MEMORANDUM FINDINGS OF FACT AND OPINION
SIMPSON, Judge: The Commissioner determined a deficiency of $2,015.00 in the Federal income tax of Lee and Saress Henry for 1977 and a deficiency of $2,082.00 in the Federal income tax of Thomas and June Strealdorf for 1977. After concessions by Mr. and Mrs. Strealdorf, the sole issue for decision is whether payments made by Mr. Strealdorf to his former wife, Mrs. Henry, are alimony or child support.
FINDINGS OF FACT
Some of the facts have been stipulated, and those facts are so found.
The petitioners, Lee Swink and Saress Dawson Henry, husband and wife, resided in Marietta, Ga., at the time they filed their petition in this case. They filed their joint Federal income tax return for 1977 with the Internal Revenue Service Center, Chamblee, Ga.
The petitioners, Thomas G. and June G. Strealdorf, husband and wife, resided in Douglasville, Ga., at the time they filed their petition in this case. They timely filed their joint Federal income tax return for 1977 with the Internal Revenue Service Center, Chamblee, Ga.
Prior to 1975, Mr. Strealdorf married Saress Dawson (now Mrs. Henry). Three children were born of such marriage:
| Name | Date of Birth |
| James Dawson Strealdorf | July 31, 1962 |
| Thomas George Strealdorf, Jr. | Oct. 14, 1963 |
| Sue Ann Strealdorf | Nov. 18, 1965 |
In June 1975, a final judgment and decree dissolving such marriage was entered by the Superior Court of Cobb County, Ga. Such decree awarded custody of the three children to Mrs. Henry and further provided, in part:
the defendant [Mr. Strealdorf] shall pay, or cause to be paid, to the plaintiff [Mrs. Henry], the sum of Five Hundred and Fifty-five Dollars ($555.00) per month as alimony and child support, for the support of herself and the said three minor children. Said payments are to be reduced by one-third as each child dies, marries, reaches age 18, or becomes sooner self-supporting. If, however, the individual child enrolls full-time in a post secondary school or college, said support payments will continue until completion of a regular program.
Neither Mr. Strealdorf nor Mrs. Henry ever discussed the tax consequences of such payments.
In October 1975, Mrs. Henry married Mr. Henry. In approximately November 1975, Mr. Strealdorf learned of the remarriage of his former wife. He continued making payments pursuant to the divorce decree. However, during June, July, and August 1976, he made payments of only $300 per month to Mrs. Henry. Mr. Strealdorf's reason for making such reduced payments was that he had insufficient funds due to the payment of large dental expenses for his children. In August 1976, Mrs. Henry instituted a court proceeding against Mr. Strealdorf in which she requested that he be held in contempt for failure to make the full amount of the monthly payments for June through August. In September 1976, the Superior Court of Cobb County, Ga., dismissed such proceeding since Mr. Strealdorf had paid such arrearage. In its order, the Superior Court characterized such payment as "unpaid child support."
During the period January through November 1977, Mr. Strealdorf paid to Mrs. Henry the amount of $555 per month. In November 1977, Mrs. Henry and Mr. Strealdorf entered into an agreement whereby the custody of their oldest child, James, was transferred from Mrs. Henry to Mr. Strealdorf. Such agreement further provided that:
the child support payments made to Saress D. Henry by Thomas G. Strealdorf are to be reduced by one third, from $555.00 per month to $370.00 per month, unless and until said James D. Strealdorf returns to the custody of his mother, when the amount shall revert to $555.00 per month, as per the original court order and judgment.
In December 1977, pursuant to such agreement, Mr. Strealdorf paid $370 to Mrs. Henry. Thus, during 1977, Mr. Strealdorf paid the total sum of $6,475 to Mrs. Henry.
On their return for 1977, Mr. and Mrs. Strealdorf deducted as alimony payments the $6,475 paid to Mrs. Henry. On their return for 1977, Mr. and Mrs. Henry did not include such payments in their gross income. In his notices of deficiency, the Commissioner disallowed the deduction claimed by Mr. and Mrs. Strealdorf and determined that such payments constituted alimony, includable in the gross income of Mr. and Mrs. Henry.
OPINION
The issue for decisionis whether the amounts paid during 1977 by Mr. Strealdorf to his former wife, Mrs. Henry, constitute alimony, deductible by him and includable in her gross income, or whether such payments constitute child support, neither deductible by him nor includable in her gross income. The Commissioner, for protective reasons, has taken inconsistent positions in his notices of deficiency. However, at trial and on brief, it is his position that such payments are alimony.
Section 71(a) of the Internal Revenue Code of 19541 provides generally that if a wife is divorced from her husband under a decree of divorce, the wife's gross income includes periodic payments received after the decree "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." (emphasis added). However, section 71(b) provides that the general rule of section 71(a) shall not apply to that part of any payment which "the terms of the decree * * * fix, in terms of an amount of money or a part of the payment, as sum which is payable for the support of minor children of the husband." Thus, where periodic payments are received by the wife for the support and maintenance of herself and the minor children of the husband, the provisions of section 71(b) do not apply unless the decree fixes, by specific designation, the amount or percentage of such payments which are for the support of the minor children. If the portion which is for the support of the minor children is not so fixed, the full amount of the payments is includable in the income of the wife. Sec. 1.71-1(e), Income Tax Regs.; Commissioner v. Lester,366 U.S. 299 (1961); Brock v. Commissioner,566 F. 2d 947 (5th Cir. 1978), affg. a Memorandum Opinion of this Court; Abramo v. Commissioner,78 T.C. 154 (1982).
The parties agree that if only the divorce decree were involved, the full amount of the payments would be alimony, since such payments were periodic and there was no specific designation of the amount or percentage of such payments which was for the support of the minor children. See Commissioner v. Lester,supra;Brock v. Commissioner,supra. However, the Henrys contend that under Georgia law (section 30-209, Georgia Code Annotated (1968)), Mr. Strealdorf's obligation to pay alimony ceased upon Mrs. Henry's remarriage. Hence, they argue that the payments in 1977 were not made in discharge of a legal obligation within the meaning of section 71(a) and therefore do not constitute alimony.
Generally, the applicability of section 71(a) rests not on the decree itself, but on the existence of a "legal obligation" which is made specific by the decree. Hoffman v. Commissioner,54 T.C. 1607, 1610 (1970), affd. per curiam 455 F. 2d 161 (7th Cir. 1972). Although the characterization of a payment under State law does not control its Federal tax consequences, State law is determinative of the existence of a "legal obligation" for purposes of section 71(a)(1). Hoffman v. Commissioner,supra;Brownv. Commissioner,50 T.C. 865 (1968), affd. per curiam 415 F. 2d 310 (4th Cir. 1969). 2 Thus, where State law imposes no legal obligation to pay alimony after the remarriage of the former wife, the payments to her after her remarriage are neither includable in her income under section 71(a)(1) nor deductible by the husband under section 215(a). Hoffman v. Commissioner,supra;Brown v. Commissioner,supra; compare Blakey v. Commissioner, 78 T.C. (June 10, 1982). Because Mr. Strealdorf and Mrs. Henry were divorced under Georgia law, we must look to the law of that State to determine whether, after their divorce, Mr. Strealdorf had a continuing legal obligation to make alimonay payments to Mrs. Henry.
Under Georgia law, the duty of a father to provide support and maintenance for his minor children does not cease upon the remarriage of his former wife. Wimpey v. Pope,246 Ga. 545, 272 S.E. 2d 278, 279 (1980); Vereen v. Arp,237 Ga. 241, 227 S.E. 2d 331, 333 (1976); McCarty v. Wiggins,232 Ga. 711, 208 S.E. 2d 812, 813 (1974). However, with respect to the continuation of alimony, section 30-209, Georgia Code Annotated (1968), provides, in part:
All obligations for permanent alimony to the wife, whether created by contract, verdict, judgment, or decree, the time for performance of which has not yet arrived, shall cease upon her remarriage unless otherwise provided in the decree.3 [Emphasis added.]
It is well settled in the Georgia cases interpreting such statute, and the parties do not contend otherwise, that a husband's legal obligation to pay alimony automatically terminates upon the remarriage of his former wife unless otherwise provided in the decree. Woodward v. Woodward,245 Ga. 550, 266 S.E.2d 170, 171 (1980); Taylor v. Taylor,243 Ga. 506, 255 S.E. 2d 32, 33 (1979); Wiley v. Wiley,243 Ga. 271, 253 S.E. 2d 750, 751 (1979); Vereen v. Arp,supra.Mrs. Henry remarried in 1975; therefore, under Georgia law, Mr. Strealdorf had no legal obligation to continue making alimony payments to her unless the divorce decree "otherwise provided."
In Wiley v. Wiley,supra, the agreement of the parties provided for the support of their two minor children and provided for alimony for the wife. However, such alimony payments were to be reduced by one-half upon the cessation of support payments for each child; "[i]t is the intention of the parties that the alimony for the wife shall cease if and when the child support ceases." 253 S.E. 2d at 750. The wife remarried, and the husband discontinued making the alimony payments, although he continued making the child support payments. Analyzing such agreement, the court pointed out that although the parties did not specifically provide that the alimony payments were to survive the wife's remarriage, neither did the agreement mention remarriage as a condition that would terminate the alimony, as was provided in other parts of the agreement. The court focused on the above-quoted language and concluded that the parties had contemplated that the alimony payments would coincide with the period of time when the minor children were to be supported and would survive the wife's remarriage. Thus, the court found that the parties had "otherwise provided," and that therefore the provisions of Georgiasection 30-209 were inapplicable.
In Vereen v. Arp,supra, the agreement of the parties provided, in part, that the husband was required to maintain a home for his minor children and their legal custodian, his former wife. The wife remarried, and the husband sought to terminate such obligation. The court held that such obligation was for the support of his minor children and therefore was not terminated by the remarriage of his former wife. It is clear that the facts of Wiley v. Wiley and Vereen v. Arp are distinguishable from those of the present case.
More significant in deciding the present case is the case of Burns v. Rivers,244 Ga. 631, 261 S.E. 2d 581 (1979). There, the agreement of the parties and the decree of divorce stated that the husband was to pay to his former wife:
"* * * as alimony and child support the sum $650of.00 per month for her support and maintenance and for the support, maintenance and educationof the minor child. Upon the minor child's 18th birthday or his death, marriage or if he should otherwise become self-supporting, the aforesaid payments, shall be reduced by a sum of $250.00 per month." [261 S.E. 2d at 582.]
The trial court found, and the Supreme Court of Georgia affirmed, that the husband's obligation was abated by the sum of $400 per month upon his former wife's remarriage. The court reasoned that if any of the conditions applicable to the child occurred, the former wife would continue to be entitled to receive alimony of $400 per month. The Supreme Court of Georgia held that it was not necessary for the agreement to expressly provide that alimony for the wife should cease upon her remarriage because Georgiasection 30-209 expressly provides that such obligation ceases upon remarriage and because, under the terms of the agreement and the decree, there was "no provision * * * to the contrary." 261 S.E. 2d at 583. The court pointed out that Vereen v. Arp,supra, was distinguishable.
The decree dissolving the marriage of Mr. Strealdorf and Mrs. Henry provided that the $555-per-month payments were for alimony and child support and that such payments were to be reduced by one-third as each of their three children reached majority or otherwise was no longer required to be supported. There was no expressed indication that such payments should end or continue in the event of the remarriage of Mrs. Henry; yet, under Wiley v. Wiley,supra, it seems clear that the Georgia courts would construe the decree to require that the payments be continued so long as any of the children was entitled to the support, notwithstanding the remarriage of Mrs. Henry. Such a construction of the decree would rest on Mr. Strealdorf's continuing obligation to support the children and an interpretation of the decree that the payments were for the support of the children. Unlike Burns v. Rivers,supra, the decree in the present case required no payments to be made to Mrs. Henry in excess of those to be used for the support of the children, and consequently, there was nothing in the decree to indicate that any payments for her should continue beyond her remarriage. Thus, we find and hold that under Georgia law, Mr. Strealdorf had no continuing legal obligation to make alimony payments to Mrs. Henry after her remarriage. Therefore, the payments to her are neither includable in her income under section 71(a)(1) nor deductible by him under section 215(a). Hoffman v. Commissioner,supra;Brown v. Commissioner,supra.
To reflect the foregoing and the Commissioner's determination that James was a dependent of the Henry's during 1977,
Decision will be entered under Rule 155 in docket No. 9103-80.
Decision will be entered for the respondent in docket No. 14814-80.