 1998, court order unambiguously stated that petitioner ' s husband's monthly $ 20,000 payment obligation would end upon petitioner's death, th e $240,000 petitioner received in 1999 from her husband is to be treated as alimony and is to be included in petitioner's 1999 - 5 - income . We agree with respondent . The $240,000 petitioner received in 1999 from her husband under the July 7, 1998 , court order constituted alimony and is includable in petitioner's 1999 taxable income . The January 12, 2000, minute order of the superior court does not retroactively change the character of the $240,000 petitioner received in 1999 . See Graham v . Commissioner , 79 T .C . 415, 420 ( 1982 ) ; Gordon v . Commissioner , 70 T .C . 525, 530 (1978) ; Ali v . Commissioner , T .C . Memo . 2004-284 . Alternatively , petitioner argues that because the $240,000 she received from her husband in 1999 also was reported on her 2000 Federal tax return , she should not be taxed on the $240,00 0 again in 1999 . To the contrary , as a cash basis taxpayer, petitioner for 1999 must report and pay taxes on the alimony she received in 1999 . See sec . 451 ( a) . Petitioner should have filed an amended 2000 Federal income tax return to correct the overreporting for 2000 of alimony she received in 2000 . For the reasons stated, the $240,000 petitioner received from her husband in 1999 is to be treated as alimony and is includable in petitioner ' s 1999 income . Because respondent has sustained his burden of production as to the section 6662(a) accuracy - related penalty and the section - 6 - 6654 addition to tax, and because petitioner has offered no separate arguments with regard thereto, we sustain respondent's imposition of this penalty and addition to tax . See Wheeler v . Commissioner , 127 T .C . 200 (2006) . To reflect the foregoing, Decision will be entere d for respondent .