TAX COURT OPINION

Case: Peter Lee Turner
Docket Number: 18795-10S
Judge: Carluzzo
Opinion Type: bench
Filed: 12/02/2011
Pages: 9

UNITED STATES TAX COURT Washington, D . C. 20217 PETER 12EE TORNER, Petitioner, v. COlVIMISSIONER. OF INTERNAL REVENUE, Re spondent . ) ) ) ) ) ) ) ) Dòcket No. 18795-10S O R D E _R Pursuant to Rule 152 (b) , Tax Court Rules of Practice and Procedure, it is ORDÉRED that the Clerk of the Court shall transmit the tranycript of herewii-h to petit i.oner and to tespondent a copy of . the pages of Special Trial Judhe Lewis R. Carluzzo at Fresno, California, on November 16, 2011k containing his oral opinion rendered at the coriclusion of trial. the trial of the above case before findirigs of fact and In accordanc) with the oral findings of fact and opinion, decision will be ntered under Rule 155. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. December 2, 2011 $ÈRVED DEC 5 2011 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 3 Bench Opinion by Special Trial Judge Lewis Carluzzo Peter Lee Turner v. Commissioner Docket No.. 18795-10S Nóvember 16, 2011 THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of .fact and opinion, which shall not be relied upon as precedent in any other case. This proceeding for the redetermination of a deficiency is a small tax case conducted pursuant to the p ovisions o± section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of Practice & Procedure . This bench opinion is . made pursuant to í;he authority granted by section 7459 (b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Cour: Rules of Practice & Procedure. . Hereinafter in this bench opinion, unless otherwise indicated, section.references are to the Internal Revenue Code of 1986, as amended, .in effect for 2007. Rule references are to the Tax Court Rules of Practice & Procedure. Petier Lee Turner appeared pro se . Nathan H. Hall appeared on behalf of Respondent . In a notice of deficiency dated June 7, 2010, Respondent determined a $3,100 deficiency in Petitioner's Heritage Reporting Corporation (202) 628-4888 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 2007 federal income tax. The issue for decision is whether Pétitioner ia entitled to an alimony deduction in excess of the amount a.'.lowed by Respòndent . The resolution· of the issue depends upon whether certain amounts paid to Petitioner's former spouse during 2007 fit within the definition o: alimony for federal income tax -purposes. Some of the facts have been stipulated and are so found. Petitioner resided in California at the time the petition was filed. Pet itioner and Cassandra Turner (Petitioner' s former spous ) married in 1984. They separated in March 2006 and wer divorced on a date not disclosed in the record. As celevant here, by order dated November 26, 2007, iàsued by the SupeÊior Court of California, County of San Jòaquin . (the temporary spousal support order) , Petitioner became obligated to pay to his former spouse 'temporary' 'spousal support' of $1, 730 per month beginning on .October 1 2007, and due on the first day of each month thereafter. Acuually, the temporary spousal. support order modified a pcevious order issued by the same court that obligated Petitioner to have paid a lesser .amount of spousal · support, thah is, $1,326, beginning at a later time, that is, November 1, 2007 (the October 12, 2007, .order) . The temporary sp,usal support -order superseded the October 12, 2007, order and, except to acknowledge its existence, the Heritage Reporting Cörporation (202) 628-4888 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 5 October 12, 2007, order is, for the most part, otherwise ignored in the resolution of the issue here in dispute. Starting in January 2007, Petitioner began to pay his former spouse $928 per month. This is the amount of monthly spou al support that Petitioner, perhaps at the suggestion o a mediator, anticipated that he and his former spouse might agree to as a result of an ongoing mediation process.. Be ore any agreement between them on spousal sòpport was eached, however, the mediation process was términated by Petitioñer's former spouse, and without the benefit of a written mediation report. In an attachment to a document styled 'Responsive Declaration to Order to Show Cause or Notice of Motion', filed October 5, 2007, in the proceeding that generated the temporary spousal support order, Petitioner describes the monthly $928 payments made up until that date as 'temporary alimony' paid on a 'voluntary' basis . As .Petitioner esplained at trial, however, the $928 payments were not so much volunta ily made as they were made to eliminate the passibility of any liability for interest. that might accrue on a future alimony award made retroactive. As relevant here, on his timely filed 2007 federal income tax return, Petitioner claimed a $15,600 alimony deduction (the alimony deduction). The record is clear that the alimony deduction relates to the amounts Petitioner paid Heritage Reporting Corporation (202) 628-4888 6 1 2 3 4 5 6 7 8 to his forme:: spouse during 2007, but it is. not so clear on hów the amourit of the alimony deduction was computed. P¾esumably, the alimóny deduction includes several of the $928 monthly payments desci-ibed above, as well as amounts Pétitioner was obligated to pay to his.former spouse pursuant to the temporary spousal support order and the Oátober 12, 2007, order. We have tried combining these amounts in various 9. ways, but cannot come up with a combination that results in 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the amount that equals the amount of the alimony deduction. This is so e,ten after taking.into account other unexplained pÄyments that the evidence shows.Petitioner to have made to h s former spouse during 2007. In the above-referenced notice of deficiency, Réspondent disallowed $12,1(40 of the alimony deduction. No e planation as to how the disallowed amount was computed has béen provided,. but it would appear that the portion of the deduction not disallowed, that is, $3,460, is the sum of two mónths of temporary spousal support Petitioner was obligated tå pay pursuänt to the temporary spousal support order, and we proceed au thòugh that is a valid explanation. Another adjustment is made in the notice of déficiency, ¼ut that adjustment is computational and need nót be discussed. Ac¢ording to Respondent, other than payments Heritage Reporting Corporation (202) 628-4888 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 included in the. portion of the alimony deduction not d¾sallowed, Petitioner has failed to show that the payments màde during 2007 to his former spouse fit within the définition ot álimony for federal income tax purposes. Federal income tax deductions are a matter of lëgislative grace. A taxpayer who claims a deduction on a federal incone tax return or otherwise in computing the táxpayer's federal income. tax liability, must establish that tl e deduction so claimed satisfies all of the requirements sét forth in a statüte that allows the deduction. Rule 142 (a) ; New Colonial Ice Co. v. Helvering, 292 US 435, 440 (1934) . In general, section 215 allows an individual to dèduct amounts paid as alimony during the taxable year to tl e individuál, spouse or former spouse. Although the deduction fo:: alimony is provided in section 215, the dÅfinition o: 'alimony' for purposes of section 215 is provided in section 71, which provides that amounts received a al imony a e includable .in the 4 recipient ' s income . As relevant here, and in addition to other rÃquirements according to the definition of alimony as. set fórth in section 71, a payment constitutes alimony only if tlåe payment is received by (or on behalf of) a spouse or former spouse under a dïvorce or separation instrument . See sèct ion 71 (b) (1) . Heritage Reporting (cid:16)042Corporation (202) 628-4888 8 According to Respondent, the payments that Petitioner müde to his former spouse bèfore the effective dáte of the. temporary spousal support order are not dÊductible an alimony _because Petitioner was not obligated to make those payments pursiiant to a divorce or separation instrument . See sect ion 71 (b) (1) (.A) . As relevant here, the term 'divorce or separation iristrument' neans (1) a decree of divorce or separate máintenance or a written instrument incident to such a dècree; (2) a written separation agreement; or (3) a decree ot!her than .a decree of divorce or separate maintenance requiring a upouse to make payments for the support or maintenance of the other spouse . Section 71 (b) (2) . The.temporary spousal support órder clearly fits within the defìnition of a divorce. or separation irkstrument' . But otherwise there was no written instrument iriicident to' the temporary spousal suppórt order or 'written sëparation agreement' entered into between Petitioner and his former spouse that obligated him to have made any . spousal support payments to her before.the éffective date of the temporary spousal support order. The iequirement that a separation agreement or an i strument incident to a court decree be written has been lenient ly cons t rued by this Court . See, e .. g . , Leventhal v . Cd>mmissioner- TC Memo 2000-92 (finding that letters signed 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 Heritage Reporting Corporation (202) 628-4888 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2.5 bý both the taxpäyer's attorney and the ex-wife's attorney . clearly sett ng forth the terms of maintenance payments was a 'written sùparation agreement'); Osterbauer v. Cámmissioner TC Memo 1982-266 (determining that a letter sent by the wife's representative to the .taxpayer mèmorializing the terms of their orál agreement constituted a written instrument) . . Nevertheless, we routinely require that there must be some actual writing in effect evidenbing the payor's olligation to pay. See, e.g., Herring v. Commissioner, 66 TC 308, 311 (1976) (holding that payments made under an oral agreement may not be deducted as alimony) . If payments betweén spouses or former spouses are nát required by a qualifying divorce or separation . instrument at the time the payments were made, we routinely characterize those payments as 'voluntary' even though, as . here, the ta:tpayer making the payments does so in anticipation of a future .obligation. See, e.g., Meyer v. Commissioner TC Memo 2003-12; Hart v. Commissioner, TC Memo l(cid:0)54097-11;Abood v. Commissioner/ TC Memo 1990-453; Dean v. Commissioner TC Memo 198.1-554. As Respondent points out, voluntary payments do nàt qualify as alimony for federal income tax purposes. See Mëver v. Commissioner, supra; Hart v... Commissioner, supra. Applying the foregoing principles to .the. facts Heritage Reporting Corporation (202) 628-4888 . . 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 10 bèfore us, we find that Petit-ioner's allowable alimony deduction may take into .account.. only those amounts he was obligated to pay pursuant to the temporary spousal support o¶der. That order required him to make three monthly payments of 1730 during 2007. Respondent has apparently al.ready allowed two.of those payments. Respondent does not necessarily agree that Petitioner made three $1, 730 payments in 2007, but based upon Petitioner's credible testimony and the .absence of any evidence to the. contrary, we find that he did. Pet itioner is entitled to - a $5190 alimony . d duction for 2007, and to give effect to the allowance of that deduction, decision will be entered under Rule 155. This concludes the Court's oral findings of fact ar d opinion :.n this case . (Whe reupon, at 9 : 4 3 a . m . , the bench opinion in the above-entitled matter was concluded.) / / / / / / / / Heritage Reporting Corporation (202) 628-4888