Patton v. Commissioner

1987 T.C. Memo. 135, 53 T.C.M. 349, 1987 Tax Ct. Memo LEXIS 137
CourtUnited States Tax Court
DecidedMarch 16, 1987
DocketDocket No. 17771-83.
StatusUnpublished

This text of 1987 T.C. Memo. 135 (Patton v. Commissioner) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Patton v. Commissioner, 1987 T.C. Memo. 135, 53 T.C.M. 349, 1987 Tax Ct. Memo LEXIS 137 (tax 1987).

Opinion

SANDRA J. PATTON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Patton v. Commissioner
Docket No. 17771-83.
United States Tax Court
T.C. Memo 1987-135; 1987 Tax Ct. Memo LEXIS 137; 53 T.C.M. (CCH) 349; T.C.M. (RIA) 87135;
March 16, 1987.
Howard L. Prescott, and Marc R. Levine, for the petitioner.
Phoebe L. Tang, for the respondent.

CLAPP

MEMORANDUM FINDINGS OF FACT AND OPINION

CLAPP, Judge: Respondent determined deficiencies in petitioner's 1979 and 1980 Federal income taxes in the amounts of $8,990 and $13,884, respectively. The issues for decision are: 1) whether payments, which petitioner received from David Patton, constitute alimony or child support; 2) whether petitioner is entitled to a moving expense deduction; 1 and 3) whether petitioner is entitled to "income average" on her 1979 or 1980 Federal income tax returns.

For convenience, we have combined our findings of fact and opinion by issues. Some of the facts have been stipulated and are found accordingly. The stipulation of facts and the attached exhibits are incorporated by this reference.

*139 Alimony/Child Support Paid to Petitioner

FINDINGS OF FACT

Petitioner and David Patton were married on October 21, 1955 and had four children from their marriage. On September 25, 1975, petitioner and David Patton entered into a written Separation Agreement which stated, inter alia, the following:

4. It is understood and agreed that the husband will pay to the wife for the support and maintenance of wife and the minor children, that sum as is paid as income by the trustee under a trust established by Annie W. Patton. It is understood that the income so paid by the trustee fluctuates between $1,700.00 and $4,000.00 per month. Husband hereby assigns to wife and releases unto wife, all his rights and interest in and to said payments of income from the said trust. If for any reason said income cannot be assigned or said payments are not received by wife pursuant to this Agreement, husband shall directly pay to wife at least the sum of $1,700.00 or whatever sum is received from said trust, whichever is greater. The said support shall be paid until all the children have graduated from college or each reach[es] the age of twenty-one (21), whichever occurs last, notwithstanding*140 the remarriage of the wife. Once all the children have graduated from college or each reach the age of twenty-one (21), whichever occurs last, the wife shall then receive $1,000.00 per month if she is not remarried. * * *

On July 12, 1976, the District Court of Moore County, North Carolina granted petitioner an absolute divorce from David Patton. The district court's judgment incorporated into its decree the terms and provisions of the separation agreement.

OPINION

During the years in issue, sections 71(a) and (b) 2 provided that amounts, which a divorce decree or separation agreement fixes as child support, are not includible in gross income. 3 The payments, however, are treated as alimony unless the decree or agreement specifically states the amounts or parts thereof allocable to the support of the children. Commissioner v. Lester,366 U.S. 299 (1961).

The agreement must expressly specify or 'fix' a sum certain or percentage of the payment for child support before any of the payment is excluded from the [payee's] income. The statutory requirement is strict and carefully worded. It does not say that 'a sufficiently clear purpose' on the part of the*141 parties is sufficient to shift the tax. It says that the 'written instrument' must 'fix' that 'portion of the payment' which is to go to the support of the children. * * * [Commissioner v. Lester,supra at 303.]

Petitioner contends that the separation agreement specifies that $1,700 or more is for child support and that she is not entitled to any alimony until "all the children have graduated from college or each reach the age of twenty-one (21), whichever occurs last, notwithstanding the remarriage of the wife." Petitioner argues alternatively that she received only $1,000 per month as alimony. Respondent contends that the separation agreement does not specifically fix the amount of child support, and therefore the entire amount of the payments is alimony.

The separation agreement specifies that David Patton was to pay to petitioner an amount for support and maintenance of petitioner and*142 the minor children, until all the children graduated from college or each reached the age of 21, whichever occurs last and, that thereafter, he was to pay to petitioner $1,000 per month if she was not remarried. The agreement specifies only the time period during which David Patton was to pay petitioner. The agreement does not specifically fix the amount of child support. The amount paid depends upon the income from the trust and it is for petitioner and the minor children without allocation. Although a reasonable inference may be that part of the payments is for child support and part is for alimony, such an inference does not satisfy the test which the Supreme Court enunciated in Commissioner v. Lester,supra.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Welch v. Helvering
290 U.S. 111 (Supreme Court, 1933)
Commissioner v. Lester
366 U.S. 299 (Supreme Court, 1961)

Cite This Page — Counsel Stack

Bluebook (online)
1987 T.C. Memo. 135, 53 T.C.M. 349, 1987 Tax Ct. Memo LEXIS 137, Counsel Stack Legal Research, https://law.counselstack.com/opinion/patton-v-commissioner-tax-1987.