Webb v. Comm'r

T.C. Summary Opinion 2007-91

UNITED STATES TAX COURT

DANIEL WAYNE WEBB, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19848-05S. Filed June 4, 2007.

Daniel Wayne Webb, pro se.

Fred E. Green, Jr., for respondent.

ARMEN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1 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 subsequent section
references are to the Internal Revenue Code in effect for 2002.
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Respondent determined a deficiency in petitioner’s Federal

income tax for 2002 of $7,504. The deficiency stemmed from the

disallowance of a deduction for alimony payments and the

subsequent adjustment of petitioner’s itemized deductions. The

parties have asked us to decide whether petitioner properly

deducted $24,000 that was voluntarily paid to his ex-wife in 2002

as alimony.2 We hold that the payments at issue were properly

deductible as alimony under section 215(a) and consequently hold

for petitioner.

Background

Some of the facts have been stipulated, and they are so

found. We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

At the time the petition was filed, Daniel Wayne Webb

(petitioner) resided in Reno, Nevada.

Petitioner and Jeanette Webb were married in October 1974

and divorced in October 1987. It was a “messy” divorce, and at

least one temporary restraining order was issued against Jeanette

Webb (ex-wife). Petitioner ended up with custody of the

children.

In addition to provisions regarding petitioner’s then-minor

children, the Statement of Decision issued by the Superior Court

2
As the issue for decision under these facts is
essentially legal in nature, we decide the instant case without
regard to the burden of proof.
 - 3 -

of California for the County of Los Angeles (the Superior Court)

in November 1987 provided for spousal support to be paid to

petitioner’s ex-wife. Over the years the Superior Court issued

various orders related to the dissolution of petitioner’s

marriage to his ex-wife, modifying provisions regarding, inter

alia, spousal support, as was deemed necessary.

In July 2000, the Superior Court issued a Stipulation Re:

Spousal Support; Order Thereon (the Superior Court’s Order). The

Superior Court’s Order outlined obligations with respect to

future spousal support payments made by petitioner to his ex-

wife, including a requirement that she declare any payments as

income on her Federal and State income tax returns, as well as

the requirement that petitioner furnish his ex-wife with a proper

accounting of all support payments made in a given tax year no

later than January 31 of the following year. The Superior

Court’s Order also specified that there was no legally actionable

duty on petitioner’s part to make any payments. The Superior

Court’s Order was signed by both petitioner and his ex-wife, and

it was signed by a judicial officer of the State of California on

July 24, 2000. It was the Superior Court’s Order that was in

effect for the taxable year 2002.

Petitioner paid his ex-wife $2,000 per month in 2002 as

spousal support. He made these payments out of concern for his
 - 4 -

children’s welfare.3 Both petitioner and his ex-wife complied

with their obligations as set forth in the Superior Court’s

Order.

Discussion

Section 71(a) provides the general rule that alimony

payments are included in the gross income of the payee spouse;

section 215(a) provides the complementary general rule that

alimony payments are tax deductible by the payor spouse in “an

amount equal to the alimony or separate maintenance payments paid

during such individual’s taxable year.”

The term “alimony” means any alimony as defined in section

71, which provides in relevant part:

SEC. 71(b). Alimony or Separate Maintenance Payments
Defined.-- 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 designate such
payment as a payment which is not
includible in gross income * * * and not
allowable as a deduction under section 215,

3
Petitioner described his ex-wife as periodically
suffering from mental instability and explained that, but for
these alimony payments, there was a real concern that his
children’s mother--with whom his children had regular visitation
--would be rendered homeless, thereby negatively impacting his
children.
 - 5 -

(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 payments to his ex-wife

satisfied the requirements set out in section 71(b)(1)(B), (C),

and (D). The parties do not agree, however, on whether the

payments satisfy the requirement that the payments be made under

a divorce or separation instrument. See sec. 71(b)(1)(A).

Section 71(b)(2) provides that a “divorce or separation

instrument” means:

(A) a decree of divorce or separate
maintenance or a written instrument incident
to such a decree,

(B) a written separation agreement, or,

(C) a decree (not described in
subparagraph (A)) requiring a spouse to make
payments for the support or maintenance of
the other spouse.

As a general matter, if the language of a statute is

unambiguous on its face, we apply the statute in accordance with

its terms. See, e.g., Garber Indus. Holding Co. v. Commissioner,
 - 6 -

124 T.C. 1 (2005), affd. 435 F.3d 555 (5th Cir. 2006). Section

71 is not a tremendously complicated statute, and its

requirements are clearly set forth. The operative order in

effect for 2002 was a written instrument incident to the divorce

decree that dissolved petitioner’s marriage to his ex-wife.

Because the Superior Court’s Order was a written instrument

incident to a divorce decree, it thus meets the definition of a

divorce or separation instrument under section 71(b)(2)(A).

Despite the fact that petitioner falls within the provisions

of the applicable statute, respondent argues that because

petitioner did not have a legally enforceable duty to make

spousal support payments in 2002, petitioner’s payments to his

ex-wife in 2002 were not made pursuant to a divorce or separation

instrument.4 But, as petitioner rightly argues, there is no

requirement in the statute that payments be made under a legally

enforceable duty in order to qualify for the alimony deduction;

the only requirement is that any payment be “received by (or on

behalf of) a spouse under a divorce or separation instrument”.

Sec. 71(b)(1)(A). Although it was once the case that entitlement

to an alimony deduction under section 71 required payments to be

4
Respondent does not allege that the payments at issue
were disguised child support payments or installments of a
property distribution; rather, his sole argument is that
petitioner’s payments to his ex-wife did not constitute alimony
because they did not meet its definition under the statute.
 - 7 -

made under a legally enforceable obligation, it has not been so

for more than 20 years.

Prior to the Deficit Reduction Act of 1984, Pub. L. 98-369,

sec. 422(a), 98 Stat. 795, section 71(a)(1) of the Internal

Revenue Code of 1954 defined alimony as payments made “in

discharge of * * * a legal obligation which, because of the

marital or family relationship, is imposed on or incurred by the

husband under the [divorce] decree or under a written instrument

incident to * * * divorce or separation.” The statute was

amended in 1984, repealing the “requirement that the payment be

based on a legal support obligation.” H. Rept. 98-432 (Part 2)

at 1069 (1984).

The cases cited by respondent in support of his position are

cases decided under the old law, or are the progeny of older

cases containing no independent analysis reflective of the

changes to the statute. Although there certainly have been cases

holding that voluntary payments made outside a written instrument

incident to divorce are not alimony, those cases have generally

dealt with situations where there was no proper divorce decree or

separation agreement, where a payment was made before the

operative document went into effect, or where the older version

of section 71 applied to the particular case. See, e.g., Herring

v. Commissioner, 66 T.C. 308, 311 (1976) (holding that payments

made under an oral agreement were not alimony because they were
 - 8 -

made before the issuance of the divorce decree); Taylor v.

Commissioner, 55 T.C. 1134, 1140 (1971) (applying the old version

of section 71 and concluding that, “absent some sort of currently

enforceable judicial decree or order”, section 71 would not

apply); Leventhal v. Commissioner, T.C. Memo. 2000-92 (stating

that letters from one spouse’s attorney to another do not

constitute a divorce or separation instrument); Peterson v.

Commissioner, T.C. Memo. 1998-27 (confirming that a California

State court’s issuance of a Minute Order was sufficient under

State law to constitute a “divorce or separation instrument”);

Abood v. Commissioner, T.C. Memo. 1990-453 (applying the pre-

amendment version of section 71 to the facts and clarifying that,

under those circumstances, “voluntary payments are not within the

purview of sections 71 and 215”). This is true even of recent

cases. See, e.g., Johnson v. Commissioner, 441 F.3d 845, 850

(9th Cir. 2006) (affirming the Tax Court’s holding that the prior

version of section 71 applied). There have been no cases firmly

on point with the one at bar.

Respondent’s own regulations support petitioner’s position.

Although section 1.71-1, Income Tax Regs., contains the

antiquated language reflective of the older version of the

alimony statute, see sec. 1.71-1(b), Income Tax Regs. (“Such

periodic payments must be made in discharge of a legal obligation

imposed upon or incurred by the husband because of the marital or
 - 9 -

family relationship”), the temporary regulation promulgated along

with the amended version of section 71 in 1984 reflects the

changes to the statutory language.5 The more recent regulation

requires only that alimony payments meet the following

requirements: (a) That payments be made in cash; (b) that

payments not be designated as excludible from the gross income of

the payee and nondeductible by the payor; (c) that payments be

made between spouses who are not members of the same household;

(d) that the payor has no liability to continue to make payments

after the death of the payee spouse; and (e) that payments are

not treated as child support. Sec. 1.71-1T, Q&A-2, Temporary

Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31, 1984). Further,

section 1.71T, Q&A-3, Temporary Income Tax Regs., makes very

clear that “the [requirement] that alimony or separate

maintenance payments be * * * made in discharge of a legal

obligation * * * [has] been eliminated.” Accordingly,

petitioner’s 2002 payments satisfy the requirements for alimony

payments as outlined in the relevant regulations.

More than 20 years after the enactment of the amended

statute, there is no reason to assume that Congress meant

anything other than what it said in enacting the present version

5
Temporary regulations are entitled to the same weight as
final regulations. See Peterson Marital Trust v. Commissioner,
102 T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d Cir. 1996); Truck
& Equip. Corp. v. Commissioner, 98 T.C. 141, 149 (1992).
 - 10 -

of section 71. It is not the Court’s place to support

respondent’s attempt to include language Congress itself did not.

Accordingly, we hold that, under the unique facts of this

case, petitioner’s payments made to his ex-wife in 2002 satisfied

the conditions set forth in section 71 and were thus properly

deductible as alimony for that taxable year.

To reflect our disposition of the disputed issue, as well as

respondent’s concession,

Decision will be entered

for petitioner.