Court Opinion

ID: 4334828
Source: CourtListenerOpinion
Date Created: 2018-11-14 01:53:50.859405+00
Date Added: 2024-06-11T07:59:07.673875
License: Public Domain

JOHN SCOTT KRACKE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentKRACKE v. COMMISSIONERNo. 1092-03SUnited States Tax CourtT.C. Summary Opinion 2004-26; 2004 Tax Ct. Summary LEXIS 28; March 9, 2004, Filed *28  PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.  John Scott Kracke, pro se.William C. Bogardus, for respondent.  Powell, Carleton D.Powell, Carleton D.POWELL, Special Trial Judge: This case was heard pursuant to the provisions of section 7463 1 of the Internal Revenue Code in effect at the time the petition was filed. The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority.Respondent determined a deficiency of $ 19,578 in petitioner's 2000 Federal income tax. The issue is whether $ 48,000 of the $ 128,000 payments petitioner made to his former wife constitute deductible alimony payments or, in the alternative, nondeductible child support payments. Petitioner resided in Darien, Connecticut, at the time the petition was*29  filed.             Background [3] Petitioner married Julie Skakel (Ms. Skakel-Kracke) on August 4, 1984. Petitioner and Ms. Skakel-Kracke had three children during their marriage: John Scott, Jr. (Scotty), born May 8, 1986; George Maxwell (George), born December 26, 1989; and Claire Hayden, born June 7, 1991. The Superior Court, Judicial District of Stamford/Norwalk, State of Connecticut, entered a Judgment on November 18, 1999, whereby petitioner and Ms. Skakel-Kracke were divorced. The Separation Agreement, executed the same day, provided in pertinent part:IV. PERIODIC ALIMONY      4.1 The $ 9K Monthly Base Amount. In a   continuation of Judge Tierney's 1n1498 Pendente Lite   Order (No. 110.00) (the "P/L Order"), the per month base amount   of $ 9K (or, $ 108K/year) shall be paid to the Wife as   unallocated periodic alimony and support (the "Periodic   Alimony"), which amount is predicated on the Husband's current   annual income of $ 258.7K, as follows: (i) the P/L Order shall   continue in full force and effect until the last day of the   month during which a judgment (the "Judgment") *30  is entered in the   Action; and (ii) on the fourth business day of each succeeding   month, the Husband shall pay the Periodic Alimony (subject to   the other terms of this Agreement). The monthly amount shall be   reduced by $ 2K on September 1st of the summer immediately   succeeding each of Scotty's and George's graduation from high   school. (Illustration: Assuming Scotty graduates   from high school on 6n202004, the Periodic Alimony would step   down from $ 9K per month to $ 7K per month effective 9n12004.)           *   *   *   *   *   *   *     4.2 The Additional Periodic Alimony Re: An Increase   in the Husband's Compensation . * * * [T]he Husband   shall pay 20% (the "20% Payment") of the gross amount of any   bonuses, commissions or additional salary received in a calendar   year * * * to the Wife as additional Periodic Alimony * * *. [4] Pursuant to the Separation Agreement, petitioner paid Ms. Skakel-Kracke $ 128,000 in 2000, which consisted of the $ 9,000 monthly payments plus 20 percent of his bonuses. In preparing his 2000 Federal income tax*31  return, petitioner deducted $ 128,000 as alimony payments. Respondent, in the notice of deficiency, disallowed $ 48,000 of the payments ($ 2,000 each per month for Scotty and George).             Discussion [5] Section 215(a)allows a deduction for amounts paid for "alimony or separate maintenance payments" that are includable in the recipient's gross income under section 71(a). An alimony or separate maintenance payment is defined by section 71(b). Sec. 215(b). Section 71(c) provides, in pertinent part:(c) Payments to Support Children. --        (1) In general. -- * * *[Amounts received as alimony     or separate maintenance payments] shall not apply to that     part of any payment which the terms of the divorce or     separation     instrument fix (in terms of an amount of money or a part of     the payment) as a sum which is payable for the support of     children of the payor spouse.        (2) Treatment of certain reductions related to     contingencies involving child. -- For purposes of     paragraph*32  (1), if any amount specified in the instrument     will be reduced --          (A) on the happening of a contingency specified        in the instrument relating to a child (such as        attaining a specified age, marrying, dying, leaving        school, or a similar contingency), or          (B) at a time which can clearly be associated        with a contingency of a kind specified in        subparagraph (A),     an amount equal to the amount of such reduction will be     treated as an amount fixed as payable for the support of     children of the payor spouse. [6] The Separation Agreement provides for a reduction of the unallocated periodic alimony and support payments by $ 2,000 each for Scotty and George on a certain date after each of their graduations from high school, and that provision is clearly a contingency related to those children. See Hammond v. Commissioner, T.C. Memo. 1998-53 (payments determined to be child support when the payments terminated on the taxpayer's*33  child's 18th birthday); Israel v. Commissioner, T.C. Memo. 1995-500 (payment determined to be child support when contingent on child residing with recipient spouse).Petitioner asserts that it is inequitable to treat the payments as child support because it was intended by the parties that he would be able to deduct the payments in full. This may have been what the parties intended, but we cannot rewrite the Separation Agreement. While we may be sympathetic with petitioner's position, this Court also cannot rewrite statutes enacted by Congress in order to reach what may be perceived as a more equitable result. See Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418">320 U.S. 418 (1943). Respondent is sustained.Reviewed and adopted as the report of the Small Tax Case Division.To reflect the foregoing,Decision will be entered for respondent.  Footnotes1. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code in effect for the year in issue.↩