T.C. Memo. 2008-177
UNITED STATES TAX COURT
KIM J. REID, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2550-07. Filed July 29, 2008.
Kim J. Reid, pro se.
Richard J. Hassebrock, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
CHIECHI, Judge: Respondent determined a deficiency in, and
an accuracy-related penalty under section 6662(a)1 on, peti-
tioner’s Federal income tax (tax) for her taxable year 2004 of
1
All section references are to the Internal Revenue Code
(Code) for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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$2,131 and $426.20, respectively.
The issues for decision are:2
(1) Are the payments totaling $9,000 that petitioner’s
former husband made to her during 2004 includible in her gross
income under section 71(a)? We hold that they are.
(2) Is petitioner liable for the year at issue for the
accuracy-related penalty under section 6662(a)? We hold that she
is.
FINDINGS OF FACT
Petitioner resided in Ohio at the time she filed the peti-
tion in this case.
On September 2, 2003, the Domestic Relations Court of
Franklin County, Ohio, entered a divorce decree (petitioner’s
divorce decree) that finalized the terms of the divorce settle-
ment between petitioner and James R. Reid (Mr. Reid). Pursuant
to the terms of petitioner’s divorce decree, Mr. Reid was ordered
to pay to petitioner during 2004 $750 a month in spousal support
(monthly payments at issue). During 2004, Mr. Reid made monthly
payments totaling $9,000 in spousal support to petitioner.
On April 15, 2005, petitioner electronically filed Form
1040A, U.S. Individual Income Tax Return, for her taxable year
2
There is also an issue relating to the earned income credit
that petitioner claimed in her tax return for 2004. Resolution
of that issue flows automatically from our resolution of the
issue under sec. 71(a).
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2004 (2004 return). Petitioner did not include in income in that
return the monthly payments at issue. Petitioner prepared and
filed her 2004 return without consulting any tax professionals.
Respondent issued to petitioner a notice of deficiency for
her taxable year 2004 (2004 notice). In that notice, respondent
determined that the monthly payments at issue totaling $9,000 are
includible in petitioner’s gross income as alimony or separate
maintenance payments. In the 2004 notice, respondent further
determined that petitioner is liable for the accuracy-related
penalty under section 6662(a).3
OPINION
Petitioner bears the burden of proving that respondent’s
determinations in the 2004 notice are erroneous.4 See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Monthly Payments at Issue
It is petitioner’s position that the monthly payments at
issue are not includible in her gross income. In support of that
position, petitioner claimed at trial that she believed that the
term “alimony” related to payments made by a former spouse for
child support and that the term “spousal support” related to
payments made by a former spouse to a spouse that are not
3
See supra note 2.
4
Petitioner does not claim that the burden of proof shifts
to respondent under sec. 7491(a).
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includible in gross income.5 On the record before us, we reject
petitioner’s position.
Section 71(b)(1) defines the term “alimony or separate
maintenance payment” to mean any cash payment 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 sepa-
rate 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.
Petitioner stipulated that during 2004 she received each of
the monthly payments at issue pursuant to the terms of peti-
tioner’s divorce decree. See sec. 71(b)(1)(A).
Petitioner’s divorce decree is not part of the record.
Nothing in the record shows whether that divorce decree desig-
nated each of the monthly payments at issue as a payment that is
not includible in gross income under section 71(a) and not
allowable as a deduction under section 215. See sec.
5
Although the Court directed the parties to file briefs,
petitioner failed to do so.
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71(b)(1)(B). On the record before us, we find that petitioner
has failed to establish that petitioner’s divorce decree desig-
nated each of the monthly payments at issue as a payment that is
not includible in gross income under section 71(a) and not
allowable as a deduction under section 215.
Nothing in the record shows whether petitioner and Mr. Reid
were members of the same household at the time Mr. Reid made each
of the monthly payments at issue. See sec. 71(b)(1)(C). On the
record before us, we find that petitioner has failed to establish
that she and Mr. Reid were members of the same household at the
time Mr. Reid made each of the monthly payments at issue.
Nothing in the record shows whether petitioner’s divorce
decree provided that Mr. Reid was obligated to make any spousal
support payments after petitioner died and whether Mr. Reid had
any obligation to make any payments as a substitute for spousal
support payments after petitioner died. See sec. 71(b)(1)(D).
Under Ohio law, any award of spousal support payments is to
terminate automatically upon the death of either party unless the
order containing the award expressly provides otherwise. Ohio
Rev. Code Ann. sec. 3105.18(B) (West 2008). On the record before
us, we find that petitioner has failed to establish that peti-
tioner’s divorce decree provided otherwise.
Based upon our examination of the entire record before us,
we find that petitioner has failed to carry her burden of estab-
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lishing that the monthly payments at issue totaling $9,000 are
not includible in her gross income under section 71(a).
Accuracy-Related Penalty
Respondent determined that petitioner is liable for the year
at issue for the accuracy-related penalty under section 6662(a)
because of negligence or disregard of rules or regulations under
section 6662(b)(1).6
Section 6662(a) imposes an accuracy-related penalty equal to
20 percent of the underpayment to which section 6662 applies.
Section 6662 applies to the portion of any underpayment which is
attributable to, inter alia, negligence or disregard of rules or
regulations. Sec. 6662(b)(1).
The term “negligence” in section 6662(b)(1) includes any
failure to make a reasonable attempt to comply with the Code.
See sec. 6662(c). Negligence has also been defined as a failure
to do what a reasonable person would do under the circumstances.
See Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992),
affg. T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C.
686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990). The term
6
On brief, respondent argues that petitioner also is liable
for the accuracy-related penalty under sec. 6662(a) because of a
substantial understatement of tax under sec. 6662(b)(2). In view
of our findings and holding under sec. 6662(a) and (b)(1), we
need not address respondent’s argument under sec. 6662(a) and
(b)(2).
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“disregard” includes any careless, reckless, or intentional
disregard. Sec. 6662(c).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
and in good faith depends on the pertinent facts and circum-
stances, including the taxpayer’s effort to assess the taxpayer’s
proper tax liability, the knowledge and experience of the tax-
payer, and the reliance on the advice of a professional, such as
an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
Respondent has the burden of production under section
7491(c) with respect to the accuracy-related penalty under
section 6662. To meet that burden, respondent must come forward
with sufficient evidence showing that it is appropriate to impose
the accuracy-related penalty. Higbee v. Commissioner, 116 T.C.
438, 446 (2001). Although respondent bears the burden of produc-
tion with respect to the accuracy-related penalty that respondent
determined for petitioner’s taxable year 2004, respondent “need
not introduce evidence regarding reasonable cause, substantial
authority, or similar provisions. * * * the taxpayer bears the
burden of proof with regard to those issues.” Id.
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At trial, petitioner claimed that she did not include the
monthly payments at issue in income in her 2004 return because
she believed that the term “alimony” related to payments made by
a former spouse for child support and that the term “spousal
support” related to payments made by a former spouse to a spouse
that are not includible in income. In response to a question on
cross-examination as to why petitioner held those beliefs, she
responded: “In the dictionary, and just, you know, what it
explained to me.”
On the record before us, we find that petitioner made no
reasonable attempt to comply with the requirements of the Code
with respect to the monthly payments at issue and that she failed
to do what a reasonable person would do under the circumstances.
We have found no dictionary definition of the term “alimony” that
supports petitioner’s testimony.7 Nor have we found anything in
a dictionary that suggests the term “spousal support” relates to
payments made by a former spouse to a spouse that are not
includible in income.
On the record before us, we find that respondent has carried
respondent’s burden of production under section 7491(c). On that
record, we further find that petitioner has failed to carry her
7
The term “alimony” is defined in Merriam-Webster’s Colle-
giate Dictionary (11th ed. 2007) to mean “1 : an allowance made
to one spouse by the other for support pending or after legal
separation or divorce 2 : the means of living: MAINTENANCE”.
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burden of showing that the underpayment for her taxable year 2004
was not attributable to negligence or disregard of rules or
regulations. On the record before us, we also find that peti-
tioner has failed to carry her burden of showing that there was
reasonable cause for, and that she acted in good faith with
respect to, that underpayment.
Based upon our examination of the entire record before us,
we find that petitioner has failed to carry her burden of estab-
lishing that she is not liable for the year at issue for the
accuracy-related penalty under section 6662(a).
We have considered all of the contentions and arguments of
petitioner that are not discussed herein, and we find them to be
without merit, irrelevant, and/or moot.
To reflect the foregoing,
Decision will be entered for
respondent.