*4 Decision will be entered for the respondent.
Petitioner was divorced from his former wife in 1946 pursuant to a decree which incorporated a prior separation agreement providing support and maintenance payments for her and their minor child. Upon the happening of certain specified events, petitioner was required to pay only 60 per cent of such payments for the support of his minor child or 40 per cent thereof to his former wife. Petitioner secured an amendment to the decree in 1953 which provided that the parties did not intend any percentage division of such payments until the happening of one of the specified events. On his return for 1948, petitioner claimed a deduction for 40 per cent of the amount paid to his former wife during that year; and on his return for 1949, he claimed the entire amount paid to her as deductible alimony.
Held, respondent correctly determined that 60 per cent of the amounts paid by petitioner to his former wife in both years was for the support of his minor child and was not deductible by him.
*576 This proceeding involves deficiencies in income tax and penalties determined by the respondent, as follows:
| Penalties | ||
| under sec. | ||
| Year | Deficiencies | 291(a) |
| 1948 | $ 17.00 | $ 4.25 |
| 1949 | 252.28 | 63.07 |
The only issue raised is whether 60 per cent of the payments made by petitioner to his former wife during the years in issue was alimony under section 22 (k) of the Internal Revenue Code of 1939, 1*6 or was *577 for the support and maintenance of petitioner's minor child and, hence, not deductible by him under section 23 (u). 2
FINDINGS OF FACT.
On January 18, 1952, petitioner and his wife, Bess McGlothlin Gantz, filed a joint income tax return for the year 1948 and petitioner filed an individual income tax return for 1949 with the collector of internal revenue for the district of Maryland.
Petitioner was formerly married to Ruth Richards Gantz (hereinafter sometimes referred to as Ruth) and of such marriage a child, Pamela Ruth Gantz, was born on September 22, 1944.
On October 31, 1946, petitioner and Ruth entered into a separation agreement. On November 22, 1946, they were divorced by a decree of the Court of Common Pleas, Mahoning County, Ohio (hereinafter*7 referred to as the divorce court). Such decree incorporated the terms of the separation agreement as follows:
Second Party agrees to pay to First Party a sum of money equivalent to one third of Second Party's base pay, plus longevity and subsistence allowance, but excluding rental allowance now received and to be received by him as an officer of the United States Navy, but in no event shall Second Party pay to First Party less than $ 140.00 per month nor more than $ 200.00 per month from and after the date hereof, which said First Party agrees to accept in full payment of all claims and demands whatsoever upon Second Party for the care, support and maintenance of First Party and said child, and the education of the latter. Said sums of money (not less than $ 140.00 but not more than $ 200.00 per month) shall be payable by Second Party to First Party at her place of residence each and every month, and Second Party will make the necessary arrangements with the United States Navy and the proper officers thereof for the payment of said sums to First Party. Said monthly payments as hereinbefore set forth shall be made by Second Party to First Party until the death or remarriage of the*8 First Party, or the death or marriage of said minor child, the adoption of said child by a third party, or upon her attainment of the age of majority, whichever event shall sooner occur. Upon the *578 death or remarriage of First Party, the provisions of this agreement with respect to monthly payments for the maintenance and support of said First Party shall terminate and Second Party shall be discharged from any duty or liability on account thereof, but shall continue to pay for the care, support, maintenance and education of said minor child sixty percent (60%) of the monthly payment which would have been paid had this contingency not arisen. Upon the death, or marriage, adoption by a third party or attainment of the age of majority of said minor child, the provisions of this agreement with respect to monthly payments for the maintenance and support of said minor child shall terminate and Second Party shall be discharged from any duty or liability on account thereof, but shall continue to pay to First Party for the support and maintenance of First Party, forty percent (40%) of the monthly payment which would have been made had this contingency not arisen.
It is mutually agreed*9 by and between the parties hereto that the First Party, Ruth Richards Gantz, shall have the exclusive control and custody of the minor child, Pamela Ruth Gantz, with the right of Second Party for reasonable visitation. In the event of a divorce being granted and the exclusive custody of said minor child being awarded to Ruth Richards Gantz, continued custody of said minor child shall be subject to the further order of the Court.
On August 3, 1953, the divorce court entered a further decree, as follows:
This cause came on to be heard upon the oral application of the defendant for a clarification of one of the provisions of the divorce decree formerly granted by this court wherein a lump sum was granted plaintiff as alimony for the support of herself and minor child.
The court, being fully advised in the premises, finds that it was not the intention of either the court or the parties that said lump sum of alimony should be subject to any percentage division in favor of said first party or said minor child, and that any reference to any division of said alimony in said percentages in favor of either the plaintiff or her minor child was intended by the parties and the court to apply *10 if and only when a change in status occurred on the part of either said plaintiff or minor child.
It is therefore ordered, adjudged and decreed that the alimony formerly granted to plaintiff in this case for the support of herself and minor child be considered a lump sum payment and not subject to any division percentagewise for plaintiff or her minor child until such time as a change of status occurs.
During 1948 petitioner paid Ruth $ 1,680 pursuant to the divorce decree and claimed an alimony deduction of 40 per cent of such sum, or $ 672, on the joint return which he filed for that year. In 1949 he paid Ruth $ 1,862 and, on his individual return for that year, claimed the entire amount as deductible alimony.
In the deficiency notices for such years, the respondent determined that petitioner's deduction for alimony payments in 1948 was correct but that only 40 per cent, or $ 744.80, of the amount claimed in 1949 was deductible.
Sixty per cent of the payments made by petitioner to his former wife in 1948 and 1949 was for the support and maintenance of his minor child and is not deductible by him.
*579 OPINION.
The petitioner appeared without counsel at the hearing, and filed*11 no brief. In his opening statement, he argued that the entire amounts paid to his former wife during the 2 years in issue should be taxable to her since she had full control over the expenditure of such sums; and that the 60%-40% division was to become effective only upon a change of status on the part of his former wife or his daughter.
The respondent based his determination on Warren Leslie, Jr., 10 T. C. 807 (1948); Robert W. Budd, 7 T. C. 413 (1946), affd. 177 F. 2d 198 (C. A. 6, 1947), and a number of similar cases wherein we have said that the decree must be read as a whole and that a proviso for a division of the total payment between the former wife and a minor child, upon the happening of some future event, was a designation of a part of the whole payment for the support of such child and applicable to all payments, within the meaning of the statute; and, hence, not deductible by the husband.
We have reached our conclusions herein on the assumption that the provisions of the amended decree of August 3, 1953, were included in the original decree of November 22, 1946. See Margaret Rice Sklar, 21 T. C. 349 (1953).
*12 Both decrees recognize that the payments made by petitioner were for the support of his former wife and their minor child. The amended decree did not seek to delete the 60%-40% division of the payments between the minor child and former wife, provided for in the original decree. It provided only that no percentage division between the minor child and former wife was intended until the happening of one of the events mentioned. We are unable to see how the amended decree can be the basis for distinguishing the situation here from those before us in the Leslie and Budd cases, supra. Admittedly, no such provision was found in the decrees in those cases, but the essential fact that the former spouse had complete control of all the funds paid to her, until the happening of some specified event, was present in those cases. We did not consider the presence of that fact in those cases sufficient to warrant our holding the entire amount taxable to the wife, in the face of other provisions in the decrees for a percentage allocation to the support of the minor child upon the happening of some one or more specified events.
We deem those cases controlling here, and the respondent's*13 determination herein is, therefore, upheld.
Decision will be entered for the respondent.
Footnotes
1. SEC. 22. GROSS INCOME.
(k) Alimony, Etc., Income. -- In the case of a wife who is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, periodic payments (whether or not made at regular intervals) received subsequent to such decree in discharge of, or attributable to property transferred (in trust or otherwise) in discharge of, a legal obligation which, because of the marital or family relationship, is imposed upon or incurred by such husband under such decree or under a written instrument incident to such divorce or separation shall be includible in the gross income of such wife, and such amounts received as are attributable to property so transferred shall not be includible in the gross income of such husband. This subsection shall not apply to that part of any such periodic payment which the terms of the decree or written instrument fix, in terms of an amount of money or a portion of the payment, as a sum which is payable for the support of minor children of such husband. In case any such periodic payment is less than the amount specified in the decree or written instrument, for the purpose of applying the preceding sentence, such payment, to the extent of such sum payable for such support, shall be considered a payment for such support. Installment payments discharging a part of an obligation the principal sum of which is, in terms of money or property, specified in the decree or instrument shall not be considered periodic payments for the purposes of this subsection; except that an installment payment shall be considered a periodic payment for the purposes of this subsection if such principal sum, by the terms of the decree or instrument, may be or is to be paid within a period ending more than 10 years from the date of such decree or instrument, but only to the extent that such installment payment for the taxable year of the wife (or if more than one such installment payment for such taxable year is received during such taxable year, the aggregate of such installment payments) does not exceed 10 per centum of such principal sum. For the purposes of the preceding sentence, the portion of a payment of the principal sum which is allocable to a period after the taxable year of the wife in which it is received shall be considered an installment payment for the taxable year in which it is received. (In cases where such periodic payments are attributable to property of an estate or property held in trust, see section 171 (b).)↩
2. SEC. 23. DEDUCTIONS FROM GROSS INCOME.
(u) Alimony, Etc., Payments. -- In the case of a husband described in section 22 (k), amounts includible under section 22 (k) in the gross income of his wife, payment of which is made within the husband's taxable year. If the amount of any such payment is, under section 22 (k)↩ or section 171, stated to be not includible in such husband's gross income, no deduction shall be allowed with respect to such payment under this subsection.