DocketNumber: No. 15519-06S
Citation Numbers: 2008 Tax Ct. Summary LEXIS 53, 2008 T.C. Summary Opinion 50
Judges: \"Goldberg, Stanley J.\"
Filed Date: 5/5/2008
Status: Non-Precedential
Modified Date: 4/18/2021
PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.
GOLDBERG,
Respondent determined a $ 3,113 deficiency in petitioner's Federal income tax for 2004. The sole issue for decision is whether petitioner is entitled to an alimony deduction of $ 12,461 1 for the taxable year in issue.
The stipulation of facts and the attached exhibits are incorporated herein by reference. At the time the petition was filed, *54 petitioner resided in Illinois.
During the year in issue, petitioner was employed as a posting supervisor (responsible for managing the advertising schedule and maintenance on billboards) with Clear Channel Outdoor in Chicago.
Petitioner and his former spouse, Lisa Colquitt (Ms. Colquitt) were married on October 23, 1982, in Cook County, Illinois. Two children were born of the marriage. On September 16, 2003, a Judgment of Dissolution of Marriage (judgment) was entered in the Circuit Court of Cook County, Illinois, Domestic Relations Division (circuit court). When the judgment was entered, one of the children -- K.P. -- was a minor.
In article III of the judgment, the circuit court ordered petitioner to make monthly payments of $ 1,000 described as "unallocated family support." With respect to "the minor child" the judgment states that petitioner's "obligation 2 for the child as detailed in this Agreement" would cease when "the child reaches majority or graduates from high school, whichever occurs last, but in no case later than January 15, 2005." *55 K.P. graduated from high school in June 2004 and turned 18 later that year. The judgment awarded sole care and custody of K.P. to Ms. Colquitt.
The judgment is otherwise silent as to whether the payments, or any part thereof, were to be deductible as alimony by petitioner and includable in gross income by Ms. Colquitt. The judgment itself is also silent as to whether petitioner's obligation to make the payments would survive Ms. Colquitt's death.
The judgment incorporates a Uniform Order for Support (order), which was also entered by the circuit court on September 16, 2003. The order characterizes the payments at issue as "unallocated support" rather than "maintenance" or "child support". The order lists K.P. as the "Child/ren covered by this order". With respect to the termination of the payments, the order states: TERMINATION. This obligation to pay child support terminates on January 15, 2005 unless modified by written order of the Court. The termination does not apply to any arrearage that may remain unpaid on that date.
The order also provides that the payments at issue were to be made through an order of support lodged with Clear Channel *56 Outdoor. The payments were accordingly then deducted from petitioner's paychecks bimonthly, and were remitted to Ms. Colquitt through the Illinois Child Support Disbursement Center. In accordance with the terms of the judgment a final payment of $ 500 was deducted from petitioner's pay and remitted to Ms. Colquitt on January 15, 2005.
The Commissioner's determinations are presumed correct, and taxpayers generally bear the burden of proving otherwise.
(a) General Rule. -- In the case of an individual, there shall be allowed as a deduction an amount equal to the alimony or separate maintenance payments paid during such individual's taxable year. (b) Alimony or Separate Maintenance Payments Defined. -- For purposes of this section, the term "alimony or separate maintenance payment" means any alimony or separate maintenance payment (as defined in
(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 designate such payment *58 as a payment which is not includible in gross income under this section 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.
The test under
Illinois law provides that "Unless otherwise agreed by the parties in a written agreement set *59 forth in the judgment or otherwise approved by the court, the obligation to pay future maintenance is terminated upon the death of either party".
Petitioner argues that because the judgment is silent as to a fixed amount of child support, the "unallocated family support" payments must be alimony. See
The Deficit Reduction Act of 1984,
Under the current statute, if any amount specified in the instrument will be reduced: (1) Upon the happening of a contingency related to a child of the payor or (2) at a time which can clearly be associated with such a contingency, then the amount of the specified reduction will be treated as child support rather than alimony.
With respect to
We first note that State law provides no guidance as to the meaning of "unallocated family support", as that term is not defined by the Illinois statutes pertaining to matrimony. We also disagree with petitioner as to the presence of "clear language" in the judgment that indicates that the payments described in article III were intended to be for alimony and not for child support. Finally, we reject petitioner's argument that it was petitioner and Ms. Colquitt's intention throughout their divorce proceedings that petitioner would pay Ms. Colquitt a $ 12,000 settlement in monthly installments of $ 1,000. The judgment *62 is silent as to this purported agreement; and because the $ 1,000 payments at issue began on October 1, 2003, and ended on January 15, 2005, the total amount petitioner paid -- $ 15,500-also fails to comport with this alleged $ 12,000 settlement figure.
On the entire record before us, and for the reasons discussed
First, we believe that the order is inextricably connected with the payments provided for under article III of the judgment because the order expressly refers to K.P. as the child "covered by [the] order". As the only issue covered by the order is the $ 1,000 payments, we fail to see how the payments were not contemplated as being for the support of petitioner's minor child. Second, petitioner testified that the payments were deducted bimonthly from his paycheck and remitted -- pursuant to the order -- to Ms. Colquitt by the Illinois Child Disbursement Center. We fail to see how that particular agency would be used other than for the disbursement of child support payments. Finally, the order's termination *63 clause, previously quoted, specifically refers to the $ 1,000 monthly payments as "child support" and states that the "child support terminates on January 15, 2005." Petitioner testified that a final payment was deducted from his paycheck on January 15, 2005. Accordingly, and on the basis of the foregoing, we fail to see how petitioner and Ms. Colquitt's use of the term "unallocated family support" could -- by itself -- characterize the payments as alimony where the aforementioned facts suggest the contrary.
Moreover, pursuant to
Our review of the entire record -- including the contingency clause -- has led us to conclude that the phrase "unallocated family support" as used in the judgment is not alimony but child support. The facts lead us to conclude that the monthly payments at issue, which were made pursuant to an order referring to the payments as "child support", and which ended on a date specified in a contingency clause in the judgment, were -- for child support. The facts indicate the true nature of the payments was for child support and not alimony, and taking into account that the cessation date of the payments comports with a date specified in a contingency clause pursuant to
Accordingly, and on the basis of the foregoing,
Patricia P. Kean v. Commissioner of Internal Revenue, ... , 407 F.3d 186 ( 2005 )
Morgan v. Commissioner , 60 S. Ct. 424 ( 1940 )
Welch v. Helvering , 54 S. Ct. 8 ( 1933 )
Grummer v. Commissioner , 46 T.C. 674 ( 1966 )
Commissioner v. Lester , 81 S. Ct. 1343 ( 1961 )