Opinion
Docket No. 473-69SC.
1970-09-1
JOHN S. HEALEY, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
John S. Healey, pro se. Ernest J. Wright, for the respondent.
John S. Healey, pro se. Ernest J. Wright, for the respondent.
Held, on the facts presented, that payments made by petitioner subsequent to the issuance of a restraining order requiring him to live separate and apart from his wife and children and prior to the issuance of a temporary support order specifically directing the petitioner to pay his wife a specified amount for her support and that of their children, do not constitute payments of an obligation imposed or incurred ‘under a decree of divorce or separate maintenance’ as provided by sec. 71, I.R.C. 1954, and therefore are not deductible as alimony under sec. 215, I.R.C. 1954.
BRUCE, Judge:
Respondent determined a deficiency in petitioner's income tax for the year 1966 in the amount of $964.13. Petitioner introduced no evidence regarding the amount of his charitable contributions and accordingly, is deemed no longer to contest respondent's determination with respect to this item. The only issue remaining for our decision is whether the payments made by petitioner to his former wife, Kathryn S. Healey, for the period February 14, 1966, to November 9, 1966, constitute alimony or separate maintenance, and therefore, whether he is entitled to a deduction under section 215 of the Code.
All section references shall be to the Internal Revenue Code of 1954, as amended, unless specified otherwise.
FINDING OF FACT
The stipulation of facts, together with exhibits attached thereto, is incorporated herein by reference.
Petitioner's legal residence at the date of the filing of the petition herein was Denver, Colo. For the year in question, petitioner filed his Federal income tax return (Form 1040) with the district director of internal revenue, Denver, Colo.
The petitioner and his former spouse, Kathryn S. Healey, were married on January 5, 1952. As a result of this marriage, they had three children, Mary Kathleen Healey, Colleen Ann Healey, and Joseph John Healey.
On February 14, 1966, Kathryn filed a complaint for separate maintenance, a motion for restraining order, and a motion for temporary support, alimony, court costs, and attorney's fees in the District Court of Douglas County, State of Colorado. On the same date, the district Court of Douglas County granted Kathryn's motion for restraining order, but did not take any action on her complaint for separate maintenance, or her motion for temporary support, alimony, court costs, and attorney's fees. The restraining order required petitioner to live apart from his wife and family and directed him not to encumber or dispose of any of the property which had been accumulated during the marriage.
Kathryn's attorney prepared a written separation and property-settlement agreement which, among other things, specified that petitioner was to pay $275 every 2 weeks to Kathryn for her support and that of their three children. This agreement was submitted to petitioner for approval and execution but her refused to execute the agreement because he wanted it to be modified in certain respects. Petitioner and Kathryn never executed this agreement because they could not agree on the specific terms to be included in such an agreement.
In answer to Kathryn's complaint for separate maintenance, on April 18, 1966, petitioner filed an answer and counterclaim in divorce. On September 15, 1966, all the actions previously referred to as being instituted in the District Court of Douglas County, State of Colorado, were transferred to the District Court of Arapahoe County, State of Colorado, by agreement between petitioner and Kathryn.
On November 21, 1966, nunc pro tunc as of November 9, 1966, the District Court of Arapahoe County, issued a temporary support order directing petitioner to pay Kathryn $250 every 2 weeks commencing on November 15, 1966. This temporary support order was the first order entered by any court which set forth and directed petitioner to make payments to Kathryn.
The petitioner paid a total of $5,591 for the support of his wife and children during 1966, in the amounts shown and on the dates indicated, as follows:
+-----------------------------+ ¦Date payment made ¦Amount ¦ +--------------------+--------¦ ¦3/ 7/66 ¦$275.00 ¦ +--------------------+--------¦ ¦3/21/66 ¦275.00 ¦ +--------------------+--------¦ ¦4/ 4/66 ¦275.00 ¦ +--------------------+--------¦ ¦4/18/66 ¦275.00 ¦ +--------------------+--------¦ ¦5/ 3/66 ¦164.75 ¦ +--------------------+--------¦ ¦5/16/66 ¦275.00 ¦ +--------------------+--------¦ ¦5/31/66 ¦266.25 ¦ +--------------------+--------¦ ¦6/13/66 ¦275.00 ¦ +--------------------+--------¦ ¦7/ 1/66 ¦275.00 ¦ +--------------------+--------¦ ¦7/12/66 ¦275.00 ¦ +--------------------+--------¦ ¦7/26/66 ¦275.00 ¦ +--------------------+--------¦ ¦8/ 9/66 ¦260.00 ¦ +--------------------+--------¦ ¦8/23/66 ¦275.00 ¦ +--------------------+--------¦ ¦9/ 6/66 ¦275.00 ¦ +--------------------+--------¦ ¦9/20/66 ¦275.00 ¦ +--------------------+--------¦ ¦10/ 4/66 ¦200.00 ¦ +--------------------+--------¦ ¦10/18/66 ¦200.00 ¦ +--------------------+--------¦ ¦11/ 2/66 ¦200.00 ¦ +--------------------+--------¦ ¦11/15/66 ¦250.00 ¦ +--------------------+--------¦ ¦11/28/66 ¦250.00 ¦ +--------------------+--------¦ ¦12/14/66 ¦250.00 ¦ +--------------------+--------¦ ¦12/27/66 ¦250.00 ¦ +--------------------+--------¦ ¦Total ¦5,591.00¦ +-----------------------------+
Of the total amount paid by petitioner, $1,000 was paid under the terms of the support order entered by the District Court of Arapahoe County effective November 9, 1966. The balance was not paid by the petitioner pursuant to the specific terms of a court order.
On February 21, 1967, the District Court of Arapahoe County issued a decree of divorce. It granted Kathryn custody of the three children mentioned above. On May 9, 1967, the District Court of Arapahoe County entered its permanent order for alimony, child support, attorney's fees, court costs, and division of property.
In his Federal income tax return for the taxable year 1966, petitioner deducted $5,591 as separate maintenance payments. The respondent determined that since the periodic payments to Kathryn were not made as a result of a written separation agreement, they are not deductible as alimony.
OPINION
The question presented for decision is whether petitioner is entitled to a deduction under section 215 for payments made to his then wife, Kathryn, subsequent to February 14, 1966, when a restraining order was issued requiring petitioner to live apart from his wife and children and prior to the entry of a temporary support order effective November 9, 1966.
Section 215 provides:
SEC. 215. ALIMONY, ETC., PAYMENTS.
(a) GENERAL RULE.— In the case of a husband described in section 71, there shall be allowed as a deduction amounts includible under section 71 in the gross income of his wife, payment of which is made within the husband's taxable year. No deduction shall be allowed under the preceding sentence with respect to any payment if, by reason of section 71(d) or 682, the amount thereof is not includible in the husband's gross income.
Section 71 provides:
SEC. 71. ALIMONY AND SEPARATE MAINTENANCE PAYMENTS.
(a) GENERAL RULE.
(1) DECREE OF DIVORCE OR SEPARATE MAINTENANCE.— If a wife is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, the wife's gross income includes periodic payments (whether or not made at regular intervals) received after 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 on or incurred by the husband under the decree or under a written instrument incident to such divorce or separation.
(2) WRITTEN SEPARATION AGREEMENT.— If a wife is separated from her husband and there is a written separation agreement executed after the date of the enactment of this title, the wife's gross income includes periodic payments (whether or not made at regular intervals) received after such agreement is executed which are made under such agreement and because of the marital or family relationship (or which are attributable to property transferred, in trust or otherwise, under such agreement and because of such relationship). This paragraph shall not apply if the husband and wife make a single return jointly.
(3) DECREE FOR SUPPORT.— If a wife is separated from her husband, the wife's gross income includes periodic payments (whether or not made at regular intervals) received by her after the date of the enactment of this title from her husband under a decree entered after March 1, 1954, requiring the husband to make the payments for her support or maintenance. This paragraph shall not apply if the husband and wife make a single return jointly.
Petitioner contends that the restraining order was a legal separation and because he was still obligated under Colorado law (Colo. Rev. Stat. Ann. sec. 43-1-1(1963); Read v. Read, 202 P.2d 953 (Colo. 1949)) to support his family, this restraining order, coupled with the legal obligation imposed upon him by the Colorado law to support his family, was tantamount to a decree of separate maintenance and any payments made subsequent to such restraining order should be considered as incurred under a decree of separate maintenance, and as such, deductible as alimony. Thus, petitioner quotes the language ‘imposed or incurred by the husband’ in the statute to argue that Congress must have intended the statute to mean what he contends; otherwise there would be no need for the word ‘incurred’ in the statute. While the restraining order did not impose this obligation on him, he did incur this obligation because of it. Therefore, any payments made subsequent to it should qualify under section 71, and therefore be deductible under section 215.
Respondent contends that the payments in question were not made pursuant to a ‘decree of divorce’ as that term is used in section 71 and it is only payments made in discharge of the marital obligation to support which is made specific by a divorce decree that are within the purview of this section.
Petitioner concedes that this restraining order was not a decree of divorce and it did not direct him to make any payments to his wife. Further, he concedes that no written separation agreement was entered into by the parties.
The only remaining basis then, upon which this Court, could hold in petitioner's favor, would be to equate the restraining order, coupled with the legal obligation to support his family imposed upon petitioner by Colorado law, with a decree of separate maintenance as defined in section 71. This we cannot do.
Petitioner's reliance on the wording of the statute ‘a legal obligation which because of the marital or family relationship is imposed on or incurred by the husband’ ignores the highly pertinent phrase which immediately follows and modifies the quoted portion of the statute. This phrase reads: ‘under the decree.’ When read in its entirety it is clear that in order to be deductible the statute requires that the obligations to make the payments in question must have been imposed by the decree itself.
The cases cited by petitioner in support of his petition herein are all distinguishable on their facts. Our attention has not been called to any case squarely on point on the issue involved herein. However, the regulations under section 71 and the legislative history of section 71 support our conclusion that petitioner is not entitled to the deduction claimed herein.
Section 1.71-1(b)(4) of the regulations provides that, ‘Section 71(a) applies only to payments made because of the family or marital relationship in recognition of the general obligation to support which is made specific by the decree, instrument or agreement.’
In the report of the Committee on Ways and Means of the Revenue Bill of 1942, pertaining to the predecessor of section 71 of the Code, H. Rept. No. 2333, 77th Cong., 2d Sess., 1942-2 C.B. 428, provides:
This section applies only where the legal obligation being discharged arises out of the family or marital relationship in recognition of the general obligation to support, which is made specific by the instrument or decree.
In Robert L. Daine, 9 T.C. 47, affd. 168 F.2d 449 (C.A. 2, 1948), which held that payments could not be made deductible by a husband and taxable to a wife by means of a retroactive court order, the Court stated:
Section 22(k) (predecessor of section 71) is applicable to ‘a wife who is * * * legally separated from her husband under a decree * * * of separate maintenance.’ The payments includible in her gross income are ‘periodic payments * * * received (by the wife) subsequent to such decree,‘ i.e., the decree under which the wife is adjudged legally separated from her husband and paid by the husband ‘in discharge of * * * a legal obligation which * * * is imposed upon or incurred by such husband under such decree or under a written instrument incident to such divorce or separation,‘ i.e., imposed by the same decree under which the wife received the payments. * * *
The same language is applicable here.
In the case at bar petitioner had an obligation to support his wife and family which arose out of the marital relationship. However, as petitioner himself apparently recognizes, this legal obligation was imposed upon him under Colorado law and not by the ‘restraining order’ issued by the court on February 14, 1966.
For the reasons discussed above we hold that the payments made by petitioner subsequent to the issuance of the restraining order and prior to the issuance of the temporary support order, are not deductible by petitioner as alimony under section 215.
Decision will be entered for the respondent.