Court Opinion

ID: 4332216
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:35:26.018066+00
Date Added: 2024-06-11T14:47:51.477620
License: Public Domain

FRED J. PETTID, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentPettid v. CommissionerNo 3716-97United States Tax CourtT.C. Memo 1999-126; 1999 Tax Ct. Memo LEXIS 177; 77 T.C.M. 1816; T.C.M. (RIA) 99126; April 16, 1999, Filed 1999 Tax Ct. Memo LEXIS 177">*177  Decision will be entered under Rule 155.  1999 Tax Ct. Memo LEXIS 177">*178 James R. Brown and Thomas R. Brown , for petitioner.Henry N. Carriger and Albert B. Kerkhove , for respondent.  WHALEN, JUDGE.  WHALENMEMORANDUM FINDINGS OF FACT AND OPINION[1] WHALEN, JUDGE: Respondent determined the following deficiencies in petitioner's Federal income tax for the years in issue:           Year       Deficiency           ____       __________           1993        $ 19,578           1994         18,964           1995         19,578 [2] After concessions, the sole issue for decision is whether monthly payments that petitioner made to Ms. Inga Wagner during the years in issue are properly treated as alimony and deductible under section 215(a) of the Internal Revenue Code, as petitioner contends, or as nondeductible payments in settlement of a claim for damages, as determined by respondent. Unless1999 Tax Ct. Memo LEXIS 177">*179  stated otherwise, all section references in this opinion are to the Internal Revenue Code in effect for the years in issue. Ms. Wagner was formerly known as Inga Wagner Bartling, and in various documents constituting the record of this case, Ms. Wagner is sometimes referred to as Ms. Bartling.FINDINGS OF FACT[3] This case was submitted fully stipulated pursuant to Rule 122 of the Tax Court Rules of Practice and Procedure. All Rule references in this opinion are to the Tax Court Rules of Practice and Procedure. The stipulation of facts, supplement to stipulation of facts, and the attached exhibits are incorporated herein by this reference. Petitioner resided in Omaha, Nebraska, at the time he filed his petition in this case.[4] Petitioner married his first wife, Ms. Wilma Rae Pettid, on October 20, 1962. Slightly more than 19 years later, on March 12, 1982, the District Court of Douglas County, Nebraska (herein referred to as the district court), entered a decree dissolving this marriage.[5] On or about May 5, 1982, petitioner obtained a license from the district court to marry Ms. Wagner. Petitioner and Ms. Wagner were purportedly married in a solemnization ceremony conducted 1999 Tax Ct. Memo LEXIS 177">*180  on May 8, 1982, less than 2 months after the decree dissolving petitioner's marriage to his first wife. Nebraska law provides that "a decree dissolving a marriage shall become final and operative * * * six months after the decree is rendered". Neb. Rev. Stat. sec. 42-372 (1988). Thus, at the time petitioner and Ms. Wagner were purportedly married, the decree dissolving petitioner's marriage to his first wife had not yet become final.[6] Approximately 9-1/2 years later, on or about January 14, 1992, petitioner filed a petition for declaratory judgment in the district court seeking to have his putative marriage to Ms. Wagner declared void. The petition identifies petitioner as plaintiff and Ms. Wagner as defendant. The petition alleges in pertinent part as follows:     3. On March 12, 1982, the marriage of Plaintiff, Frederick   J. Pettid to Wilma Rae Pettid was decreed dissolved by the a   [sic] Decree of the District Court of Douglas County, Nebraska,   at Doc. 777, No. 168.     4. On May 5 [sic], 1982, Plaintiff and Defendant were   purportedly married in the city of Omaha, County of Douglas,   Nebraska.     5. Pursuant to applicable Nebraska1999 Tax Ct. Memo LEXIS 177">*181  statutes, Plaintiff,   Frederick J. Pettid was under absolute disability to marry the   Defendant on May 5 [sic], 1982.     6. On or about January 13, 1992, in contemplation of   instituting an action for dissolution of the above-noted alleged   marriage, Defendant removed from a joint banking account of the   parties $ 50,000, all of which was earned by, and belonged to,   the Plaintiff herein.     7. Defendant made no contribution to said monies which she   has now taken and whose whereabouts are not known to Plaintiff. [7] The petition requests the following relief from the court: To declare the purported marriage between petitioner and Ms. Wagner void; to determine that the $ 50,000 removed by Ms. Wagner, as alleged in paragraph 6 of the above-quoted petition, is the property of petitioner; to determine that Nebraska divorce law does not apply to this action; and to determine that petitioner and Ms. Wagner each be entitled to the property that he or she personally accumulated during the purported marriage. The declaratory judgment action, including amendments thereto described below, is referred to herein as the annulment proceeding.[8] On1999 Tax Ct. Memo LEXIS 177">*182  April 20, 1992, Ms. Wagner filed a petition against petitioner in the district court. Ms. Wagner's petition alleges in pertinent part as follows:     3. During the years 1981 and 1982, Pettid dated and courted   Bartling [viz, Wagner].     4. During the courtship, Bartling was a single person,   having been legally divorced from a previous marriage.     5. At all times during the courtship, Pettid represented   himself to Bartling as a single person, who had been divorced   pursuant to a dissolution of a previous marriage.     6. During the courtship, Pettid established himself in a   position of trust and confidence with Bartling which resulted   from the courtship relationship.     7. In or around August, 1981, Pettid asked Bartling to   marry him, promising to marry her and cohabitate as husband and   wife.     8. Bartling accepted the good faith of Pettid and relied   upon his representation to her that he was legally capable of   entering into an agreement to marry her. Bartling, therefore   having reasonably and justifiably given Pettid her trust and   confidence, and accepting his good faith, 1999 Tax Ct. Memo LEXIS 177">*183  agreed to marry Pettid   pursuant to his proposal.     9. In anticipation of her planned marriage to Pettid, and   with Pettid's knowledge and encouragement, Bartling resigned her   employment in the Fall of 1981.     10. In anticipation of her planned marriage to Pettid, and   with Pettid's knowledge and agreement, Bartling sold her   residence in the Fall of 1981 and moved into her parents' house,   planning to remain a resident there until the marriage was   solemnized.     11. In anticipation of her planned marriage to Pettid, and   at Pettid's specific request, Bartling gave funds to Pettid for   business purposes, including his purchase of his medical   practice and the purchase of certain real estate.     12. Throughout the entire courtship and until March 12,   1982, Pettid knew that he was not legally divorced from his   first wife, Wilma Pettid. Pettid knowingly and intentionally   concealed his true marital status from Bartling throughout their   courtship and continued to conceal until January 14, 1992.     13. On March 12, 1982, Pettid was decreed divorced from his   first wife, Wilma, 1999 Tax Ct. Memo LEXIS 177">*184  by the District Court of Douglas County,   Nebraska. The decree was not effective for six months from its   date. Pettid knowingly and intentionally concealed this fact   from Bartling from the date of the decree until January 14,   1992.     14. On or about May 5, 1982, Pettid and Bartling made   application to the Douglas County Clerk for a marriage license.   Pettid knowingly and falsely stated the date of his divorce   decree as February 16, 1981. Bartling made application for such   marriage license in good faith, based on her reliance on   Pettid's affirmative statements that Pettid was legally capable   of entering into the proposed marriage.     15. On May 8, 1982, knowing himself to be under a legal   prohibition from entering into a marriage, Pettid arranged a   marriage ceremony in which Pettid and Bartling exchanged   marriage vows in Douglas County, Nebraska * * *.     16. Bartling participated in the solemnization ceremony and   the reception without knowledge that Pettid's divorce was not   final and without knowledge that Pettid was not legally capable   of entering into a valid marriage. Bartling1999 Tax Ct. Memo LEXIS 177">*185  accepted Pettid's   good faith and representations concerning his marital status in   entering into and participating in the marriage ceremony with   Pettid, and thereafter relied on the legitimacy of the marriage   ceremony.     17. Subsequent to May 8, 1982, and as a result of Pettid's   fraudulent representations to Bartling that they were legally   married and the purported marriage between Bartling and Pettid,   Bartling was induced to live with Pettid as his wife.     18. In reliance on the validity of the marriage and by   reason of Pettid's fraudulent misrepresentations to Bartling   that they were legally married, Bartling undertook certain   actions, including, but not limited to the following:        a. Bartling assumed Pettid's last name * * *;          b. Bartling changed her status from that of a        single person to a married woman, thereby being        required to live meretriciously with Pettid;        c. Bartling filed federal and state income tax returns     as the spouse of Frederick J. Pettid for the years 1982     through 1990;     d. Bartling1999 Tax Ct. Memo LEXIS 177">*186  performed normal duties as Pettid's spouse,     including housekeeping, cooking, laundry, tending to family     activities, being active in civic and social groups as     Pettid's wife;        e. Bartling assisted in Pettid's medical practice     development activities by being active in the medical     community's social and charitable activities and assisting     in the introduction of Pettid to other members of the     medical profession, all of which assisted Pettid in the     development of his medical practice;        f. Bartling forsook her career in order to tend to her     responsibilities as Pettid's wife;        g. Bartling held herself out as a married woman * * *.        h. By virtue of holding herself out as a married     woman, Bartling thereby lost certain inheritances from her     parents she would have had if she had been a single person     at the time of their deaths. Based upon the above allegations, Ms. Wagner's petition sets forth four separate grounds for relief: (1) Intentional infliction of emotional distress; (2) fraud and deceit and misrepresentation1999 Tax Ct. Memo LEXIS 177">*187  of capacity to marry; (3) breach of promise to marry; and (4) quantum meruit. The action instituted by Ms. Wagner is referred to herein as the Bartling lawsuit.[9] On March 6, 1992, petitioner amended his declaratory judgment action into a petition for annulment of marriage. On or about April 27, 1992, petitioner filed a second amended petition for annulment of marriage (Domestic Law). The prayer for relief of the amended petition states as follows:     WHEREFORE, Petitioner prays that the Court decree that the   marriage of the parties be null and void; that each party should   receive all property, whether real or personal, and moneys,   securities and other valuable items of all types that each party   personally accumulated during the period since May 5 [sic],   1982; and for such other and further relief that the Court may   deem just and proper. [10] On November 19, 1992, petitioner and Ms. Wagner executed a Settlement Agreement and Mutual Release (the Annulment Agreement). This agreement provides in pertinent part as follows:               RECITALS     WHEREAS, on the 12th day of March, 1982, Pettid [i.e.   Petitioner] 1999 Tax Ct. Memo LEXIS 177">*188  was divorced pursuant to a Decree of Dissolution   entered in the District Court of Douglas County, Nebraska, in a   matter entitled Wilma Rae Pettid, Petitioner vs. Frederick J.   Pettid, Respondent (hereinafter referred to as "the Divorce"),   contained at Docket 777, No. 168; and     WHEREAS, on the 8th day of May, 1982, Pettid entered into a   marriage ceremony with Wagner (hereinafter referred to as "the   Marriage Ceremony"); and     WHEREAS, the Marriage Ceremony took place during the six-   month interlocutory period of the Divorce; and     WHEREAS, Wagner was unaware of Pettid's legal inability to   enter into a valid marriage and is an innocent party as   otherwise referred to in Neb. Rev. Stat. section 42-378 (Reissue   1988); and     WHEREAS, Pettid filed a Petition for Declaratory Judgment   which was amended to a Petition for Annulment of Marriage in a   legal pleading entitled Frederick J. Pettid, Plaintiff, vs. Inga   W. Bartling, a/k/a Inga W. Pettid, contained at Docket 903, Page   208, in the District Court of Douglas County, Nebraska   (hereinafter referred to as "the Annulment Lawsuit"); 1999 Tax Ct. Memo LEXIS 177">*189  and     WHEREAS, Wagner has filed a civil suit for deceit, fraud,   breach of contract and quantum meruit against Pettid in an   action entitled Inga Bartling Pettid, Plaintiff, vs. Frederick   J. Pettid, Defendant, in the District Court of Douglas County,   Nebraska, at Docket 905, No. 797 (hereinafter referred to as   "the Bartling Lawsuit"); and     WHEREAS, the parties desire to resolve all differences   pertaining to the Annulment Lawsuit and the Bartling Lawsuit   between themselves.     NOW, THEREFORE, in consideration of the above and   foregoing, the parties agree as follows:     1. PAYMENT FROM PETTID TO WAGNER. Pettid agrees to transfer   real and personal property and to pay Wagner, as full and   complete settlement toward the claims in the Annulment Lawsuit   and the Bartling Lawsuit, as follows:     a) Real Estate Commonly Known As 972 South 4th   Street. * * *               * * * * * * *     b) IRA. * * *     c) Household Goods. * * *     d) Dean Witter. * * *     e) Insurance. * * *               * * * * * * *    1999 Tax Ct. Memo LEXIS 177">*190   f) PERIODIC SUPPORT PAYMENTS. Commencing on December 1,       1992, and continuing on the first (1st) day of each and       every month thereafter, Pettid shall pay Wagner periodic       support payments of Four Thousand and No/ 100 Dollars       ($ 4,000.00) per month for a period of eighty-four (84)       months.     g) HOUSE ACCOUNT. * * *              * * * * * * *     i) Cash Payment. * * *              * * * * * * *     5. RELEASE. Wagner, in consideration of the compromise and   settlement of her claim against Pettid, releases and forever   discharges Pettid, his successors, legal representatives and   assigns from all claims, demands and causes of action, including   any arising in tort or contract, law or equity, that Wagner may   now have or that might subsequently accrue to Wagner, known or   unknown, arising out of or connected with, directly or   indirectly, the marriage of the parties which took place on May   8, 1982, in any way connected with the relationship of the   parties. This release includes, but is not limited to, all   claims and actions1999 Tax Ct. Memo LEXIS 177">*191  based on the allegations contained in the   Bartling Lawsuit and the claims of an innocent spouse in the   Annulment Lawsuit. This release shall forever settle, adjust and   discharge all claims of Wagner against Pettid pertaining to the   Bartling Lawsuit or the Annulment Lawsuit.     Pettid, in consideration of the compromise and settlement   of any claims he may have against Wagner, releases and forever   discharges Wagner, her successors, legal representatives and   assigns from all claims, demands and causes of action, including   any arising in tort or contract, law or equity, known or   unknown, that Pettid may now have or might subsequently accrue   to Pettid arising out of or in any way associated therewith.   This release shall forever settle, adjust and discharge any   claims that Pettid may have against Wagner by virtue of said   marriage and all elements relating thereto.              * * * * * * *     9. FULL AGREEMENT. This agreement represents the complete   understanding of the parties and constitutes a full and final   settlement of all claims or claims against the other, known or  1999 Tax Ct. Memo LEXIS 177">*192  unknown, without any reservation of any rights, either in law,   equity, tort, contract, or in any other fashion, and may not be   modified except in writing and signed by all of the parties.     10. Binding Agreement. This agreement shall be binding upon   the parties, their respective heirs, successors, administrators,   assigns and personal representatives.                * * * * * *     13. WAIVER OF BREACH. No waiver of any breach by either   party of the terms of this Agreement shall be deemed a waiver of   any subsequent breach. No modification of this Agreement shall   be binding upon either of the parties unless reduced to writing   and subscribed by both parties, unless ordered by the Court. The payments at issue in this case are the monthly payments made pursuant to paragraph 1.f) above.[11] On the same day that the Annulment Agreement was executed, the district court entered a decree which annulled petitioner's marriage to Ms. Wagner. The district court found that petitioner was legally married to Ms. Wilma Rae Pettid at the time of his marriage to Ms. Wagner; therefore, the marriage of petitioner and Ms. Wagner1999 Tax Ct. Memo LEXIS 177">*193  was void as a matter of law. The district court stated that it had examined the Annulment Agreement and   finds the same to be fair, just, reasonable and not   unconscionable and hereby approves the same, which Agreement is   not being filed with the Court, but shall be adhered to by all   parties as though said * * * Agreement * * * were filed with the   Court and set forth in its entirety in this Agreement; that in   the event either party shall fail to abide by the terms of the   * * * Agreement * * *, the aggrieved party may file said   Agreement with the Court and be entitled to all relief which   would otherwise be made available for the enforcement of a   judgment, including contempt.The district court further stated:   IT IS FURTHER ORDERED, ADJUDGED AND DECREED that * * *   [petitioner] and * * * [Ms. Wagner] shall each abide by and   adhere to the terms and conditions of the * * * [Annulment]   Agreement which has been reviewed by the Court and has been   found to be fair, just, reasonable and not unconscionable, and   which Agreement shall not be filed with the Court as provided   for in Neb. Rev. Stat. sec. 42-366(4)(b)1999 Tax Ct. Memo LEXIS 177">*194  (Reissue 1988). [12] Respondent issued a notice of deficiency to petitioner with respect to his 1993, 1994, and 1995 returns. The notice of deficiency sets forth the following explanation for the adjustment disallowing the deduction petitioner claimed for the payments made during 1993:   Alimony Deduction:   Payments totaling $ 48,000.00 which you made in the taxable year   1993 to Inga Wagner, are not alimony payments, but are payments   in settlement of a claim for damages. Accordingly, the payments   are not deductible and your taxable income is increased   $ 48,000.00. The notice of deficiency contains identical explanations for taxable years 1994 and 1995.OPINION[13] The issue for decision is whether monthly payments made by petitioner to Ms. Wagner in each of the years in issue, pursuant to the Annulment Agreement, are properly characterized as deductible alimony under section 215(a), as petitioner contends, or as nondeductible payments in settlement of a claim for damages, as determined by respondent. Petitioner bears the burden of proving respondent's determination wrong. See Rule 142(a).EVIDENTIARY ISSUES[14] As a preliminary matter, we must decide1999 Tax Ct. Memo LEXIS 177">*195  respondent's objection to the introduction of 18 joint exhibits. Four of the joint exhibits relate to the divorce proceeding between petitioner and Ms. Wilma Rae Pettid. They are described as follows:   5-E  Decree dissolving petitioner's marriage to Ms. Wilma Rae     Pettid, issued by the District Court of Douglas County,     Nebraska, on March 12, 1982.   6-F  Property Settlement Agreement executed by and between     petitioner and Ms. Wilma Rae Pettid.   7-G  Answers to Interrogatories filed in the divorce proceeding.   8-H  Affidavit RE: Application for Support, Fees, Custody, Etc.     and Financial Statement, filed in the divorce proceeding.Fourteen of the joint exhibits relate to the purported marriage ofand subsequent annulment proceeding between petitioner and Ms.Wagner. They are described as follows:   9-I  Marriage License issued to petitioner and Ms. Wagner on May     5, 1982, by the Office of the County Judge for Douglas     County, Nebraska.  10-J  Excerpt from a record containing Ms. Wagner's testimony     taken in a deposition in connection with the annulment     proceeding.   12-L1999 Tax Ct. Memo LEXIS 177">*196  Affidavit RE: Application for Support, Fees, Custody, Etc.     and Financial Statement, filed by petitioner in the     annulment proceeding.   13-M Affidavit RE: Application for Support, Fees, Custody, Etc.     and Financial Statement, filed by Ms. Wagner in the     annulment proceeding.   15-O Motion for temporary support filed by Ms. Wagner in the     annulment proceeding.   16-P Temporary Order issued by the District Court of Douglas     County, Nebraska, in the annulment proceeding.   17-Q Certificate of Readiness for Trial prepared by Ms. Wagner's     attorney in the annulment proceeding.   23-W Draft of the Settlement Agreement and Mutual Release.   24-X Letter from petitioner's attorney to Ms. Wagner's attorney,     dated February 24, 1992.   25-Y Letter from petitioner's attorney to Ms. Wagner's attorney,     dated October 6, 1992.   26-Z Letter from Ms. Wagner's attorney to petitioner's attorney,     dated October 19, 1992.  27-AA Letter from petitioner's attorney to Ms. Wagner's attorney,     dated November 3, 1992.  28-AB Acknowledgment of Receipt and Release, 1999 Tax Ct. Memo LEXIS 177">*197  executed by Ms.     Wagner on July 1, 1994, and filed on July 12, 1994.  29-AC Ms. Wagner's Answer to Request for Admission, dated August     11, 1992, executed in connection with the annulment     proceeding. [15] Respondent's counsel set forth his objection to the exhibits in paragraph 7 of the stipulation of facts and paragraph 55 of the supplement to stipulation of facts, which state as follows:     7. Respondent also objects to admission into evidence of   Joint Exhibits 5-E, 6-F, 7-G. 8-H, 9-I, 10-J, 12-L, 13-M, 15-O,   16-P, 17-Q, 23-W, 24-X, 26-Z, 27-AA, and 28-AB on the grounds   that the Annulment Agreement * * * represents the complete   understanding of the parties and constitutes a full and final   settlement of all claims or claims against the other, known or   unknown, without any reservation of any rights, either in law,   equity, tort, contract, or in any other fashion, and may not be   modified except in writing and signed by all of the parties.   Joint Exhibits 5-E, 6-F, 7-G, 8-H, 9-I, 10-J, 12-L, 13-M, 15-O,   16-P, 17-Q, 23-W, 24-X, 26-Z, 27-AA, and 28-AB could not be   admitted as parole [sic] evidence1999 Tax Ct. Memo LEXIS 177">*198  in an action between Pettid   and Wagner to alter the construction of the Annulment Agreement   or to show its unenforceability because of mistake, undue   influence, fraud, duress, etc. Commissioner v. Danielson, 378 F.   2d 771, 775 (3rd Cir. 1967). * * *     55. In paragraph 7 of the Stipulation of Facts, Respondent   objected to admission of several Joint Exhibits into evidence.   Respondent continues to object to all of the Joint Exhibits   listed in paragraph 7 of the Stipulation of Facts and now adds   Joint Exhibits 25-Y and 29-AC. * * * [16] Although nominally phrased in terms of the parol evidence rule, respondent's objection is based on the application of the court's holding in Commissioner v. Danielson, 378 F.2d 771">378 F.2d 771 (3d Cir. 1967), vacating and remanding 44 T.C. 549">44 T.C. 549 (1965). In that case, the taxpayers executed covenants not to compete and a purchase agreement in connection with their sale of stock. The documents specifically allocated a portion of the total consideration to the covenants not to compete. Nevertheless, on their tax returns, the taxpayers reported the entire amount received1999 Tax Ct. Memo LEXIS 177">*199  from the buyer as proceeds from the sale of stock. The taxpayers argued that the allocation of the buyer's consideration in the covenants not to compete and the purchase agreement had no basis in fact or economic reality and that taxation should be based on the substance of the transaction. In response to the taxpayers' argument, the Court of Appeals adopted the following rule:   a party can challenge the tax consequences of his agreement as   construed by the Commissioner only by adducing proof which in an   action between the parties to the agreement would be admissible   to alter that construction or to show its unenforceability   because of mistake, undue influence, fraud, duress, etc. * * *378 F.2d 771">378 F.2d at 775. This Court has not adopted the rule enunciated by the Court of Appeals for the Third Circuit in 378 F.2d 771">Commissioner v. Danielson, supra. See Norwest Corp. v. Commissioner, 111 T.C. 105">111 T.C. 105, 111 T.C. 105">142 (1998); Coleman v. Commissioner, 87 T.C. 178">87 T.C. 178, 87 T.C. 178">202 n. 17 (1986), affd. without published opinion 833 F.2d 303">833 F.2d 303 (3d Cir. 1987); Elrod v. Commissioner, 87 T.C. 1046">87 T.C. 1046, 87 T.C. 1046">1065 (1986);1999 Tax Ct. Memo LEXIS 177">*200 G.C. Servs. Corp. v. Commissioner, 73 T.C. 406">73 T.C. 406, 73 T.C. 406">412 n. 2 (1979).[17] On brief, respondent's counsel expanded the basis for his objection to include two additional theories: The "strong proof" rule and the holding of Grummer v. Commissioner, 46 T.C. 674">46 T.C. 674 (1966). Under the "strong proof" rule, adopted by this Court, a taxpayer can ignore the unambiguous terms of a binding agreement only if the taxpayer presents "strong proof," that is, more than a preponderance of the evidence, "that the terms of the written instrument" do "not reflect the actual intention of the parties thereto." G. C. Servs. Corp. v. Commissioner, 73 T.C. 406">73 T.C. 412; Meredith Corp. & Subs. v. Commissioner, 102 T.C. 406">102 T.C. 406, 102 T.C. 406">440 (1994); Major v. Commissioner, 76 T.C. 239">76 T.C. 239, 76 T.C. 239">247 (1981). Similarly, the holding in Grummer v. Commissioner is stated as follows:   extrinsic evidence designed to alter the language of a divorce   decree or separation agreement will not be considered in   determining whether payments constitute alimony or child support   when the agreement of the parties1999 Tax Ct. Memo LEXIS 177">*201  specifically and unequivocally   fixes the character of such payments. * * *Grummer v. Commissioner, 46 T.C. 674">46 T.C. 680. In that case, the Court found "no ambiguity of the agreement." 46 T.C. 674">Id. at 679.[18] The Danielson rule, the "strong proof" rule, and the Grummer holding all relate to the same issue: whether a party to a binding agreement should be permitted to avoid the tax consequences that would otherwise flow from the unambiguous terms of the agreement. The Danielson rule and the "strong proof" rule differ in the level of proof necessary to challenge the tax consequences of an agreement. The Grummer case adopts a rule prohibiting consideration of extrinsic evidence in interpreting the unambiguous language of a divorce decree or separation agreement.[19] None of the three theories relied upon by respondent apply to the instant case. All three theories apply only in the case of an unambiguous agreement. However, we find paragraph 1.f) of the Annulment Agreement to be ambiguous because it does not state whether, or to what extent, the "periodic support payments" are in settlement of a claim for damages under the Bartling lawsuit1999 Tax Ct. Memo LEXIS 177">*202  or are payments in connection with the annulment of petitioner's purported marriage to Ms. Wagner. Paragraph 1 of the Annulment Agreement states that the transfers of property and payments are in "full and complete settlement toward the claims in the Annulment Lawsuit and the Bartling Lawsuit."[20] Petitioner is not attempting to alter the unambiguous terms of the Annulment Agreement and, thus, avoid the tax consequences that flow from this Agreement. Rather, by introducing the joint exhibits into evidence, petitioner seeks to produce evidence contrary to respondent's position that the subject payments are "in settlement of a claim for damages" (i.e., the Bartling lawsuit) and to prove that the parties to the Annulment Agreement intended the "periodic support payments" to qualify as "alimony or separate maintenance." Accordingly, we overrule respondent's objection to the joint exhibits.[21] Respondent also objects to paragraph 6 of the stipulation of facts and paragraph 53 of the supplement to stipulation of facts, relating to respondent's treatment of the payments received by Ms. Wagner. Paragraph 6 of the stipulation of facts states in pertinent part as follows:     6. 1999 Tax Ct. Memo LEXIS 177">*203  Pettid (i.e. Petitioner) asserts that for the same   three tax years [1993, 1994, and 1995], the Commissioner * * *   determined that the same $ 4,000.00 monthly payments that   Pettid made to Wagner were alimony includable in her gross   income. * * *Paragraph 53 of the supplement to stipulation of factsprovides in pertinent part as follows:     53. On November 27, 1996, Respondent issued a notice of   deficiency to Inga Wagner, for tax years 1993 and 1994, in which   Respondent determined that Inga Wagner was liable for tax on the   payments she received from Petitioner, Fred J. Pettid, in   response to paragraph 1.f) of the Annulment Agreement. * * * Respondent objects to the above-quoted statements on the ground that the determinations made by the Commissioner with respect to the treatment of the payments in Ms. Wagner's returns are not probative as to the treatment of the payments in petitioner's returns.[22] Petitioner did not address respondent's objection on brief, and, thus he has conceded it. See Lime Cola Co. v. Commissioner, 22 T.C. 593">22 T.C. 593, 22 T.C. 593">606 (1954) (stating that because petitioners did not address transferee1999 Tax Ct. Memo LEXIS 177">*204  liability on brief, petitioners had conceded the issue); Levert v. Commissioner, T.C. Memo 1989-333 (stating that respondent had conceded the taxpayer's liability for an addition to tax that was determined in the notice of deficiency by failing to discuss the issue on brief). Accordingly, we sustain respondent's objection to the admission of paragraph 6 of the stipulation of facts and paragraph 53 of the supplement to stipulation of facts.Alimony or Separate Maintenance[23] The principal issue in this case is whether the payments made by petitioner to Ms. Wagner are properly characterized as "alimony or separate maintenance payments," deductible under section 215(a). Section 215(b) provides that the term "alimony or separate maintenance payment" means "any alimony or separate maintenance payment (as defined by section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b) provides as follows:     SEC. 71(b). Alimony or Separate Maintenance Payments   Defined. -- For purposes of this section --        (1) In General. -- The term "alimony or separate     maintenance payment" means any 1999 Tax Ct. Memo LEXIS 177">*205  payment in cash if --          (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        includible in gross income under this section and not        allowable as a deduction under section 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.If the payments made by petitioner fail to meet each of the four criteria enumerated by section 71(b)(1), then the payments are not "alimony1999 Tax Ct. Memo LEXIS 177">*206  or separate maintenance payments" and are not deductible by petitioner under section 215(a).[24] As stated in respondent's reply brief, "Both petitioner and respondent agree that payments made by petitioner meet the requirements contained in I.R.C. sec. 71(b)(1)(A), (B), and (C)." Therefore, the sole question remaining is whether the subject payments satisfy the requirements of subparagraph (D).[25] Respondent takes the position that the requirements of subparagraph (D) are not satisfied for the following two reasons: "First, there is no reference in the Annulment Agreement which requires the termination of the support payments upon Wagner's death. Second, there appears to be a specific requirement in the agreement for Pettid to continue the payments should Wagner die."[26] Contrary to respondent's first position, we conclude that petitioner's liability to make payments under paragraph 1.f) of the Annulment Agreement terminates upon the death of Ms. Wagner by operation of Neb. Rev. Stat. section 42-365, which provides as follows:    Decree; alimony; division of property; criteria; modification;   revocation; termination. When dissolution of marriage is   decreed, the 1999 Tax Ct. Memo LEXIS 177">*207  court may order payment of such alimony by one   party to the other and division of property as may be   reasonable, having regard for the circumstances of the parties,   duration of the marriage, a history of the contributions to the   marriage by each party * * * and interruption of personal   careers or educational opportunities * * * EXCEPT AS OTHERWISE   AGREED BY THE PARTIES IN WRITING OR BY ORDER OF THE COURT,   ALIMONY ORDERS SHALL TERMINATE UPON THE DEATH OF EITHER PARTY OR   THE REMARRIAGE OF THE RECIPIENT.     The purpose of alimony is to provide for the continued   maintenance or support of one party by the other when the   relative economic circumstances and the other criteria   enumerated in this section make it appropriate. [Emphasis   added.]Neb. Rev. Stat. sec. 42-365 (1988).[27] Neb. Rev. Stat. section 42-365 provides that the payor's liability to make payments under "alimony orders" terminates by operation of law upon the death of either spouse or the remarriage of the recipient spouse, "except as otherwise agreed by the parties in writing or by order of the court". We note that respondent does not argue that the district1999 Tax Ct. Memo LEXIS 177">*208  court's decree is not an "alimony order." In this case, neither the Annulment Agreement nor the Decree of Annulment provides for the termination of the payments required under paragraph 1.f) of the Agreement. Thus, petitioner's liability to make the payments terminates by operation of Neb. Rev. Stat. section 42- 365 upon Ms. Wagner's death.[28] Under Nebraska law, there is a distinction between "annulment" and "divorce". Annulment is the declaration by a court that a purported marriage is null and void, as if the marriage had not occurred. See Neb. Rev. Stat. sec. 42-119 (1988). Divorce is the termination of a valid and binding marriage. See Neb. Rev. Stat. sec. 42-347(2) (1988). Notwithstanding this distinction, annulment actions are brought in the same manner as divorce actions and are subject to the same provisions of the Nebraska Divorce and Alimony Law. See Neb. Rev. Stat. sec. 42-373 (1988).[29] Our interpretation of Neb. Rev. Stat. section 42-365 is supported by the holding in Euler v. Euler, 207 Neb. 4">207 Neb. 4, 295 N.W.2d 397">295 N.W.2d 397 (Neb. 1980). The issue in Euler v. Euler was whether, under Neb. Rev. Stat. section 42-365, the remarriage of the ex-wife caused the termination1999 Tax Ct. Memo LEXIS 177">*209  of the payment of alimony to her. The court held that:   Neither the property settlement nor the decree provides for the   termination of alimony upon the occurrence of a specified event   set out in the agreement, nor does either state that the   agreement shall not be subject to amendment or revision. SECTION   42-365 CLEARLY STATES THAT ALIMONY PAYMENTS WILL TERMINATE BY   OPERATION OF LAW WHEN A DECREE IS SILENT ON THE EFFECT OF DEATH   OR REMARRIAGE. [Emphasis added.]295 N.W.2d 397">295 N.W.2d at 400. [30] Respondent attempts to distinguish Euler v. Euler by noting that the agreement in that case expressly permitted modification. Respondent argues that the court in Euler v. Euler concluded that termination language could be added to the agreement. In this case, on the other hand, respondent argues that the Annulment Agreement does not permit modification, and that language terminating petitioner's liability to make the subject payments upon the death of Ms. Wagner cannot be added.[31] We disagree. We do not agree that the statutory direction set forth in Neb. Rev. Stat. section 42-365 can be defeated by a general contractual provision prohibiting1999 Tax Ct. Memo LEXIS 177">*210  modification of the agreement. If Neb. Rev. Stat. section 42-365 applies, a payor's liability to pay alimony terminates automatically by operation of law upon the death of the payee. As the court stated in Kingery v. Kingery:   The words, "terminate upon the death of either party or the   remarriage of the recipient," clearly show that this portion of   the statute needs no order of court to effect termination. The   alimony terminates by operation of law when the condition   occurs.Kingery v. Kingery, 211 Neb. 795">211 Neb. 795, 320 N.W.2d 441">320 N.W.2d 441, 320 N.W.2d 441">443 (Neb. 1982). Thus, if Neb. Rev. Stat. section 42-365 applies, liability to make the payments terminates without a court order. Similarly, the termination takes place without "modification" of the Annulment Agreement or the Decree of Annulment.[32] Respondent cites Watters v. Foreman, 204 Neb. 670">204 Neb. 670, 284 N.W.2d 850">284 N.W.2d 850 (Neb. 1979), in support of his position that section 71(b)(1)(D) is not satisfied because paragraph 1.f) of the Annulment Agreement does not explicitly provide for termination of the subject support payments upon the death or remarriage of Ms. Wagner. The issue in 204 Neb. 670">Watters v. Foreman, supra,1999 Tax Ct. Memo LEXIS 177">*211  was whether the remarriage of the payee spouse resulted in the termination of alimony by operation of Neb. Rev. Stat. section 42-365. The court decree stated that the payments would cease upon the payee's death, but it was silent about remarriage.[33] In support of his position that his obligation to pay alimony terminated upon his ex-wife's remarriage, the payor, Foreman, argued that Neb. Rev. Stat. section 42-365 required termination of the alimony payments upon the remarriage of his ex-wife. The court in 204 Neb. 670">Watters v. Foreman, supra, held:   Where the parties by their agreement in writing, or the court by   its decree, provide that a specific amount of alimony shall be   paid for a specific period of time, and shall terminate only   upon the occurring of a specific event set out in the agreement   or decree and otherwise shall not be subject to amendment or   revision, the payments of such alimony shall terminate only upon   the happening of the event set out in the agreement or decree.284 N.W.2d 850">284 N.W.2d at 854.[34] Respondent notes that in 204 Neb. 670">Watters v. Foreman, supra, the parties to the written1999 Tax Ct. Memo LEXIS 177">*212  agreement did not include the remarriage of the ex-wife as a ground for termination, and the agreement stated that it was final and complete and not subject to revision or amendment. According to respondent, the same result should follow in the instant case because the Annulment Agreement likewise does not include the death of Ms. Wagner as a ground for termination and states that it is final and complete and not subject to revision or modification.[35] We believe that 204 Neb. 670">Watters v. Foreman, supra, is distinguishable from the instant case. In 204 Neb. 670">Watters v. Foreman, supra, the decree fit within the "Except as otherwise agreed by the parties in writing or by order of the court" language of Neb. Rev. Stat. section 42-365 because the decree expressly dealt with termination and provided that termination would occur upon the death of the payee spouse. In the instant case, on the other hand, the Annulment Agreement is silent about termination and is silent about the effect that the death or remarriage of Ms. Wagner will have on the payments required under paragraph 1.f). Thus, the parties to the Annulment Agreement have not "otherwise agreed" 1999 Tax Ct. Memo LEXIS 177">*213  in writing regarding the effect of the death or remarriage of Ms. Wagner on petitioner's liability to make payments under paragraph 1.f). In such a case, by operation of Neb. Rev. Stat. section 42-365, the payments automatically terminate upon the death of petitioner or of Ms. Wagner or remarriage of Ms. Wagner.[36] Respondent further argues that section 71(b)(1)(D) is not satisfied because petitioner, or his estate "may be required to make payments [under the Annulment Agreement] after Ms. Wagner's death." To support this argument respondent makes three points. First, respondent notes that paragraph 10 of the Annulment Agreement provides: "This Agreement shall be binding upon the parties, their respective heirs, successors, administrators, assigns and personal representatives." Second, respondent argues that, because the Annulment Agreement provides that it cannot be modified, it is equivalent to a judgment on which Ms. Wagner's heirs could bring an action. Third, respondent asserts that "the Annulment Agreement is a settlement of the Bartling Lawsuit", a "tort suit," and the payments in issue "are simply the periodic payment of a damage award" that could be enforced against petitioner1999 Tax Ct. Memo LEXIS 177">*214  by Ms. Wagner's heirs.[37] Unlike respondent, we do not believe that any provision of the Annulment Agreement or the Decree of Annulment requires petitioner to continue making the monthly payments under paragraph 1.f) of the Agreement after Ms. Wagner's death. As to the first and second points raised by respondent, we do not agree that the "binding agreement" provision or the "no modification" provision of the Annulment Agreement can be read so broadly as to require the payments to continue after Ms. Wagner's death or to constitute an agreement of the parties that the alimony order will not terminate on Ms. Wagner's death, as otherwise required by Neb. Rev. Stat. section 42-365.[38] We also disagree with respondent's third point, that the Annulment Agreement is a settlement of the Bartling lawsuit, a tort action, and the payments in issue are periodic payments of a damage award that could be enforced by Ms. Wagner's heirs. While we agree that the Bartling lawsuit was settled in the Annulment Agreement, we do not agree that it was necessarily a tort action or that the subject payments relate to an award of damages.[39] Accordingly, by operation of Neb. Rev. Stat. section 42- 365, 1999 Tax Ct. Memo LEXIS 177">*215  the payments described by paragraph 1.f) of the Annulment Agreement terminate upon the death of Ms. Wagner. Thus, the payments constitute "alimony" under section 71(b) because "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" as required by section 71(b)(1)(D). Therefore, we find that the subject payments constitute "alimony or separate maintenance payments" within the meaning of section 71(b) and are deductible under section 215(a).[40] To reflect the foregoing,[41] Decision will be entered under Rule 155.