T.C. Summary Opinion 2011-114
UNITED STATES TAX COURT
DAVID K. BROWN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2157-10S. Filed September 28, 2011.
David K. Brown, pro se.
Brandon S. Cline, for respondent.
CARLUZZO, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463.1 Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, in effect for the
relevant period. Rule references are to the Tax Court Rules of
Practice and Procedure.
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and this opinion shall not be treated as precedent for any other
case.
In a notice of deficiency dated October 19, 2009, respondent
determined a $4,884 deficiency in and a $743.73 section
6651(a)(1) addition to tax with respect to petitioner’s 2007
Federal income tax. After concessions,2 the issue for decision
is whether petitioner is entitled to an alimony deduction in
excess of the amount now allowed by respondent. The resolution
of the issue depends upon whether petitioner may treat as alimony
certain amounts paid as attorney’s fees to the attorney for his
former spouse.
Background
All of the facts have been stipulated, see Rule 122, and
they are so found. At the time the petition was filed,
petitioner resided in Florida.
Petitioner and Orly Brown (petitioner’s former spouse) were
married on October 27, 1985; their marriage was dissolved on
June 9, 2008, by the final judgment of dissolution of marriage
issued by the Circuit Court of the Seventeenth Judicial Circuit
for Broward County, Florida (divorce decree). As best can be
determined from the record, the divorce proceedings were less
2
According to the stipulation of settled issues, respondent
now agrees that petitioner is entitled to an alimony deduction in
an amount not less than $22,087.81; respondent further concedes
the imposition of the sec. 6651(a) addition to tax.
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than cordial. The divorce decree addresses items routinely found
in such documents, such as spousal support, custody and
visitation rights with respect to the minor children of
petitioner and his former spouse, and the division of property.
As relevant here, the divorce decree specifically states that
each party was responsible for his or her own costs, including
attorney’s fees, and that such costs were not to be shared.
During the course of the divorce proceedings, and before the
issuance of the divorce decree, petitioner’s former spouse
applied to the appropriate court for attorney’s fees and costs.
As a result, after a finding that petitioner had been the cause
of extensive and unnecessary delay, the State court ordered him
to pay $67,639.32 to the attorney who had represented his
former spouse during the divorce proceedings (for convenience,
separation instrument). The amount awarded was intended to cover
attorney’s fees actually incurred and attorney’s fees reasonably
estimated to be incurred in the future in connection with the
divorce proceedings.3 Accordingly, during 2007 petitioner paid
$15,086.23 to the attorney for his former spouse (disputed
payment).
Petitioner’s 2007 Federal income tax return was timely
filed. As relevant here, the adjusted gross income reported on
3
At the time of the award, attorney’s fees actually incurred
by petitioner’s former spouse exceeded $30,000.
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that return takes into account a $27,290 deduction for alimony
paid to petitioner’s former spouse. The record does not disclose
how that deduction was computed, but it is clear that no amounts
attributable to the disputed payment are included in it.
The notice of deficiency disallowed the alimony deduction.
As noted, respondent now agrees that petitioner is entitled to an
alimony deduction in an amount not less than $22,087.81. The
record does not disclose how that amount was computed either, but
it is also clear that no amounts attributable to the disputed
payment are included in the amount now allowed by respondent.
Discussion
According to petitioner, the disputed payment is allowable
as an alimony deduction. Respondent disagrees, and for the
following reasons, so do we.
As has been observed in countless opinions, deductions are a
matter of legislative grace, and the taxpayer bears the burden of
proving his entitlement to claimed deductions. Rule 142(a);
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Section 215(a) permits a deduction for the payment of
alimony during the taxable year. For section 215 purposes, the
definition of “alimony” is actually found in section 71(b)(1),
which provides:
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(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 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 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.
If a payment made to a spouse or former spouse fails to meet
any of these four enumerated criteria, that payment does not fit
within the definition of alimony and is not allowable as a
deduction under section 215.
Taking the parties’ lead, and assuming without finding that
the disputed payment satisfies the requirements set forth in
section 71(b)(1)(A), (B), and (C), we turn our attention to
petitioner’s obligation to have made the disputed payment after
the death of his former spouse.
In order to deduct a payment as alimony, the payor must have
no liability to make the payment, or continue to make payments,
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after the payee’s death. Sec. 71(b)(1)(D); Johanson v.
Commissioner, 541 F.3d 973, 976-977 (9th Cir. 2008), affg. T.C.
Memo. 2006-105; Kean v. Commissioner, 407 F.3d 186, 191 (3d Cir.
2005), affg. T.C. Memo. 2003-163. This requirement may be
satisfied either by the express terms of the relevant divorce or
separation instrument or by operation of State law. Commissioner
v. Estate of Bosch, 387 U.S. 456, 465 (1967); Cunningham v.
Commissioner, T.C. Memo. 1994-474.
According to petitioner, his obligation to have made the
disputed payment would have terminated upon the death of his
former spouse. According to respondent, petitioner’s obligation
to make the disputed payment was fixed by the separation
instrument regardless of whether his former spouse died before
the payment was made. Because the separation instrument does not
state whether petitioner’s obligation to make the disputed
payment would have terminated upon the death of his former
spouse, we examine State law, in this case Florida law, to
resolve the dispute between the parties on the point. See
Johanson v. Commissioner, supra at 977.
Our review of Florida law leads us to conclude that
petitioner’s obligation to have made the disputed payment would
not have terminated upon the death of his former spouse.
See Fla. Stat. Ann. sec. 57.105(2) (West 2006 & Supp. 2011) (fees
and costs may be imposed upon a party to civil litigation who has
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caused unreasonable delay);4 Clark v. Clark, 802 So. 2d 478,
478-479 (Fla. Dist. Ct. App. 2001) (upholding an award of
attorney’s fees applied for before the death of the payee
spouse); Hirsch v. Hirsch, 519 So. 2d 1056 (Fla. Dist. Ct. App.
1988) (upholding an award of attorney’s fees even though the
payee spouse died before the issuance of the divorce decree).5
In support of his position, petitioner relies upon
Rosenhouse v. Ever, 150 So. 2d 732 (Fla. Dist. Ct. App. 1963).
In Rosenhouse, the court held that a party’s right to seek
attorney’s fees terminated upon the death of that party. To the
extent that Rosenhouse has not been effectively overruled by the
line of cases cited above, we find it to be distinguishable and
decline to apply its reasoning here. See, e.g., Clark v. Clark,
supra at 478; MacLeod v. Hoff, 654 So. 2d 1250, 1251-1252 (Fla.
Dist. Ct. App. 1995).
Because petitioner has failed to establish that under
Florida law his obligation to have made the disputed payment
would have terminated upon the death of his former spouse, the
payment does not fit within the definition of alimony for
4
The court order obligating petitioner to make the disputed
payment clearly reflects that court’s view that petitioner
“unreasonably [delayed]” the divorce proceedings.
5
Relying upon Hirsch v. Hirsch, 519 So. 2d 1056 (Fla. Dist.
Ct. App. 1988), in Berry v. Commissioner, T.C. Memo. 2000-373,
affd. 36 Fed. Appx. 400 (10th Cir. 2002), we found that the
obligation of one spouse to pay the attorney’s fees of the other
did not terminate upon the death of the payee spouse.
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purposes of sections 71 and 215. It follows that petitioner’s
allowable alimony deduction for the year in issue is limited to
the amount now allowed by respondent.
To reflect the foregoing,
Decision will be entered
under Rule 155.