DocketNumber: No. 3227-05S
Citation Numbers: 2006 T.C. Summary Opinion 128, 2006 Tax Ct. Summary LEXIS 29
Judges: \"Armen, Robert N.\"
Filed Date: 8/21/2006
Status: Non-Precedential
Modified Date: 11/20/2020
2006 Tax Ct. Summary LEXIS 29">*29 PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.
ARMEN, Special Trial Judge: This case was heard pursuant to the provisions of
Respondent determined a deficiency in petitioner's Federal income tax for 2002 in the amount of $ 9,350.
After concessions by respondent, the sole issue for decision is whether petitioner properly deducted attorney's fees paid in 2002 as alimony under
Background
Some of the facts have been stipulated, 2006 Tax Ct. Summary LEXIS 29">*30 and they are so found. We incorporate by reference the parties' stipulation of facts and accompanying exhibits.
At the time the petition was filed, Charles H. Devers (petitioner) resided in St. Louis, Missouri.
Petitioner and Nadine F. (Lundsgaard) Devers (Ms. Devers) were married in August 1973 and separated in January 2001. Ms. Devers filed a petition seeking a dissolution of her marriage to petitioner on August 1, 2001, in the Circuit Court of St. Louis County, Missouri (Family Court Cause No. 01FC-7461). A Judgment Pending Dissolution Proceeding (PDL) (sometimes referred to as an Order Pendente Lite) was filed on December 17, 2001, and required petitioner to pay $ 5,000 to Aaron Dubin (Mr. Dubin), attorney for Ms. Devers, "as and for attorney fees on account". Petitioner did not appeal the order. The PDL did not specify whether petitioner's obligation to pay the $ 5,000 would terminate upon either spouse's death. In March 2002, petitioner paid the $ 5,000 as ordered by the PDL.
The original dissolution proceeding, Cause No. 01FC-7461, was dismissed in July 2002 for reasons not relevant to the instant action. Petitioner himself then sought a dissolution of the marriage in the2006 Tax Ct. Summary LEXIS 29">*31 Circuit Court of St. Louis County, Missouri (Family Court Cause No. 02FC-7407, filed July 31, 2002) and an Order dissolving the Deverses' marriage was entered on October 13, 2004.
Petitioner claimed a deduction of $ 29,000 as alimony on his 2002 tax return. 2 A notice of deficiency was mailed to petitioner determining an income tax deficiency of $ 9,350. After further inquiry by respondent, it became clear that the $ 29,000 comprised $ 24,000 of maintenance paid to Ms. Devers and the $ 5,000 paid to Mr. Dubin. Before trial, respondent conceded the deduction for the payments to Ms. Devers and recalculated petitioner's income tax deficiency to be $ 1,607. Only the $ 1,607 deficiency corresponding to the $ 5,000 payment made to Mr. Dubin remains at issue.
Discussionn 3
2006 Tax Ct. Summary LEXIS 29">*32
Payments to a third party on behalf of a spouse and pursuant to the terms of a divorce decree may be alimony if those payments would otherwise qualify as such. See
For purposes of this section --
(1) In general. -- The term "alimony or separate
maintenance payment" means any 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
2006 Tax Ct. Summary LEXIS 29">*33 designate such payment as a payment which is not
includable in gross income * * * and not allowable as
a deduction under
(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.
Both parties agree that petitioner's payment to Mr. Dubin satisfies the requirements set out in
"Although Federal law controls in determining petitioner's income tax liability * * *, State law is necessarily implicated in the inquiry inasmuch as the nature of petitioner's liability for the payment" was based in Missouri law.
the State's highest court is the best authority on its own law.
If there be no decision by that court then federal authorities
must apply what they find to be the2006 Tax Ct. Summary LEXIS 29">*36 state law after giving
"proper regard" to relevant rulings of other courts of the
State. In this respect, it may be said to be, in effect, sitting
as a state court.
With no State decision squarely on point, the Court must do its best to discern and apply what it believes to be Missouri law.
1. Missouri Family Law
In Missouri, an award for attorney's fees does not arise out of the Missouri alimony provision. In 1974, the State enacted the Dissolution of Marriage Act,
The separate treatment of maintenance and child support, as one
type of an award, and litigation costs and attorney fees as
another type of award, demonstrates a legislative intent not to
continue the authority to award attorney fees as an incident to
alimony or the present substitute for alimony which is
designated as maintenance.
In
2006 Tax Ct. Summary LEXIS 29">*39 2. Validity of the Award
Petitioner argues that a final Order of Dissolution would have been required for the PDL to have any effect and that the dismissal of the first dissolution proceeding removed the court's authority to order him to pay attorney's fees. We disagree. It is true that a court loses jurisdiction over a dissolution action if one of the parties dies before the entry of a final Order. See, e.g.,
In
3. Conclusion
Although the Supreme Court of Missouri has not addressed the narrow legal issue presented in the instant case, the State's statutory scheme of the child support, maintenance, and attorney fee provisions, as well2006 Tax Ct. Summary LEXIS 29">*42 as relevant caselaw, suggests that petitioner's obligation to Mr. Dubin would not have terminated had Ms. Devers died before satisfaction of the obligation whether or not the PDL was ever followed by a Final Order and Decree of Dissolution. For that reason, and after considering all of the facts and circumstances, we hold that petitioner's deduction of the $ 5,000 paid to Mr. Dubin was improper as it did not meet the definition of "alimony" under
Reviewed and adopted as the report of the Small Tax Case Division.
To reflect our disposition of the disputed issue, as well as respondent's concessions,
Decision will be entered for respondent in the amount of the reduced deficiency of $ 1,607.
1. Unless otherwise indicated, all subsequent section references are to the Internal Revenue Code in effect for 2002, the taxable year in issue.↩
2. There is no disagreement that if the deduction were proper, 2002 would be the appropriate tax year.↩
3. The issue for decision is essentially legal in nature; accordingly, we decide it without regard to the burden of proof.↩
4. Although there is caselaw suggesting that the obligation to pay attorney's fees not yet earned but awarded prospectively on account would be subject to modification, see, e.g.,
Dyche v. Dyche , 570 S.W.2d 293 ( 1978 )
Muegler v. Muegler , 784 S.W.2d 839 ( 1990 )
Noll v. Noll , 286 S.W.2d 58 ( 1956 )
State Ex Rel. Carlson v. Aubuchon , 669 S.W.2d 294 ( 1984 )
Dardick v. Dardick , 661 S.W.2d 538 ( 1983 )
Rutlader v. Rutlader , 411 S.W.2d 826 ( 1967 )
Parkhurst v. Parkhurst , 799 S.W.2d 159 ( 1990 )
Fischer v. Seibel , 733 S.W.2d 469 ( 1987 )
Bernhardt v. Polygraphic Co. of America, Inc. , 76 S. Ct. 273 ( 1956 )