TAX COURT OPINION

Case: Daniel M. Steinberg
Docket Number: 361-12S
Judge: Holmes
Opinion Type: bench
Filed: 02/27/2013
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 DANIEL M. STEINBERG, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Re spondent . ) ) ) ) ) ) ) ) O R D E R Docket No. 361-12S. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall the pages of transmit the to petitioner and to respondent a copy of transcript of Holmes at Chicago, findings of which the case was heard. fact and opinion rendered at the trial in the above case before Judge Mark V. IL, on February 4, 2013, , c ntaining his oral the trial session at In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Mark V. Holmes Judge Dated: Washington, D.C. February 27, 2013 0 Wfá0 RAR 1 200 Capital Reporting Company 3 1 2 Bench Opinion by Judge Mark V. Holmès February 4, 2013 3 Daniel M. Steinberg 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 361-12S THE COURT: In the case of Daniel M. Steinberg v. Commissioner, Docket Number 361-12S, the Court has decided to render oral findings of fact and opinion and the following represents the Court's oral findings of fact and opinion. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Mr. Steinberg and the government reached a stipulation which forms together with his testimony am the record in this case. Mr. Stéinberg is an Illinois resident and was when he filed his petition. The case is a 150 case that is fairly simply to 'hí understand. Mr. Steinberg timely filed his Federal income tax return for 2009. He claimed an alimony deduction in the amount of $66,000 which was the amount due his wife under their judgment of divorce. However, the government disallowed $5,520 of the alimony deduction because the payments weren't made in case to his ex-wife. He had made these 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 payments, in part, to a Chrysler dealershipjwhich were payments under the judgment ofi divorce that his 3 wife owed, but he dá-d them, as he testimony 4 5 6 7 8 9 truthfully. He just did it for convenience reasons. The ·coupon book was already in his name and he could just offset his obligation to pay alimony. He, however, runs into section 71 of the Internal Revenue Code by doing this . Section 71 (b) of the Internal Revenue Code states that the term 10 alimony or separate maintenance paymen is any 11 12 13 14 15 16 17 18 payment in cash, if such payment is. received by or on behalf of the spouse under a divorce or separation 'fY instrument. And then, this being the tax code, l everything is defined divorce or separation instrument is defined in section 71 (b) (2){ a-s the term divorce or separation instrument means a decree of divorce or separate maintenance or a; written instrument incident to such a de ree, t<r-cte-csea,- a 19 written separation agreement, or a decree (not 20 21 22 23 24 25 described in subparagraph (A to make payments for the support or maintenance of the other spouse. In all these cases, however, the decree or judgment must be in writing. Now, Mr. Steinberg does have a written judgment of dissolution of divorce 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 which I hold to be a divorce decree. It's called something different under Illinois law. And again, as he complete y honestly testified, the maintenance payment br alimony that he owed to his ex-wife is $5,500 per mþnth. And he certainly sent her something each mönth. The problem is that paragraph 9.11(c), page 23 of this judgment of dissolution of marriage, also Exl ibit 3-J, states 9 with regard to the formerly co-ownecl 2008 Jeep, that 10 11 12 13 14 15 16 17 18 she, meaning Eva, will "maintain automobile insurance on the vehicle at all times. She cdvenants and I agrees that she will save, indemnify and hold Dan harmless from any liability thereon, and make timely payments on said vehicle. So in other words, according to this divorce decree, she was responsible for making those payments. Now, of course, from any easonable economic perspective, what they did was slightly more 19 efficient and should lead to the samé result. The 20 21 22 23 24 25 problem, however, is that because of the requirement that a divorce decree be in writing, Tax Court precedent construes it very strictly and requires that we give you, Mr. Steinberg, your alimony exemption only if it follows the terMs of the written decree and not the more efficient offset procedure 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Conipany (cid:16)042 I 1 2 3 4 5 6 6 that you came up with. The closest case I could find was Zampini v. Commissioner. That's Z-a-m-p-i-n-i v. Commissioner, 62 TC,and 475 (1991). In that case, 1 the.former husband had promised to pay in his divorce decree he-r automobile insurance on behalf of his 7 wife's 1980 Mustang. Well, she went out and traded 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the Mustang'for a 1984 model car. He continued to make the insurance payments on the new car, but he lost because none of the payments that he made were towards the insurance listed in the divorce decree in his case because it was a different car. This is a somewhat harsh finding, of course, because economically the parties to the divorce were in the same exact position that they were without the offset. Nevertheless, that is what|the law requires. So I must rule against Mr. Steinberg on that major issue. The government did, however, concede the $470 in extra alimony which means that a decision will have to be entered under Rule 155. This concludes the Court's oral findings of fact and opinion in this case. Thank you very much, Mr. Steinberg. This is one that ke- really only lawyers ould come up with something like this, .but it's the way it is. We will 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 have a short break. I will need tö look over the documents in the Alexander case. It should.be about ten minutes or so and I will tell Mr. Cecil when I am ready for that one. (Whereupon, at 1:35 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 25 866.488.DEPO www.CapitalReportingCompany.com