T.C. Summary Opinion 2008-102
UNITED STATES TAX COURT
MARK A. CROMPTON AND DIANE J. CROMPTON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1838-07S. Filed August 13, 2008.
Mark A. Crompton and Diane J. Crompton, pro sese.
Monica J. Miller, and Kevin Parrington, for respondent.
DEAN, 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. 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. Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue,
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and all Rule references are to the Tax Court Rules of Practice
and Procedure.
Respondent determined a $1,500 deficiency in petitioners’
2004 Federal income tax. The issue for decision is whether
petitioners are entitled to claim a $6,000 deduction for alimony
paid to Nancy Wood (former wife).
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. When petitioners filed
their petition, they resided in Georgia.
On November 7, 1996, Mark A. Crompton (Mr. Crompton) was
divorced from former wife by a final decree of the Family Court
of Delaware (family court). A “Stipulation and Order Resolving
Ancillary Matters Pursuant to a Decree of Divorce” (the order)
was entered on January 13, 1997. The order directed Mr. Crompton
to pay alimony of $500 per month for a 10-year period beginning
November 15, 1996. The order does not contain a provision
regarding the effect of remarriage on Mr. Crompton’s obligation
to pay alimony.
In 2003 former wife remarried. Former wife did not inform
Mr. Crompton of her subsequent marriage, and he was otherwise not
informed that she had remarried. During 2004 Mr. Crompton
continued to make monthly payments of $500 to former wife.
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Former wife did not include the payments in gross income on her
joint return for 2004. Petitioners filed a joint return for 2004
and claimed a $6,000 deduction for alimony paid.
Discussion
I. Burden of Proof
The Commissioner’s determinations in a notice of deficiency
are presumed correct, and the taxpayer has the burden to prove
that the determinations are in error. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). But the burden of proof on
factual issues that affect a taxpayer’s tax liability may be
shifted to the Commissioner if he introduces credible evidence
with respect to the issue. See sec. 7491(a)(1). There is no
dispute as to any factual issue. Accordingly, this case is
decided by the application of law to the undisputed facts, and
section 7491(a) is inapplicable.
II. Alimony Deduction
Section 215(a) allows a deduction for alimony paid during
the taxable year. Section 215(b) provides that the term
“alimony” means any alimony (as defined in section 71(b)) that is
includable in the recipient’s gross income under section 71.
Section 71(b)(1) defines alimony as any cash payment meeting the
four criteria provided in subparagraphs (A) through (D). The
first criterion is that the payment must be made “under a”
divorce or separation instrument. Sec. 71(b)(1)(A). The phrase
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“divorce or separation instrument” includes a written instrument
incident to a divorce decree. Sec. 71(b)(2)(A).
The parties dispute the characterization of the $500 monthly
payments. Respondent, citing Del. Code Ann. tit. 13, sec.
1519(b) (1999 & Supp. 2008),1 contends that the payments are not
alimony:
[B]ecause under Delaware state law, unless the divorce
decree expressly states that the payments have to
continue after remarriage, the obligation to make the
payments ceases upon the remarriage of the recipient
spouse. Because of that, under the Internal Revenue
Code, these payments were no longer required under a
divorce or separation instrument, which is necessary to
be qualified as alimony.
Mr. Crompton contends that because he did not know that
former wife had remarried, “I continued to meet what I felt was
my obligation for alimony, paying on a monthly basis * * * The
divorce decree clearly stated that I needed to pay alimony for 10
years.” He also contends that former wife’s cohabitation,
remarriage, or death is merely a “statutory [factor] for
termination”. Thus, petitioners are entitled to a deduction for
alimony paid.
1
Del. Code Ann. tit. 13, sec. 1519(b) (1999 & Supp. 2008)
provides that the obligation to pay future alimony is terminated
on the recipient’s remarriage unless otherwise agreed by the
parties in writing and expressly provided in the decree. See
also Caldwell v. Caldwell, 458 A.2d 709, 711 (Del. Fam. Ct. 1983)
(“Remarriage by a once-dependent former spouse operates as an
absolute bar to alimony, regardless of any continuing need for
support”).
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Congress, in amending section 71, has determined that “a
uniform Federal standard should be set forth to determine what
constitutes alimony for Federal tax purposes.” H. Rept. 432,
98th Cong., 2d Sess. 1495 (1984). This definition is predicated
on an objective standard, and courts generally should not make
subjective inquiries under the varying laws of the States.
Hoover v. Commissioner, 102 F.3d 842, 845-846 (6th Cir. 1996),
affg. T.C. Memo. 1995-183. It is Congress’s intent that courts,
in determining whether payments constitute alimony under section
71, will look to State law only to determine whether the
requirement of section 71(b)(1)(D) is satisfied; i.e., whether
State law provides that the payments terminate upon the payee’s
death. Id. (citing H. Rept. 432, supra at 1496).
If the Court were to accept respondent’s argument, it would
have to look first to Delaware law in order to determine whether
the order was enforceable and thereby such payments were received
“under a” divorce or separation instrument pursuant to State law.
Such an inquiry impermissibly injects State law into section
71(b)(1)(A) through the back door. This the Court cannot do--it
will follow Congress’s intent. Under the order, Mr. Crompton was
required to pay $500 per month for a 10-year period. The
payments were received by former wife under a divorce or
separation instrument consonant with section 71(b)(1)(A).
Accordingly, respondent’s determination is not sustained.
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To reflect the foregoing,
Decision will be entered for
petitioners.