T.C. Summary Opinion 2009-198
UNITED STATES TAX COURT
DONALD A. BENZIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7811-09S. Filed December 28, 2009.
Donald A. Benzin, pro se.
John M. Janusz and Crystal-Lyn Orta, 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
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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other court, and this opinion shall not be treated as precedent
for any other case.
Respondent determined a deficiency in petitioner’s Federal
income tax for 2007 of $1,028. The sole issue for decision is
whether payments made by petitioner to his former wife in 2007
are deductible as alimony under section 215. We hold that they
are not.
Background
Some of the facts have been stipulated, and they are so
found. We incorporate by reference the parties’ stipulation of
facts, supplemental stipulation of facts, and accompanying
exhibits. Petitioner resided in the State of New York when the
petition was filed.
Petitioner and Judith Benzin (Ms. Benzin) married in 1989.
During the marriage, petitioner contributed to a pension plan
maintained by his employer, the U.S. Postal Service (USPS).
Petitioner and Ms. Benzin were granted a divorce on
September 13, 2001, pursuant to a Judgment of Divorce (Judgment)
issued by the State of New York Supreme Court, County of Erie.
The Judgment states, in part, that “all of the marital assets
have been divided in accordance with the terms of the Oral
Stipulation Agreement dated June 15, 2001”. The Oral Stipulation
Agreement (Agreement) was incorporated into the Judgment. The
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Agreement states, in part, “that neither party shall be obligated
to pay maintenance to the other party.”
Petitioner retired in November 2006 and started receiving
distributions from his USPS pension plan in December 2006.
Beginning in December 2006, petitioner sent to Ms. Benzin a check
for $475 per month and did so for each month in 2007.
On his 2007 Federal income tax return petitioner claimed a
deduction of $6,845 for “alimony paid” to Ms. Benzin.2
In a notice of deficiency, respondent determined the
payments were not alimony and therefore disallowed the claimed
deduction.
The parties’ stipulation of facts includes an untitled
single-page document, which has a page number on it indicating
that it is page 2 of a multipage document. One paragraph of this
document reads as follows:
ORDERED, that the Defendant, DONALD BENZIN, shall pay
to the Plaintiff, JUDITH BENZIN, the sum of $475.00 per
month, as a projected calculation of the Plaintiff’s
interest in the Defendant’s pension with the United States
Postal Service, at such time as the Defendant begins to
receive his pension * * *[.]
Respondent reserved an objection to this document on the basis of
the best evidence rule.
2
Although petitioner claimed a deduction of $6,845 for
“alimony paid” in 2007, it was clarified at trial that the Court
would only consider whether $5,700 ($475 per month for 12 months)
constituted “alimony paid”. The additional $1,145 was on account
of a debt petitioner owed to Ms. Benzin.
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Discussion
A. Evidentiary Matters
In general, the Court conducts trials in accordance with the
rules of evidence for trials without a jury in the U.S. District
Court for the District of Columbia and accordingly follows the
Federal Rules of Evidence. Sec. 7453; Rule 143(a); Clough v.
Commissioner, 119 T.C. 183, 188 (2002). However, Rule 174(b) and
section 7453 carve out an exception for trials of small tax
cases. Under this exception, the Court conducts small tax cases
as informally as possible consistent with orderly procedure and
“any evidence deemed by the Court to have probative value shall
be admissible.” Rule 174(b); Schwartz v. Commissioner, 128 T.C.
6, 7 (2007).
The untitled single-page document stipulated by the parties
and to which respondent reserved an objection is incomplete and
was not explained by petitioner at trial. The document raises
more questions than it provides answers. Therefore, respondent’s
objection is sustained on the basis that the document is not
probative. See Rule 174(b).
B. Burden of Proof
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving that those
determinations are erroneous. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). Deductions are a matter of legislative
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grace, and the taxpayer bears the burden of proving that he or
she is entitled to any deduction claimed. Rule 142(a); Deputy v.
du Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). Under section 7491(a)(1),
the burden of proof may shift from the taxpayer to the
Commissioner if the taxpayer produces credible evidence with
respect to any factual issue relevant to ascertaining the
taxpayer’s liability. Petitioner has not alleged that section
7491 applies nor otherwise satisfied the requirements of that
section; therefore, the burden of proof remains on petitioner.
C. Alimony Deduction
Generally, property settlements or equitable divisions of
marital property incident to a divorce are not taxable events and
do not give rise to a deduction. Sec. 1041; Estate of Goldman v.
Commissioner, 112 T.C. 317, 322 (1999), affd. without published
opinion sub nom. Schutter v. Commissioner, 242 F.3d 390 (10th
Cir. 2000). On the other hand, payments made or received as
alimony or separate maintenance generally are deductible by the
payor spouse under section 215(a) and includable in the gross
income of the payee spouse under sections 61(a)(8) and 71.
Section 215(b) defines an alimony or separate maintenance
payment as a payment which is includable in the gross income of
the recipient under section 71. Section 71(b)(1) provides a
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four-step inquiry for determining whether a payment is alimony or
separate maintenance. Section 71(b)(1) provides:
SEC. 71(b)(1). 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.
Payments are deductible as alimony only if all four
requirements of section 71(b)(1) are met.
Under subparagraph (A) of section 71(b)(1), alimony or
separate maintenance must be received pursuant to a divorce or
separation instrument. 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,
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(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.
Further, subparagraph (B) of section 71(b)(1) requires that
the divorce or separation instrument not designate the payment as
not alimony or separate maintenance. A divorce or separation
instrument “contains a nonalimony designation if the substance of
such a designation is reflected in the instrument.” Estate of
Goldman v. Commissioner, supra at 323. In other words, a divorce
or separation agreement must provide a “clear, explicit and
express direction” that the payments are not to be treated as
alimony, but the designation need not mimic the language of
sections 71 and 215. Richardson v. Commissioner, 125 F.3d 551,
556 (7th Cir. 1997), affg. T.C. Memo. 1995-554; Estate of Goldman
v. Commissioner, supra at 323.
In the present case, neither the Judgment nor the
incorporated Agreement makes any mention of alimony or separate
maintenance. Petitioner’s pension plan with the USPS and the
$475 per month payment therefrom were also not established by the
Judgment or the Agreement. Indeed, the Agreement specifically
states that “neither party shall be obligated to pay maintenance
to the other party.” In addition, petitioner testified: “I
didn’t have to pay alimony, and she didn’t have to pay it to me
either.”
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We conclude, therefore, that the Judgment of Divorce and the
Oral Stipulation Agreement incorporated therein do not provide
for payments to petitioner’s former wife and clearly, explicitly,
and expressly contain a nonalimony provision. Accordingly, we
must hold that petitioner’s payments made to his former wife in
2007 did not satisfy the conditions set forth in section 71 and
are thus not properly deductible as alimony for the taxable year
in issue.
Finally, we observe that the only year before us is 2007 and
that our holding relates only to that year. Thus, our holding
does not preclude petitioner from asking a local court of
competent jurisdiction for a qualified domestic relations order
(QDRO) with respect to the monthly payment to his former wife of
a portion of his USPS pension. See secs. 402(e)(1)(A), 414(p);
Amarasinghe v. Commissioner, T.C. Memo. 2007-333, affd. 282 Fed.
Appx. 228 (4th Cir. 2008).
To reflect the foregoing,
Decision will be entered
for respondent.