t c memo united_states tax_court jane gilbert petitioner v commissioner of internal revenue respondent richard c hawley petitioner v commissioner of internal revenue respondent docket nos 4178-o1 filed date john w schmehl for petitioner in docket no charles f blumenstock jr for petitioner in docket no jack t anagnostis for respondent memorandum opinion wells chief_judge respondent determined deficiencies in the federal_income_tax of petitioner jane gilbert formerly jane - hawley ms gilbert for the taxable years and of dollar_figure dollar_figure and dollar_figure respectively respondent determined deficiencies in the federal_income_tax of petitioner richard c hawley m d mr hawley for the taxable years and of dollar_figure dollar_figure and dollar_figure respectively ’ after concessions the issue remaining to be decided in the instant cases is whether any part of the unallocated child and spousal support payments constitutes alimony under section that is deductible by the payor spouse mr hawley under sec_215 and includable in the gross_income of the payee spouse ms gilbert under sec_61l a and a in the notices of deficiency and on brief respondent has taken inconsistent positions in that respondent disallowed deductions to mr hawley and required ms gilbert to report alimony income respondent asks us to allocate the subject payments consistently between petitioners moreover if we find that the payments constitute alimony then we must decide whether ms gilbert is liable under sec_55 for alternative_minimum_tax because of the increase in her gross_income from the alimony adjustment ‘these cases have been consolidated for purposes of briefing and opinion because they involve common questions of law and fact arising from the separation and divorce of petitioners all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure background the parties submitted the instant case fully stipulated without trial pursuant to rule the parties’ stipulations of facts are hereby incorporated by this reference and are found as facts in the instant case petitioners were residents of pennsylvania when they petitioned this court on date petitioners were married in buchanan georgia three children were born of petitioners’ marriage charles r hawley born september katherine g hawley born date and margaret g hawley born date on date petitioners separated and thereafter were not members of the same household on date ms gilbert sued mr hawley for divorce on date mr hawley answered and counterclaimed against ms gilbert for divorce at the time petitioners initiated the divorce proceedings they were residents of schuylkill county pennsylvania on date the court of common pleas of schuylkill county entered an agreement and order of support hereinafter the date separation instrument which stated -respondent objects on grounds of relevance to stipulation sec_12 and both ms gilbert and respondent object on grounds of relevance to stipulation this court finds these objections to be moot because this court does not rely upon those stipulations in reaching our decision - - and now thi sec_4th day of february upon agreement of the parties it is hereby ordered that the defendant is directed to pay the sum of dollar_figure bi- weekly for and toward the support of wife and three minor children in addition the defendant is directed to pay the sum of dollar_figure bi-weekly on account of accumulated arrearages for a total sum of dollar_figure bi-weekly the first payment in the sum of dollar_figure is to be made date and a like sum each second wednesday thereafter as of date the arrearage balance shall be dollar_figure this order is to be effective date all payments are to be made to the domestic relations section of this court and mailed to p o box pottsville pa the number must appear on all payments and correspondence mailed to this office the parties are directed to make available to all dependents named in this order any employer-provided medical or other_benefits available at no cost as a benefit of employment or at a reasonable cost the parties are directed to notify the domestic relations section in writing within seven days of obtaining coverage or any change in coverage both parties shall inform the domestic relations section in writing of any change in employment change_of address or change_of address of a child receiving support within seven days of such change an automatic wage attachment shall be issued without notice on defendant upon default of an amount egual to one month’s support obligation or at such other time as the court may designate plaintiff will be responsible to pay the first dollar_figure per year for uninsured medical_expenses including dental orthodontic optical and prescription drugs any uninsured medical_expenses in excess of dollar_figure per year shall be divided between the parties plaintiff and defendant commencing with the payment due_date plaintiff shall be obligated to make the monthly mortgage payments on the residence located pincite pershing drive orwigsburg schuylkill county pennsylvania mr hawley deducted dollar_figure in dollar_figure in and dollar_figure in as alimony paid to ms gilbert ms gilbert did not report the receipt of any payments from mr hawley for and ’ on date petitioners divorced on date pursuant to a petition to the court of common pleas of schuylkill county that court terminated mr hawley’s obligation to provide spousal support for ms gilbert and transferred the matter to the domestic relations office for a determination of the appropriate amount of child_support ms gilbert filed tax returns for and but not for ms gilbert qualified for head-of-household filing_status for and the order granting mr hawley’s petition to terminate spousal support stated and now this 20th day of november pincite a m the court hereby orders the following the defendant’s petition to terminate spousal support is granted as the obligation for spousal support is terminated as a matter of law by the entry of the date decree in divorce and this matter is transferred to the domestic relations office for a determination of the appropriate amount of child_support - - discussion we must decide whether all or any part of the predivorce unallocated support payments made by mr hawley to ms gilbert gualify as alimony to the payee spouse ms gilbert includable in gross_income under sec_61 and a ’ and deductible by the payor spouse mr hawley under sec_215 to be considered alimony unallocated support payments must conform to the requirements of sec_71 293_f3d_1208 10th cir affg miller v commissioner tcmemo_1999_273 zinsmeister v commissioner tcmemo_2000_364 gonzales v commissioner tcmemo_1999_ sec_71 provides in part sec_71 alimony or separate_maintenance payments defined --for purposes of this section-- in general --the term alimony_or_separate_maintenance_payment means any payment in cash if- sec 6l1 a general definition --except as otherwise provided in this subtitle gross_income means all income from whatever source derived including but not limited to the following items alimony and separate_maintenance payments sec_71l a general_rule --gross income includes amounts received as alimony or separate_maintenance payments sec_215 general_rule --in the case of an individual there shall be allowed as a deduction an amount equal to the alimony or separate_maintenance payments paid during such individual’s taxable_year - jj - a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includable in gross_income under this section and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse in the instant case the parties agree that the unallocated support payments meet the requirements subparagraphs a b and c of sec_71 the parties however dispute the application of subparagraph d of sec_71 if mr hawley is obligated to make one or more substitute_payments after the death of ms gilbert then none of the unallocated support payments will be considered alimony see gonzales v commissioner supra sec_1_71-1t q a-13 temporary income_tax regs fed reg date mr hawley contends that we should follow simpson v commissioner tcmemo_1999_251 pa case and lawton v commissioner tcmemo_1999_243 pa case which held that unallocated payments are considered alimony however those cases considered the application of sec_71 and did not directly address the application of subpar d of sec_71 continued --- - in deciding whether the payments were alimony we examine the language of the date separation instrument to ascertain whether it contains a termination upon death condition and if it does not whether state law supplies such a condition 102_f3d_842 6th cir affg tcmemo_1995_183 see gonzales v commissioner supra see also cunningham v commissioner tcmemo_1994_474 state law determines certain rights of the parties and federal_law determines the federal_income_tax consequences of those rights 309_us_78 281_us_111 the date separation instrument does not explicitly order that payments terminate upon ms gilbert’s death and thus we examine pennsylvania law to determine whether the payments would terminate by operation of pennsylvania law hoover v commissioner supra pincite when examining a matter of state substantive law we will look to a state’s highest court to determine the rights of parties under state law see estate of bosch v 387_us_456 the pennsylvania supreme court has not decided the narrow legal issue of whether an unallocated support continued in deciding that the unallocated payments were alimony therefore those cases provide only limited guidance on the issue before us - order covering spousal and child_support terminates upon the death of the payee custodial spouse mr hawley contends that we must apply pa r c p f pa cons stat ann west to the instant case which provides unallocated charging orders for child and spousal support or child_support and alimony pendente lite shall terminate upon the death of the payee spouse or payee ex- spouse pa r c p f became effective on date the years in issue are mr hawley’s and ms gilbert’s and tax years pennsylvania statues shall not be construed to apply retroactively unless clearly and manifestly so intended by the general assembly pa cons stat ann sec west see barnes v barnes a 2d pa see also commonwealth v rockwell manufacturing co a 2d pa pa r c p f does not indicate that it will have retroactive effect and consequently we will not apply it retroactively twenty-three pa cons stat ann section a west which addresses the jurisdiction of pennsylvania courts over divorce proceedings provides sec continuing jurisdiction over support orders a general_rule -- the court making an order of support shall at all times maintain jurisdiction of the matter for the purpose of enforcement of the order and for the purpose of increasing decreasing modifying or -- - rescinding the order unless otherwise provided by part viii relating to uniform interstate family support or viii-a relating to intrastate family support without limiting the right of the obligee or the department if it has an assignment or other interest to institute additional proceedings for support in any county in which the obligor resides or in which property of the obligor is situated the supreme court shall by general_rule establish procedures by which each interested_party shall be notified of all proceedings in which support obligations might be established or modified and shall receive a copy of any order issued in a case within days after issuance of such order a petition for modification of a support order may be filed at any time and shall be granted if the requesting party demonstrates a substantial change_in_circumstances twenty-three pa cons stat section does not explicitly provide that a pennsylvania court’s jurisdiction terminates upon the death of either party to a divorce proceeding it does however grant pennsylvania courts continuing jurisdiction over support proceedings a party seeking modification or termination of a support order must petition the pennsylvania court with jurisdiction over the divorce proceedings barnes v barnes supra pincite petition to modify see soncini v soncini a 2d pa super ct petition to modify see also benjamin v benjamin a 2d pa super ct petition to terminate mosier v mccaughtry a 2d pa super ct twenty-three pa cons stat section a provides strong indication that a pennsylvania court would retain jurisdiction over a divorce this would continue at least temporarily if the payee custodial spouse died because the statute and caselaw grant courts continuing jurisdiction over support matters and require a petition to modify or terminate support payments see edelstein v edelstein a 2d pa super ct in gonzales v commissioner tcmemo_1999_332 we held applying new jersey law that when a separation instrument is modifiable the noncustodial payor spouse could have remained liable to pay support under the separation agreement after the payee spouse’s death mr hawley contends that the doctrine_of abatement applies to the instant cases and thus the unallocated support order would terminate upon ms gilbert’s death before the entry of divorce in pennsylvania divorce actions abate upon the death of one of the parties haviland v haviland a 2d pa super ct citing matuszek v matuszek a 2d pa super ct economic claims for equitable haviland v haviland a 2d pa super ct held that the pa divorce code applies in_pari_materia with the probate code and the divorce code applies only to living spouses id pincite however in dicta teribery v teribery a 2d pa super ct stated that should either party die or become disabled for example a petition for modification can be filed to reflect changed circumstances a court need not consider all contingencies in ordering unallocated support because it may consider a change_in_circumstances such as death when raised by petition edelstein v edelstein a 2d pa super ct citing teribery v teribery supra under those cases unallocated support payments may continue after the death of the payee custodial spouse at least temporarily until there has been a petition filed to modify the unallocated support order distribution of marital property also abate upon the death of a party to the divorce action reese v reese a 2d pa super ct see myers v myers a 2d pa super ct ancillary economic claims abate but see pastuszek v pastuszek a 2d pa super ct no abatement if death occurs after a divorce decree but before the disposition of equitable claims twenty-three pa cons stat ann section west which codifies the doctrine_of abatement provides upon the death of the payee party the right to receive alimony pursuant to this chapter shall cease we note however that a similar provision does not exist for the termination of child_support pursuant to a divorce proceeding see garney v estate of hain a 2d pa super ct in pennsylvania both parents are equally responsible for their children who are unemancipated and under the age of pa cons stat ann ‘wwe have examined a state statute similar to pa cons stat ann sec west see ambrose v commissioner tcmemo_1996_128 cal fam code sec west held to terminate unallocated support payments upon death of custodial spouse but see wells v commissioner tcmemo_1998_2 cal fam code sec does not automatically terminate unallocated support payments upon death of payee custodial spouse sec west see oeler v oeler a 2d pa in construing an unallocated support agreement a pennsylvania court must promote the best interests of the parties' children oeler v oeler supra and assure their uninterrupted maintenance ritter v ritter a 2d pa super ct for the tax years in issue the treatment of an unallocated support instrument is ambiguous under pennsylvania law if the instrument addressed only alimony mr hawley’s duty to make payments would terminate on ms gilbert’s death see pa cons stat sec however the unallocated separation agreement also covers child_support and pennsylvania law is ambiguous on that issue ’ see garney v estate of hain supra an equivalent to pa cons stat sec does not exist for child_support see also oeler v oeler supra courts must promote the best interests of children ritter v ritter supra court must ensure the uninterrupted sec liability for support subject_to the provisions of this chapter parents are liable for the support of their children who are unemancipated and years of age or younger ‘3pennsylvania law treats alimony support orders and child_support orders differently pa r c p b pa cons stat ann west provides that child_support orders are considered to be final and immediately appealable whereas support orders are considered to be interlocutory mosier v mosier a 2d n pa super ct maintenance of children furthermore state courts maintain continuing jurisdiction over separation instruments and petitions are required for modification of such instruments pa cons stat sec see barnes v barnes a 2d pa for the years in issue pennsylvania state law does not provide an explicit termination condition on separation instruments nor do we find such a condition in the language of the date separation instrument itself in pertinent part the date separation instrument orders an automatic wage attachment shall be issued without notice on defendant upon default of an amount equal to one month’s support obligation or at such other time as the court may designate mr hawley is designated the defendant in the date separation instrument the unallocated support payments do not necessarily cease upon the death of ms gilbert because the pennsylvania court may attach mr hawley’s wages for failure to pay an unallocated support obligation or attach mr hawley’s wages at such other time as the court may designate as a result of such an attachment mr hawley’s liability under the date separation instrument may extend beyond ms gilbert’s death in miller v commissioner tcmemo_1999_273 we examined a provision of an unallocated support order arising from a -- - divorce in colorado which ordered that unallocated support payments continue until further order of court we conclude that the provision in issue in miller is similar to the provision in issue in the instant case because the unallocated support payments may continue beyond the death of the payee spouse at the discretion of the pennsylvania court consequently we have no reason to conclude that mr hawley’s obligation to make unallocated support payments under the date separation instrument terminates upon the death of ms gilbert see generally hoover v commissioner f 3d pincite accordingly we hold that mr hawley’s obligation to provide unallocated support to ms gilbert and their children may continue after the death of ms gilbert and consequently hold that subparagraph d of sec_71 has not been satisfied having found the unallocated support payments do not constitute alimony we hold that ms gilbert is not liable for the sec_55 alternative_minimum_tax we have considered all of the contentions and arguments of the parties that are not discussed herein and we find them to be without merit irrelevant or moot to reflect the foregoing decisions will be entered under rule


t c memo united_states tax_court vincent j and susan l maranto petitioners v commissioner of internal revenue respondent docket no filed date victor a latham for petitioners jordan musen for respondent memorandum opinion nameroff special_trial_judge this case is before the court on cross-motions to dismiss for lack of jurisdiction it was heard pursuant to sec_7443a respondent contends that petitioners failed to file their petition within the time prescribed by sec_6213 while petitioners contend that all section references are to the internal_revenue_code all rule references are to the tax_court rules_of_practice and procedure the notice_of_deficiency was invalid because respondent failed to mail it to petitioners’ last_known_address petitioners resided pincite edinger avenue huntington beach california the edinger avenue address at the time they filed their petition respondent determined a deficiency in petitioners’ federal_income_tax in the amount of dollar_figure and an accuracy- related penalty under sec_6662 in the amount of dollar_figure on date respondent mailed duplicate copies of the notice_of_deficiency by certified mail to blake road wilton california the blake road address and to fern point circle huntington beach california the fern point circle address the petition was filed herein on date more than years after the mailing of the notice_of_deficiency respondent alleges that the notice mailed to the fern point circle address was returned undeliverable but that the one mailed to the blake road address was not during the examination of petitioners’ federal_income_tax return petitioners signed and submitted to the internal_revenue_service a form_2848 power_of_attorney and declaration of representative naming james f christensen mr christensen airway avenue suite bl costa mesa california the airway avenue address as their representative the form_2848 was dated by petitioners on date and by mr christensen on date we note that the address of petitioners shown on the form_2848 was the fern point circle address on date respondent sent a copy of the notice_of_deficiency for petitioners’ taxable_year to mr christensen by regular mail mr christensen received the notice_of_deficiency but did not advise petitioners of the receipt because he believed that petitioners’ return was being handled by a san francisco law firm mr christensen filed the copy of the notice_of_deficiency in his records page of the form_2848 under the heading notices and communications states notices and other written communications will be sent to the first representative listed on line the form further provides two blocks to be checked to vary the statement but neither block was checked by letter dated date petitioners advised revenue_agent curtis lawrence that they had moved to northern california in date the letter continues i request any inquiry required in regards to maranto enterprises be forwarded to a location closier sic to my home the letter reflects the blake road address petitioners filed their federal_income_tax return in october of that return reflects the blake road address this court’s jurisdiction to redetermine a deficiency depends upon the timely issuance of a valid notice_of_deficiency and a timely filed petition see rule a c 93_tc_22 90_tc_142 sec_6212 a authorizes the secretary upon determining that there is a deficiency in income_tax to send a notice_of_deficiency to the taxpayer by certified or registered mail sec_6212 b provides that a notice_of_deficiency in respect of an income_tax shall be sufficient if it is mailed to the taxpayer at his last_known_address generally the commissioner has no duty to effect delivery of the notice after it is mailed to the taxpayer’s last_known_address see monge v commissioner supra pincite neither sec_6212 nor the regulation promulgated thereunder sec_301_6212-1 proced admin regs defines what constitutes a taxpayer’s last_known_address we have defined it as the taxpayer’s last permanent address or legal residence known by the commissioner or the last known temporary address of a definite duration to which the taxpayer has directed the commissioner to send all communications during that period see 74_tc_430 62_tc_367 affd without published opinion 538_f2d_334 9th cir stated otherwise it is the address to which in light of all the surrounding facts and circumstances the commissioner reasonably believed the taxpayer wished the notice to be sent see weinroth v commissioner supra the relevant focus is thus on the commissioner’s knowledge rather than on what in fact may have been the taxpayer’s actual address in use see 78_tc_215 citing alta sierra vista inc v commissioner supra pincite in 91_tc_1019 we held that a taxpayer’s last_known_address is the address shown on his most recent return absent clear and concise notice of a change_of address see monge v commissioner supra pincite under this principle the blake road address was petitioners’ last_known_address as it was shown on petitioners’ federal_income_tax return the last return filed before date a validly executed power_of_attorney may suffice to render an attorney’s address the taxpayer’s last_known_address if it directs that all original notices and written communications be sent to the taxpayer at the attorney’s address see d’an263_f2d_904 d c cir 72_tc_21 59_tc_818 the form_2848 executed by the taxpayers in the above-cited cases directed the taxpayers to choose between having originals or copies of all notices and written communications sent to their representatives the new form_2848 which was revised in date and which is involved in this case provides simply that notices and other written communications will be sent to the taxpayer’s designee we have previously held that that language is sufficient to render the address of the taxpayer’s representative the last_known_address of the taxpayer see honts v commissioner tcmemo_1995_532 under this principle the notice mailed to mr christensen at the airway avenue address and received by him was sent to petitioners’ last_known_address petitioners contend that respondent should have mailed the notice_of_deficiency to the edinger avenue address we disagree as indicated above the address shown on petitioners’ most recently filed return serves as notice to respondent of petitioners’ last_known_address unless respondent was given clear and concise notification of a change in that address accordingly petitioners’ return which was filed in october of was the last filed return before the mailing of the notice_of_deficiency for petitioners’ return showing the edinger avenue address was filed after the mailing of the notice_of_deficiency by certified mail to the blake road address petitioners’ contention that they provided a new address to respondent’s appeals_office orally in a telephone conversation has not been proven petitioner husband testified to such a conversation but his testimony was rather vague on the contrary the person to whom he spoke janet cole from the los angeles appeals_office recalls the conversation but does not recall receiving any added information as to petitioners’ new address the appeals documentary record in the case attached to the supplement to respondent’s motion to dismiss for lack of jurisdiction reflects that an entry was made at some undetermined time changing the fern point circle address to the blake road address moreover in date petitioner husband filed a voluntary petition in bankruptcy in the u s bankruptcy court for the eastern district of california sacramento division in which he listed the blake road address as his current address if the blake road address was not petitioners’ last_known_address then certainly the airway avenue address for mr christensen would have been petitioners’ last_known_address see honts v commissioner supra the record is clear that respondent mailed by regular mail a copy of the notice_of_deficiency for to mr christensen on date and that he received it petitioners contend that respondent has failed to prove the exact date upon which mr christensen received it but we do not believe that is necessary respondent did offer testimony of a representative of the u s postal service that mail from respondent’s office to mr christensen’s office would normally have been received within or days and we find that such testimony in conjunction with mr christensen’s admission of receipt is satisfactory evidence that the mail was delivered in the regular course of business and that mr christensen timely received the document petitioners then contend that respondent did not mail the notice_of_deficiency to mr christensen’s office by certified mail we note that the u s court_of_appeals for the third circuit has squarely addressed and rejected this argument in 404_f2d_668 3d cir affg 48_tc_848 see also freiling v commissioner 81_tc_42 ndollar_figure balkissoon v commissioner tcmemo_1992_322 affd 995_f2d_525 4th cir in berger v commissioner supra pincite the court stated we therefore reject a construction of the procedural provisions of sec_6212 which would yield the startling conclusion that a notice given to clients and their lawyer is inadequate even though they received it in due course simply because the lawyer’s copy should have been the original and the channel of certified mail which was used for the taxpayers should have been used for the lawyer accordingly we hold that the notice_of_deficiency for petitioners’ taxable_year was validly sent to petitioners’ last_known_address and that the petition filed more than years later was untimely an order will be entered granting respondent’s motion to dismiss and denying petitioners’ motion to dismiss