T.C. Summary Opinion 2006-20
UNITED STATES TAX COURT
PATRICIA D. ARIAS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4976-05S. Filed February 7, 2006.
Patricia D. Arias, pro se.
Kelly M. Davidson, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code.
Unless otherwise indicated, subsequent section references are to
the Internal Revenue Code as in effect for the year at issue.
The decision to be entered is not reviewable by any other court,
and this opinion should not be cited as authority.
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Respondent determined for 2002 a deficiency in petitioner’s
Federal income tax of $4,783.
The issue for decision is whether $30,000 received by
petitioner constitutes alimony or separate maintenance payments
includable in gross income for 2002.
The stipulated facts and exhibits received in evidence are
incorporated herein by reference. At the time the petition was
filed, petitioner resided in Flagstaff, Arizona.
Background
A Consent Decree of Dissolution of Marriage (With Children)
(decree) was filed on April 30, 2001, in the Superior Court of
the State of Arizona, dissolving the marriage of petitioner and
Arnold S. Arias (Arias). The decree ordered Arias to pay child
support of $1,000 a month and spousal maintenance of $2,500 a
month, both to be paid by wage assignment through the “Support
Clearinghouse” (Clearinghouse). The decree provides that spousal
maintenance will terminate automatically upon petitioner’s death.
Petitioner and Arias have not resided in the same household since
2000.
During 2002, petitioner received directly from Arias 24
payments of $1,750 by check for a total of $42,000. Child
support payments represented $12,000 of the total and is not at
issue here. Arias made the payments directly to petitioner; he
did not use a wage assignment through the Clearinghouse, and
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Clearinghouse records reflect no payments. Each check to
petitioner, however, bore a notation that it was for spousal
maintenance and child support.
Petitioner failed to report any amount as income from
alimony or separate maintenance on her Federal tax return for
2002.
Discussion
As the issue for decision in this case is a question of
law, section 7491(a) does not apply. Petitioner argues that
under Arizona State law $30,000 of the payments that she received
from Arias constitutes a “gift” to her and is not taxable.
Respondent contends that the $30,000 paid by Arias constitutes
income to petitioner as alimony or separate maintenance.
For purposes of Federal income tax, under section 71(a),
“Gross income includes amounts received as alimony or separate
maintenance payments.” Section 71(b)(1) defines the term
“alimony or separate maintenance payment” as 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 as a payment which is not includible
in gross income under this section and not allowable as a
deduction under section 215,
(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
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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 payments at issue, totaling $30,000 for the year 2002, meet
the specifications of section 71(a) and (b)(1).
Petitioner, however, relies on two State statutes for her
position that the contested payments she received are gifts and
not income. The first of these, Ariz. Rev. Stat. Ann. sec. 46-
441A (1998), established the Clearinghouse to receive, disburse
and monitor support payments. Arizona Revised Statutes Annotated
sec. 46-441B (1998) requires all orders of support to direct
payment of support or maintenance through the Clearinghouse,
unless otherwise provided. Arizona Revised Statutes Annotated
sec. 46-441H (1998) provides that payments made directly to a
person other than the Clearinghouse “shall not be credited
against the support obligation” unless direct payments were
ordered by the court or are made by agreement of the parties. It
is clear that the decree in this case required Arias to make his
payments through the Clearinghouse and that he did not do so.
The second statutory provision on which petitioner relies,
Ariz. Rev. Stat. Ann. sec. 25-510B (2000), states that “In any
proceeding under this chapter” (Chapter 5, Family Support
Duties), records of payments maintained by the Clearinghouse are
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prima facie evidence of payments made and disbursed and are
“rebuttable only by a specific evidentiary showing to the
contrary.” Under this provision, when the State court is
considering matters under Chapter 5, Family Support Duties, for
State support purposes, Clearinghouse records are important
pieces of evidence.1
The parties stipulated a copy of a document published by the
Arizona Supreme Court, Administrative Office Of The Courts,
Family Law Unit. At page six of the document, it states that if
child support payments are not sent through the Clearinghouse,
“the court may consider those payments as ‘gifts’” and not as
child support. For purposes of any payment dispute between
petitioner and Arias that may be brought to the attention of the
State court, petitioner may rely on State statutes. The parties
agree that the payments at issue here, however, are not child
support payments.
The question to be decided by this Court is whether
petitioner’s receipt from Arias of the $30,000, over and above
$12,000 of child support, is income to her for Federal income tax
purposes. Under the Constitution, the laws of the United States
are the supreme law of the land that bind the judges in every
State, notwithstanding any State law to the contrary. U.S.
1
Since Clearinghouse records are rebuttable by specific
contrary evidence, however, Arias’s canceled checks would be
specific evidence showing payment of his support obligations.
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Const. art. VI, cl. 2. The decision of the Tax Court is to be
made under Federal law, the Internal Revenue Code; this is not a
proceeding under Chapter 5, Family Support Duties, under Arizona
State law. The laws of a State cannot govern issues of Federal
tax law. Commissioner v. Tower, 327 U.S. 280, 287-288 (1946);
First Natl. Bank of Omaha v. United States, 681 F.2d 534, 541 n.4
(8th Cir. 1982).
It is true that section 102 excludes from gross income the
value of property received as a “gift”. A gift in the statutory
sense, however, proceeds from a “detached and disinterested
generosity”, Commissioner v. Lo Bue, 351 U.S. 243, 246 (1956),
out of affection, respect, admiration, charity, or like impulses.
Robertson v. United States, 343 U.S. 711, 713-714 (1952). The
most critical consideration is the transferor’s intent. Bogardus
v. Commissioner, 302 U.S. 34, 43 (1937); see Commissioner v.
Duberstein, 363 U.S. 278, 285-286 (1960). Because of the
acrimony between petitioner and Arias it is doubtful that the
payments proceeded from “detached and disinterested generosity”
out of Arias’s affection, respect, admiration, charity, or like
impulses. Arias testified that his intent was to pay petitioner
spousal maintenance and child support. The circumstances support
his testimony.
The Court finds that $30,000 of the payments received by
petitioner from Arias in 2002 is includable in her gross income
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as alimony or separate maintenance payments under section 71.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.