Holt v. Commissioner

23 T.C. 469, 1954 U.S. Tax Ct. LEXIS 22

Opinions

OPINION.

Opper, Judge:

On the foregoing ultimate findings of fact the fundamental question presented is whether a support agreement is “incident” to¹ a subsequent divorce under section 22 (k) where the wife does not want a divorce, bas no knowledge that the husband has plans to institute divorce proceedings, and there is no mutuality of intent or plan and no objective evidence that such agreement was to be deemed incident to a divorce. The case is no stronger for a tax upon the wife in any respect than was Florence B. Moses, 18 T. C. 1020, 1024, where we said:

The evidence does not indicate that the parties entering into the agreement contemplated divorce proceedings as were true in Bertram G. Zilmer, 16 T. C. 365. If plans for a divorce following the agreement were held by Albert Moses [the husband], he did not bring them to light. The fact that one party may be considering the possibility of a divorce is not sufficient to make the voluntary separation agreement an incident to a divorce later obtained. Cecil A. Miller, 16 T. C. 1010. Although there is no requirement of positive proof that both parties jointly and positively anticipated legal divorce or separation at the moment they signed the agreement, Izrastzoff v. Commissioner, 193 F. 2d 625, affirming Estate of Daniel G. Reid, 15 T. C. 573, the actions and conduct of the parties, the time between agreement and divorce proceedings, and the participation of the parties in obtaining a divorce are elements and factors to be considered.

Upon examination of the evidence, we are left with the conclusion that if a divorce had been made the consideration for entering into the voluntary separation agreement, the petitioner would not have executed the agreement * * *

If anything the instant proceeding presents a stronger case for taxing the husband than did Florence B. Moses, supra. In that case the Opinion continued:

The respondent contends that section 21 of the agreement demonstrates that both husband and wife contemplated a divorce. That section declared that the provisions of the agreement may be incorporated in the final judgment or decree of divorce in any action brought by either party. * * *

On the contrary the present circumstances are, as our findings show, that such a provision was proposed and categorically rejected by the wife thereby putting the husband on notice that the agreement was not being made and could not be construed as having been intended as an incident to any divorce. Cf., e. g., Bertram G. Zilmer, 16 T. C. 365, and Estate of Daniel G. Reid, 15 T. C. 573, affirmed sub nom. Izrastzoff v. Commissioner, (C. A. 2) 193 F. 2d 625, with Joseph J. Lerner, 15 T. C. 379, revd. (C. A. 2) 195 F. 2d 296.

We are of course not unaware that the Moses case has been reversed, Commissioner v. Moses, (C. A. 2, 1954) 214 F. 2d 912. If the fact just stated is not adequate to distinguish the two results,² we must respectfully adhere to the position previously taken by the cases decided in the Tax Court. “Not every agreement which is followed by a divorce is ‘incident to’ the divorce within the meaning and intent of section 22 (k). * * * The chief difficulty has been to determine from the facts in each individual case whether the necessary connection between the two exists.”³ Cecil A. Miller, 16 T. C. 1010, 1013, 1014, revd. (C. A. 9) 199 F. 2d 597. We conclude that under the facts as found the payments were not made under an agreement incident to a divorce.

Reviewed by the Court.

Decisions will be entered wider Bule 50.

Footnotes

1

SBC. 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. * * * [Emphasis added.]

2

Lerner v. Commissioner, (C. A. 2) 195 F. 2d 296, reversing 15 T. C. 379, may be distinguished on the same grounds as those set forth in the Morse case (p. 1024) : “The voluntary separation agreement was not employed by the court granting the divorce in establishing the legal and economic relationships between the parties as was- true in Lemer v. Commissioner * *

3

And see, e. g., Jane C. Grant, 18 T. C. 1013, affd. (C. A. 2) 209 F. 2d 430, decided the day before the Moses case where we held as a matter of fact that the agreement was incident to a divorce. •