T.C. Summary Opinion 2007-105
UNITED STATES TAX COURT
RICHARD THOMAS WILLIAMS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11695-05S. Filed June 25, 2007.
Richard Thomas Williams, pro se.
Lynn M. Curry, 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 2003.
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Respondent determined a deficiency in petitioner’s Federal
income tax for 2003 of $6,912 on the basis of the disallowance of
an alimony deduction for payments made to petitioner’s ex-wife.
The sole question presented in this case is whether those
payments met the definition of “alimony” under the Internal
Revenue Code. We hold that the payments at issue were not
alimony and consequently, we hold for respondent.
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, Richard Thomas Williams
(petitioner) resided in Jacksonville, Florida.
Petitioner and Amy Williams (Ms. Williams or ex-wife) were
married in May 1976. They separated in November 2002.
Immediately following their separation, petitioner, a
retired U.S. Coast Guard (Coast Guard) officer, directed the
Coast Guard Finance Center that one-half of his monthly military
pension be paid to Ms. Williams.2 The money was to cover both
alimony and child support for the couple’s minor child.
Petitioner made these arrangements upon separating from Ms.
Williams as he thought he was required to do so under the terms
2
Petitioner retired from the military in 1998 and began
receiving his pension at that time.
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of the Uniform Code of Military Justice (UCMJ).3 Under this
arrangement, petitioner paid Ms. Williams $27,652.41 in 2003.
Petitioner and Ms. Williams began divorce proceedings in
2005 and entered into an official Marital Settlement Agreement
(MSA) in May 2006. The MSA, later incorporated into the final
judgment of dissolution of marriage, specified that petitioner
was to pay $1,080 per month, plus annual cost of living
increases, to Ms. Williams as alimony. The payments under the
MSA began April 1, 2005.
Petitioner’s divorce became final in July 2006.
Discussion4
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, the relevant provision of which explains:
3
The Uniform Code of Military Justice can be found at 10
U.S.C. Subtit. A, Part II, ch. 47 (2001).
4
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.
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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,
(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).5 The parties do not agree, however, whether the
5
Respondent’s argument focuses on sec. 71(b)(1)(A), so we
merely note--it does not impact our holding--that it seems
inconsistent to concede that the divorce or separation agreement
in question does not designate a payment as being excluded from
the secs. 71 and 215 inclusion/deduction scheme when respondent’s
argument is that there is no divorce or separation agreement at
(continued...)
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payments made in 2003 satisfied the requirement that alimony
payments be made under a divorce or separation instrument.6 See
sec. 71(b)(1)(A).
According to section 71(b)(2), 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.
Respondent’s position is that neither the MSA nor the final
judgment of dissolution of marriage was in effect for 2003, the
year at issue; therefore, the payments were not made pursuant to
a divorce or separation instrument. Petitioner argues that the
UCMJ required him to make arrangements to support Ms. Williams,
even in the absence of a court order or written separation
agreement. If that were the case, the UCMJ might serve to meet
section 71(b)(2)(C) and function as a decree not otherwise
5
(...continued)
all for the year in issue.
6
As previously stated, petitioner paid Ms. Williams
$27,652.41 in 2003 to cover both alimony and child support for
the couple’s minor child. Payments to support children are not
deductible. Sec. 71(c). Respondent does not, however, invoke
that section, but argues instead that the payments in issue do
not satisfy the requirement of alimony as set forth in sec.
71(b)(1)(A).
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described in subparagraph (A). But, despite his honorable
intentions, petitioner cites no authority, and we are aware of
none, subjecting a retired military officer receiving only a
military pension to the UCMJ.7
At trial, we found petitioner to be very straightforward and
honest; we are convinced that petitioner felt he was doing what
was morally required of him. Unfortunately, the Internal Revenue
Code is very specific in its requirements, and petitioner’s
payments to his ex-wife in 2003 did not meet the requirement
outlined in section 71(b)(1)(A). Accordingly, we must hold that,
in the instant case, petitioner’s payments made to his ex-wife in
2003 did not satisfy the conditions set forth in section 71 and
are thus not properly deductible as alimony for the taxable year
in issue.
To reflect our disposition of the disputed issue,
Decision will be entered
for respondent.
7
Similarly, petitioner cited no authority, and we are
aware of none, subjecting a retired Coast Guard officer to the
provisions of the Coast Guard Personnel Manual, available at
http://www.uscg.mil.hq.cgpc/home/PERSMAN.pdf.