Court Opinion

ID: 9455513
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:24:58.482199+00
Date Added: 2024-06-11T17:34:37.923069
License: Public Domain

*1228CUMMINGS, Circuit Judge
(concurring).
It seems preferable to me to affirm on the ground that under the terms of the agreement between the taxpayer and his wife, the husband’s obligation to make the monthly payments to his wife did not attach until the divorce decree was entered. This was the alternative basis of the Tax Court’s opinion (52 T.C. 231, 239-240).
The purpose and function of Section 71(c) (2) of the Internal Revenue Code contemplate that the “date of such decree, instrument, or agreement” should be construed to mean the effective date of the obligation incurred (26 U.S.C. § 71(c) (2)). Therefore, unlike a presently enforceable separation agreement, an instrument which conditions the obligation of periodic payments upon the subsequent issuance of a divorce decree should take the date of the fulfillment of that condition even though a valid contract was otherwise entered substantially earlier.
In this case, the agreement itself clearly intended that the establishment of the decree and the incorporation of the agreement into the decree should be conditions precedent to the creation of any obligation to make the monthly payments. See 3A Corbin on Contracts, § 625 et seq. (1960). Thus paragraph 1(c) provides that the payments shall begin “on the first day of the month succeeding the month in which a Decree of Divorce in favor of the Wife may be entered,” and paragraph 3(d) provides:
“That this Agreement subject to the approval of the court, or such parts thereof as the courts shall deem pertinent, shall be made a part of any Decree of Divorce to be entered between the parties hereto, in lieu of any and all other provisions for either division of property or alimony.”
Accordingly, the effective date of the decree should control here, so that the periodic payments are not deductible by taxpayer.
The majority has adopted the blanket rule that unless state law binds the divorce court to the terms of the parties’ own agreement, then by definition the periodic payments are imposed by the decree. Such a rule fails to draw any distinction between separation agreements which happen to be incorporated into a divorce decree well after they have taken effect and governed the discharge of the marital obligation, and instruments which are not intended to impose any legal duties until sanctioned by the decree of the divorce court. This rule does not necessarily follow from prior decisions such, as the Blum cases,* and can be avoided here by referring to the content of the agreement itself.

 Blum v. Commissioner of Internal Revenue, 177 F.2d 670, 673 (7th Cir. 1949); Commissioner of Internal Revenue v. Blum, 187 F.2d 177 (7th Cir. 1951) (related ease).