MEMORANDUM OPINION
[1] COHEN, CHIEF JUDGE: Respondent determined a deficiency in petitioner's Federal income tax in the amount of $ 11,032 for the taxable year 1994. By amendment to the answer, respondent asserts an increased deficiency in the amount of $ 14,297. The issue for decision is whether petitioner is entitled to deduct as alimony certain amounts paid in accordance with a marital settlement agreement.
[2] This case was submitted fully stipulated under Rule 122. Unless otherwise indicated, all 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. The stipulated facts are incorporated herein by this reference. Petitioner's brief contains statements and attachments that were not stipulated and are not evidence. See Rule 143(b). We disregard these in making our decision.
BACKGROUND
[3] Petitioner resided in La Quinta, California, at the time he filed the petition in this case. Petitioner formerly was married to Patricia R. Cologne (Ms. Cologne). Petitioner and Ms. Cologne separated on March 21, 1993. On November 19, 1993, petitioner and Ms. Cologne entered into a marital settlement agreement (the agreement), which was filed with the Superior Court of the State of California for the County of San Diego on December 29, 1993.
[4] Pertinent portions of the agreement are as follows:
RECITALS
* * * * *
6. Husband is presently the sole proprietor of Gordon
Cologne and Associates. This business has an estimated pre-tax
net income of $ 19,500.00 per month. Wife is presently unemployed
and has no earned income. Husband will retire on or about
September 1, 1994, after reaching the age of 70, and anticipates
receiving no earned income after that date.
DIVISION OF COMMUNITY PROPERTY
12. The real property commonly known as * * * Rancho Santa
Fe, California, shall be disposed of according to the following
terms:
A. The residence shall be listed for sale * * * on or
before February 1, 1994. * * * The residence shall remain listed
until sold. * * *
C. Wife may have the use and possession of the residence on
the condition that she maintain the residence and yard in
satisfactory condition, normal wear and tear excepted. Husband
shall have the right to occupy the residence for principal
residential use purposes, including sleeping, cooking and eating
and attending to his personal hygiene needs. In case of any
dispute, Wife shall have the first right to occupy the premises.
Husband shall also have the right to store any items of personal
property awarded to him in the premises until the sale is
consummated.
E. Until the sale of the residence is consummated or until
September 1, 1994, whichever first occurs, Husband shall pay on
a current basis, without the right to reimbursement, real
property taxes, principal and interest payments on the notes
secured by deeds of trust on the residence and fire and
liability insurance for the residence. In addition, Husband
shall pay on a current basis all charges for trash pickup, the
water bill, and the gardener for one day a week, and pool
maintenance. If the house is not sold by September 1, 1994, and
the Wife continues to reside in the house, the Wife shall pay
all the aforesaid taxes, principal and interest on the notes,
insurance and maintenance costs as and for reasonable rental for
such use or the actual fair rental value, whichever is less. If
the sale of the residence is not consummated on or before
September 1, 1994, the court shall have the jurisdiction to make
further orders regarding occupancy and the payment of the
mortgages, real property taxes, insurance, trash pickup, water,
gardener and pool maintenance * * *.
H. The net proceeds of sale, * * * shall be held in escrow
and disbursed as follows:
(1) Husband shall be paid a sum equal to all payments
made by him on or after April 1, 1993, on * * * [certain
charge, credit card, and loan balances, except for
purchases made by petitioner after April 1, 1993];
(2) The Wife shall be paid a sum equal to all payments
made by her on or after April 1, 1993, on * * * [certain
purchases made by Ms. Cologne after April 1, 1993].
(3) Any remaining balance due on the obligations
described in paragraphs (1) and (2) above shall be paid in
full.
(4) Any balance remaining shall be paid one-half to
each party and Wife shall pay to Husband from her one-half,
her share of the 1993 income tax obligation as set forth in
Paragraph 16.
* * * *
13. The real property in Blue River, Wisconsin, shall be
disposed of according to the following terms:
A. The parties shall continue to hold such property as
joint tenants with right of survivorship. Either party may
terminate the joint tenancy at any time. At such time both
parties shall make testamentary provisions so that the property
will pass to the children of this marriage if a party should die
prior to its sale.
* * * * *
C. Both parties shall have the right of use and possession
of the residence. In case of a conflict, Wife shall have the
first right to any two-week period she chooses upon providing
Husband thirty days' advance written notice.
* * * * * *
E. Wife shall pay on a current basis, without the right to
reimbursement, principal and interest payment on the note
secured by the first deed of trust. Husband shall pay on a
current basis, without the right to reimbursement, real property
taxes on the residence, fire and liability insurance for the
residence, utilities, maintenance and repairs. All income
received on account of the property shall be applied to the
obligation owed to W. Southard and any remaining balance shall
be paid one-half by each party. Any earnings remaining after
payment to W. Southard shall be divided equally between the
parties.
15. The Husband's interest in the Judge's Retirement Plan
and in the Legislator's Retirement Plan shall be divided equally
between the parties. * * * Pending each plan's direct payment of
benefits to Wife, Husband shall allow the Wife to receive for
deposit in a joint account the entire retirement benefits in
lieu of the division of these benefits and the spousal support
as provided in paragraph 34 of this agreement. She may withdraw
all such sums for her personal use as an assignment in
satisfaction of spousal support.
16. The parties shall file joint federal and state tax
returns for the calendar year ending 1993. * * * Any tax
liability due and unpaid upon the filing of the tax return shall
be paid by the Husband, and the Wife shall reimburse the Husband
her share of the tax based on the net income (retirement income
actually received) received by her during the year. * * *
DEBTS
* * * * *
30. Husband and Wife shall each pay fifty percent (50%) of
all liabilities and expenses (including accounting and legal
fee) relating to any tax liabilities asserted by Federal, State
or local taxing authorities arising out of any review of the
parties' personal income tax returns for any period when they
filed joint returns except for tax year 1993 which is governed
by paragraph 16. Each party shall, however, be solely
responsible for the liabilities and expenses resulting from
income known only to and solely benefiting said party.
SPOUSAL SUPPORT
34. Husband shall pay Wife * * *, as and for spousal
support the sum of $ 3,000.00 per month on the 1st day of each
month commencing November 1, 1993, and continuing until Husband
dies, Wife dies, Wife remarries, Wife commences residing with an
unrelated member of the opposite sex, or until Husband retires
on September 1, 1994, whichever shall first occur.
During 1994, petitioner made the following payments pursuant to
the agreement:
| $ 25,950.00 | Spousal support |
| 1,920.00 | Life insurance premiums |
| 3,030.00 | Gardener for home during pendency of sale |
| 675.83 | Pool service |
| 1,804.02 | Waste management |
| 6,790.77 | January and February pensions |
| 1,221.54 | Utilities (electric and water conditioning) for house |
| in Wisconsin |
| 33,625.50 | One-half of petitioner and Ms. Cologne's 1993 state |
| and Federal income taxes. |
| $ 75,017.66 |
Petitioner deducted $ 71,273 as alimony on his 1994 Federal income tax return.
[5] The parties have stipulated that an alimony deduction is allowed for the following payments totaling $ 36,465: Spousal support of $ 25,950, life insurance premiums of $ 1,920, waste management of $ 1,804, and January and February pension payments of $ 6,791. Remaining in dispute are the payments of Ms. Cologne's half of the 1993 Federal and State income taxes and payment of the utilities for the Wisconsin property.
DISCUSSION
[6] Section 215 allows as a deduction an amount equal to the alimony or separate maintenance payments paid during the year. For purposes of section 215, the term "alimony or separate maintenance payment" means any alimony or separate maintenance payment (as defined in section 71(b)) that is includable in the gross income of the recipient under section 71. See sec. 215(b). Section 71(a) provides that gross income generally includes amounts received as alimony or separate maintenance payments. Section 71(b)(1) defines alimony or separate maintenance payment as 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.
California Family Code section 4337 (West 1994) provides: "Except as otherwise agreed by the parties in writing, the obligation of a party under an order for the support of the other party terminates upon the death of either party or the remarriage of the other party."
[7] The parties dispute whether the payments at issue meet the requirement of section 71(b)(1)(D). The parties agree that the agreement does not provide any conditions for the termination of these payments. Respondent's position is that petitioner's obligations to pay Ms. Cologne's share of their 1993 income taxes and for the utilities for the Wisconsin property survive her death. Petitioner argues that petitioner's liability for the payments terminates at her death pursuant to California Family Code section 4337.
FEDERAL AND STATE INCOME TAX PAYMENTS
[8] Because the income tax liabilities are joint and several, if Ms. Cologne died, petitioner would remain liable for the full amount of their taxes to the respective tax collectors. See sec. 6013(d)(3). Normally, however, petitioner would be entitled to the right of contribution for Ms. Cologne's half of the taxes. Petitioner, through the agreement, has given up that right (beyond the limited share specified). The question we must decide is whether, if Ms. Cologne died, petitioner would still be obligated for Ms. Cologne's half of the joint liabilities without the right of contribution (beyond the share specified). As this question is not answered by the agreement and the payment of taxes is not the usual type of support expense, such as food, shelter, or medical care, that necessarily ends with the payee spouse's death, we look to State law.
[9] California Family Code section 4337 (West 1994) serves to terminate spousal support at the payee spouse's death, where the parties have not otherwise agreed. California law distinguishes payments for support from those for property settlement. In setting spousal support, the California court considers, among other factors, each party's earning capacity, the needs of each party based on the standard of living during the marriage, the payor spouse's ability to pay, the obligations and assets of each party, the duration of the marriage, and the age and health of the parties. See Cal. Fam. Code sec. 4320 (West 1994).
[10] Division 7 of the California Family Code governs the division of debts and liabilities and that of property. See Cal. Fam. Code sec. 2500-2660 (West 1994). Both assets and liabilities are considered in dividing the community estate. See Cal. Fam. Code sec. 2552 (West 1994).
[11] The allocation of the liability for the 1993 income taxes between petitioner and Ms. Cologne was based on their relative incomes for the year. Petitioner has not shown that the allocation was based on their relative needs, standards of living, or earning capacities when the taxes would be paid or on any other factors normally taken into consideration in determining support. The agreement provided that petitioner would be reimbursed for Ms. Cologne's smaller share out of the net proceeds, if any, of the sale of the residence remaining after other debts were paid. The division of the couple's tax liabilities is in the nature of a property settlement, rather than a provision for the future support of Ms. Cologne. Accordingly, section 4337 of the California Family Code (West 1994) does not operate to terminate these payments at Ms. Cologne's death, and the requirement of section 71(b)(1)(D) is not met. Petitioner is not entitled to an alimony deduction for the payments of his former spouse's 1993 Federal and State income tax liabilities.
PAYMENT OF UTILITIES FOR WISCONSINPROPERTY
[12] Pursuant to the agreement, petitioner and Ms. Cologne owned the Wisconsin property as joint tenants with right of survivorship. Both had the right of use and possession of the property, and his liability for utility bills would be continued after her death. While she occupied the property, however, the utility charges related to her use of it. We have allowed alimony deductions for utilities. See Graham v. Commissioner, 79 T.C. 415 (1982); Zampini v. Commissioner, T.C. Memo 1991-395. We hold that petitioner is entitled to deduct half of the amount paid, or $ 610.77.
[13] To reflect the above holdings and the parties' stipulations,
[14] Decision will be entered under Rule 155.