TAX COURT OPINION

Case: Andre M. Guerin
Docket Number: 9083-11S
Judge: Carluzzo
Opinion Type: bench
Filed: 06/21/2012
Pages: 9

UNITED STATES TAX COURT 20217 WASHINGTON, D . C. ANDRE M. GUERIN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) Docket No. 9083-11S O R D E R 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 transcript of Judge Lewis R. Carluzzo at Portland, Maine, on June 8, 2012, containing his oral fact and opinion rendered at conclusion of trial. the above case before Special Trial the trial of the pages of the findings of the In accordance with the oral findings of fact and opinion, decision will be entered for respondent with respect deficiency and for petitioner with respect accuracy-related penalty. to the to the section 6662 (a) Dated: Washington, D.C. June 21, 2012 (Signed) Lewis R. Carluzzo Special Trial Judge MO JUN 22 8 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 R. Carluzzo Guerin v. Commissioner Docket No.: 9083-11S June 8, 2012 THE COURT: The Court has decided to render oral findings of fact and opinion (bench opinion) in this case. Unless otherwise noted, section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 175. Pursuant to section 7463 (b) the decision entered in this case shall not be treated as precedent for any other case. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. Andre M. Guerin appeared as a self- represented litigant. Molly H. Donohue appeared on behalf of respondent. In a notice of deficiency dated February 28, 2Öll (notice), respondent determined a $10,200 deficiency in and a $2,040 section 6662(a) accuracy- .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 4 related penalty with respect to petitioner's 2008 Federal income tax. The issues for decision are: (1) whether 'petiticner is entitled to the alimony deduction claimed on his timely filed 2008 Federal income tax return; and (2) whether petitioner is liable for an accuracy-related penalty. Some of the facts have been stipulated and are so found. Petitioner resided in Maine at the time the petition was filed. Petitioner and Pamela L. Guerin (petitioner's former spouse) married in 1982; they have three children, all of whom.were over the age of 18 by the time the marriage between petitioner and his former spouse was dissolved by Divorce Judgment, dated June 12, 2008 (divorce decree) issued by the District Court of South Androscoggin, Lewiston, Maine (divorce court) . At least one of petitioner's children, that is Ryan Guerin p (Ryan) , was attending college at the time the divorce decree was entered. College tuition approximated $4)0, 000 per year during 2008, and it appears that as between petitioner and his former spouse, petitioner assumed the responsibility to pay that tuition, which he did. Petitioner's "commitment to pay the Heritage Reporting Corporation (202) 628-4888 II 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 remaining three years of college tuition" for Ryan is acknowledged in paragraph 20 of the divorce decree. That paragraph goes on to read: "It is hereby ordered that [petitioner] shall pay general spousal support to [his former spouse] in the amount of $1.00 per year until said three years of college tuition have been paid in full or until June of 2012, whichever occurs first. On the happening of either of these events, the obligation of Andre M. Guerin to pay spousal support to Pamela L. Guerin shall terminate finally and shall not be reviewed under any circumstances." . As relevant here, on his timely filed 2008 Federal income tax return peti.tioner claimed a $40,000 alimony deduction (alimony deduction). The alimony deduction is computed with reference to the amount of Ryan's college tuition paid by petitioner during the year in issue. ' The alimony deduction is disallowed in the notice. According to the notice, petitioner failed to establish that "the amount shown was (a) alimony and (b) paid." Respondent also imposed a section 6662(a) penalty in the.notice. An adjustment to the itemized deductions claimed on netitioner's return is also made in the notice, but that adjustment is computational 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 and need not be discussed. As has been observed in countless opinions, deductions are a mattef of legislative grace, and the taxpayer bears the burden of proving his entitlement to claimed deductions. Rule 142 (a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). In general, section 215 allows an individual to deduct amounts paid as alimony during the taxable year to the individual's spouse,. or former spouse. Although the déduction for alimony is provided in section 215, the definition of "alimony" for purposes of section 215 is provided in section 71. In addition to other requirements, that section provides that a payment consti.tutes alimony only if the payment is received by or on behalf of the payor's spouse or former spouse under a divorce or separation instrument. Sec. 71(b) (1) (A). The divorce decree clearly constitutes a "divorce or separation instrument" within the meaning of section 71, see section 71(b) (2). As petitioner views the matter the tuition he paid to Ryan's college during 2008, id effect, constitutes a payment made on behalf of his former spouse. Petitioner's position assumes that the 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 7 divorce decree obligates him to have made Ryan's tuition payments. After all, a payment qualifies as alimony only if the payor was obligated to have made the payment under the divorce or separation instrument. We do not read the divorce decree in that manner. The divorce decree does not obligate petitioner to have paid Ryan's tuition. The reference in the divorce decree to petitioner's "commitment" to pay that tuition is not an obligation imposed by the divorce decree, but rather a factor obviously taken into account under Maine law in setting the spousal support awarded to petitioner's former spouse by the divorce court. See Me. Rev. Stat. Ann. title 19, sec. 951-A(5) (A-Q). The practice of awarding spousal support of one dollar per year so as to allow the spousal support order to be modified upon a change of circumstances of the affected parties seems to be a common practice in Maine. See e.g., Pongonis v. Pongonis, 606 A.2d 1055 (ME 1992). That is what happened here. The fact that petitioner was committed to pay Ryan's entire college tuition obviously had an effect on his ability to pay spousal support, see Me. Rev. Stat. Ann. title 19, sec. 951-A(5) (B). And the 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 8 fact that petitioner's former spouse was to pay none of that tuition had an obvious effect on her need for spousal support, see Me. Rev. Stat. Ann. title 19, sec. 951-A(5) (Q). Maine law required the divorce court to take into account these respective factors and after doing so the divorce court awarded petitioner's former spouse one dollar per year in spousal support. Had the circumstances changed, that is, had petitioner failed to satisfy his commitment, his. ability to pay spousal support might have been changed and the divorce decree could have been modified accordingly. Because the payment of Ryan's tuition was not a payment made to or on behalf of petitioner's former spouse under the divorce decree, the payment does not fit within the definition of alimony under section 215. It follows that petitioner is not entitled to a deduction for the payment under that section, and we are aware of no other provision of the Internal Revenue Code that would otherwise allow for the deduction. See section 262(a). Respondent's disallowance of the alimony deduction here in dispute is sustained. Lastly, we consider whether petitioner is liable for a section 6662(a) accuracy-related penalty. 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 According to respondent, he is, and respondent bears the burden of production on the issue. See section 7491(c).. Various grounds for the imposition of the penalty are set forth in the notice, including respondent's determination that the underpayment of tax required tò be shown on petitioner's 2008 Federal income tax return is a substantial understatement of income tax. see sec. 6662(d). In this case, the understatementvof income tax is computed in the same manner as and is equal to the deficiency. Sec. 6662(d) (1).(A). The underpayment of income tax"ïs a substantial understatement of income tax within the meaning of section 6662(d) because it exceeds $5,000. Sec. 6662 (d) (1) (A). Consequently, respondent has met his burden of production with respect to the imposition of the penalty. Nevertheless, if it is shown that a taxpayer acted in good faith and that there is reasonable cause for the underpayment, then the section 6662(a) accuracy-related penalty is not applicable. Sec. 6664 (c); Higbee v. Commissioner, 116 T.C. 438, 446-447 . (2001). Petitioner's entitlement to the alimony 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 deduction here 3in dispute required an analysis of not only Federal law, but State law as well. Entitlement to an alimony deduction for Federal income tax purposes is not always easily determined. We are satisfied from petitioner's presentation at trial that he acted in good faith and had reasonable cause for the underpayment. Consequently, he is not liable for a section 6662(a) accuracy-related penalty. To reflect the foregoing, decision will be entered for respondent, except that the decision will show that petitioner is not liable for a section 6662(a) penalty. This concludes this.bench opinion. (Whereupon, at 9:48 a.m. , the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888