Pierson v. Commissioner

Marcia P. Pierson, Petitioner, v. Commissioner of Internal Revenue, Respondent

Pierson v. Commissioner

Docket No. 41188

United States Tax Court

21 T.C. 826; 1954 U.S. Tax Ct. LEXIS 285;

February 26, 1954, Promulgated

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Decision will be entered under Rule 50.

Payment of $ 1,100 to petitioner in 1948 by a corporation of which her former husband had been an officer, in discharge of his obligation for alimony payments, is held taxable to her as alimony income under section 22 (k) of the Code; and her failure to file a return for that year subjects her to the 25 per cent negligence penalty imposed under section 291 (a) of the Code.

Francis X. McCormick, Esq., for the petitioner.

Norman A. Peil, Jr., Esq., for the respondent.

Rice, Judge.

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RICE

In the deficiency notice and by amended answer, the respondent determined deficiencies in income tax for the years 1945, 1946, 1947, and 1949. He also determined a deficiency of $ 737.50 for 1948 and a penalty of $ 184.38 for failure to file a return for that year.

The parties have agreed to the proper amounts to be taken into income for the years 1945, 1946, 1947, and 1949, and such agreement will be taken into account under a Rule 50 computation.

Respondent now contends that petitioner's alimony income for 1948 is $ 4,700. Petitioner concedes she received alimony in 1948 in the sum of $ 3,600, but claims that an additional sum of $ 1,100 received from the Arthur N. Pierson Corporation in 1948 was not alimony income.

The issues which we must decide are: (1) Was the $ 1,100 taxable as alimony income under section 22 (k) of the Code, and (2) did respondent err in imposing a delinquency penalty under section 291 (a) of the Code for failure to file a return for the taxable year 1948. Some of the facts were stipulated.

FINDINGS OF FACT.

The stipulated facts are so found and are incorporated herein.

Petitioner resided in Westfield, New Jersey, during the taxable years before us and filed individual returns for the years 1945, 1946, 1947, and 1949 with the collector of internal revenue for the fifth district of New Jersey. She filed no return for the year 1948.

Petitioner was divorced from Arthur N. Pierson, Jr., on June 19, 1944. Incorporated in the divorce decree was an agreement whereby her former husband was to pay her alimony of $ 100 per week. Pursuant to such agreement, petitioner received the following sums, from the indicated payors:

Year	Amount	Payor
1945	$ 2,600	Arthur N. Pierson Corporation
1946	2,600	Arthur N. Pierson Corporation
	3,500	Arthur N. Pierson, Sr.
1947	5,700	Arthur N. Pierson Corporation
1948	2,100	Arthur N. Pierson Corporation
	2,600	Robert Darby, Esq.
1949	5,500	Robert Darby, Esq.

All sums paid to petitioner by the Arthur N. Pierson Corporation in 1945, 1946, and 1947 were charged to her former husband's salary account as one of its officers. After 1947 the company became inactive. Her former husband reimbursed it for $ 1,000 of the amount paid to petitioner in 1948; the $ 1,100 balance of such amount was not repaid.

Petitioner received and accepted payment of $ 2,100 in 1948 from the Arthur N. Pierson Corporation in satisfaction of her former husband's obligation for support and maintenance under the decree granting them a divorce.

OPINION.

Petitioner argues that $ 1,100 of the total sum of $ 2,100, which she received from the Arthur N. Pierson Corporation in 1948, is not taxable to her as alimony income because it represented a gift from the company. This is true, she says, because the company was not reimbursed by her former husband nor could it deduct such amount from his salary, since it was then inactive.

We think this argument is totally without merit. Petitioner received and accepted such sum from the corporation in satisfaction of her husband's obligation for support and maintenance under the divorce decree just as she had received and accepted similar payments from it in 1945, 1946, 1947, and 1948. It is of no concern to her or to us in this proceeding whether her former husband repaid the company. She and the Commissioner are the parties here. She accepted the $ 1,100 in satisfaction of her former husband's obligation to her, and that sum is taxable to her as alimony income under section 22 (k) of the Code. See .

Petitioner has failed to show reasonable cause for failure to file a return for the year 1948; and we, therefore, uphold the respondent's imposition of a 25 per cent penalty under section 291 (a) of the Code.

Decision will be entered under Rule 50.