Lori Novak v. Commissioner

T.C. Summary Opinon 2009-185
UNITED STATES TAX COURT
LORI NOVAK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1176-08S. Filed December 7, 2009.
Lori Novak, pro se.
Carol-Lynn E. Moran, for respondent.
RUWE, Judge: This case was heard pursuant to the provisions
of section 74631 of the Internal Revenue Code in effect when the
petition was filed. Pursuant to section 7463(b), the decision to
be entered is not reviewable by any other court, and this opinion
shall not be treated as precedent for any other case.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue.
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Respondent determined a $1,669 deficiency in petitioner’s
2005 Federal income tax. The issue we must decide is whether
petitioner is entitled to an $8,772 alimony deduction for 2005.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Pennsylvania at the time the petition was filed.
Petitioner and Joseph Kemp (Mr. Kemp) were married on
November 10, 1984, and have four children. Sometime during 2004
petitioner left the marital residence. During 2005 the children
resided with their father, Mr. Kemp, in New Jersey.
On April 8, 2005, the Superior Court of New Jersey Chancery
Division--Family Part Gloucester County (superior court) in the
case of “Joseph Kemp, Plaintiff vs. Lori Kemp, Defendant”, issued
an order addressing petitioner’s motion and Mr. Kemp’s cross-
motion dated February 28, 2005. In the order, the superior court
granted in part Mr. Kemp’s request that petitioner contribute to
the household bills and ordered petitioner to pay $516 per week
pendente lite2 toward “the marital bills” effective as of the
filing date of the original motion, February 28, 2005. The April
2005 order provides, in pertinent part:
2
Pendente lite is a Latin term meaning “while the action is
pending”. Black’s Law Dictionary 1248 (9th ed. 2009).
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This number is based on * * * [petitioner’s] own Case
Information Statement as to what the marital bills are
each month. ($2,000/month mortgage, $430/month home
equity loan, $250 heat, $200 electric and gas, $100
water and sewer, $500 joint credit cards, $957 other
long term debt = $4,437/month /2 = $2,219/each/month =
$516/week@4.3weeks.[)]
Petitioner’s payments to Mr. Kemp were to be made biweekly
and facilitated through Gloucester County Probation via wage
execution. The superior court also denied Mr. Kemp’s request
that petitioner pay child support. Petitioner was liable for
$516 per week from February 28 through June 17, 2005, for a total
of 16 weeks.
Because of a change in living arrangements between
petitioner and Mr. Kemp and pursuant to the parties’ requests,
the superior court, on June 17, 2005, issued an order granting
petitioner’s request to “equitably recalculate the support” and
directed petitioner to pay $214 per week “for child support” plus
$50 per week on the arrears, effective as of the date of the
order. The June 2005 order also noted that petitioner was, at
that time, “in arrears in support in the amount of $5,394.56.”
The arrears reflected payments still due pursuant to the superior
court’s April 2005 order. The superior court stated that the
recalculated payment was “determined to be the net figure based
on the attached guidelines minus an alimony figure of $100 per
week paid by * * * [Mr. Kemp].”
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The first biweekly payment by petitioner pursuant to the
June 2005 order was made on July 20, 2005, for $528. The $528
payment reflected a child support payment of $314 per week netted
to $214 to offset the $100 per week alimony payments due from Mr.
Kemp, equaling $428 biweekly plus a biweekly arrearage of $100.
Petitioner made a total of six $528 payments to Mr. Kemp. In the
June 2005 order the superior court also granted Mr. Kemp’s
request for exclusive possession of the marital residence and
further required him to refinance the mortgage or list the
marital residence for sale. Both petitioner and Mr. Kemp agreed
that the refinancing of the marital residence was to include the
first and second mortgages.
On September 9, 2005, the superior court issued an order
terminating petitioner’s child support obligation and Mr. Kemp’s
alimony obligation. The superior court also stated that
petitioner was entitled to a credit of $100 per week from June 17
to September 9, 2005, for having provided for the children’s
health care. Thereafter, on September 28, 2005, the superior
court issued a final judgment of divorce; the divorce decree,
however, is not part of the record.
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Pursuant to the April, June, and September 2005 superior
court orders, petitioner made payments to Mr. Kemp via wage
execution as follows:
Check Date Check Amount
5/10/05 $923.81
5/24/05 1,026.34
6/9/05 911.29
6/20/05 904.22
7/6/05 862.93
7/20/05 528.00
8/3/05 528.00
8/15/05 528.00
9/2/05 528.00
9/13/05 528.00
9/26/05 528.00
10/11/05 100.00
10/24/05 100.00
11/15/05 100.00
11/21/05 100.00
12/6/05 100.00
12/19/05 100.00
Total 8,396.59
The record does not disclose why there is a difference between
petitioner’s claimed $8,772 alimony deduction and the $8,396.59
she paid to Mr. Kemp through wage execution.
After filing her petition, petitioner returned to the
superior court in August 2008 (almost 3 years after the divorce
became final), requesting that the superior court clarify that
her payments were spousal support, not child support. The
superior court, through a different judge, granted petitioner’s
request stating: “Prior to 10/17/07, there was no child support
order in place between the parties. There was however a spousal
support obligation for * * * [petitioner] in 2005.”
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Discussion
Section 215(a) provides that an individual is allowed a
deduction for alimony or separate maintenance payments
(hereinafter collectively referred to as alimony) as defined in
section 71(b). Alimony must consist of an amount received by or
on behalf of the payee spouse. Sec. 71(b)(1)(A). Thus a payment
that satisfied the payor’s share of joint debts and obligations
would not qualify. Zinsmeister v. Commissioner, T.C. Memo. 2000-
364, affd. 21 Fed. Appx. 529 (8th Cir. 2001). Alimony does not
include any part of a payment which the terms of the divorce
instrument fix as a sum payable for the support of the children
of the payor spouse. Sec. 71(c); Zinsmeister v. Commissioner,
supra. Furthermore, payments which are part of a property
settlement are capital in nature and are not subject to section
71. Zampini v. Commissioner, T.C. Memo. 1991-395 (citing Yoakum
v. Commissioner, 82 T.C. 128, 134 (1984), Thompson v.
Commissioner, 50 T.C. 522 (1968), and Price v. Commissioner, 49
T.C. 676 (1968)).
While property interests of divorcing parties are determined
by State law, Federal law governs the Federal income tax
treatment of that property. Zinsmeister v. Commissioner, supra
(citing Hoover v. Commissioner, 102 F.3d 842, 845 (6th Cir.
1996), affg. T.C. Memo. 1995-183). State court adjudications
retroactively changing the rights of parties are generally
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disregarded for Federal income tax purposes. Ianniello v.
Commissioner, 98 T.C. 165, 175 n.5 (1992); see also Ali v.
Commissioner, T.C. Memo. 2004-284 (retroactive imposition of
support by a State court does not have retroactive effect for
Federal tax purposes). Consequently, we do not ascribe
conclusive weight to the label placed on the payments pursuant to
the superior court’s August 2008 order, which was entered by a
different judge 3 years after the operative events.3 Whether
petitioner’s payments to Mr. Kemp are considered alimony for
Federal tax purposes will be determined under the guidelines of
the applicable Federal law.
In the April 2005 order the superior court delineated
petitioner’s obligation to make payments to Mr. Kemp as a
requirement to pay $516 per week “toward the marital bills.” The
superior court’s determination was made on the basis of
petitioner’s own case information statement; i.e., petitioner was
required to pay one-half of the monthly mortgage, the monthly
home equity loan, the joint credit cards, the other long-term
debt, and the utilities. Although petitioner left the marital
3
We note that an exception to the general rule exists when
a nunc pro tunc order retroactively corrects an order which
failed to reflect the true intention of the court at the time it
was rendered. Gordon v. Commissioner, 70 T.C. 525, 530 (1978);
Johnson v. Commissioner, 45 T.C. 530, 532 (1966). There is no
persuasive evidence that the superior court’s August 2008 order
corrected an order which failed to reflect the true intention of
the court at the time it was rendered.
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residence sometime during 2004, Mr. Kemp and the children
continued to reside in the marital residence throughout 2005. At
trial Mr. Kemp’s uncontradicted testimony was that the mortgage,
home equity loan, joint credit cards, and other long-term debt
were joint obligations. To the extent petitioner was paying her
share of the joint obligations, the payments do not qualify as
alimony. See Zinsmeister v. Commissioner, supra. To the extent
that the payments may have slightly exceeded petitioner’s share
of the joint obligations, petitioner has not convinced us that
they constitute alimony to Mr. Kemp. Indeed, it would seem
totally inconsistent to view any portion of petitioner’s payments
as alimony when, according to the superior court’s order of June
17, 2005, Mr. Kemp was being given credit for alimony that he was
obligated to pay to petitioner. In the June 2005 order the
superior court not only granted Mr. Kemp’s request that
petitioner pay child support but also fixed petitioner’s child
support obligation at $214 per week.4
Petitioner has failed to prove that any of the payments were
for anything other than her joint debt obligations and child
support. In reaching our holdings herein, we have considered all
4
We note that the June 2005 order reduced petitioner’s
payment obligation from $516 per week for the payment of marital
bills to $214 per week child support plus an arrearage of $50.
At the time the June order was issued, petitioner was in arrears
by $5,394.56; a reflection of the payments still due pursuant to
the superior court’s April order.
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arguments made, and, to the extent not mentioned above, we
conclude they are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
for respondent.