Blanchard v. United States, Civ. No. K-75-1726.

• Decision Date: 30 December 1976
• Docket Number: Civ. No. K-75-1726.
• Citation: 424 F. Supp. 916
• Parties: Elmer F. BLANCHARD v. UNITED STATES of America.
• Court: U.S. District Court — District of Maryland

424 F. Supp. 916

Elmer F. BLANCHARD v. UNITED STATES of America.

Civ. No. K-75-1726.

United States District Court, D. Maryland.

December 30, 1976.

George E. Krouse, Wheaton, Md., for plaintiff.

Jervis S. Finney, U. S. Atty., Gerard P. Martin, Asst. U. S. Atty., Baltimore, Md., Edward J. Snyder, Trial Atty., U. S. Dept. of Justice, Washington, D. C., for defendant.

FRANK A. KAUFMAN, District Judge.

In this case, Blanchard seeks to recover the sum of $9,823.24 paid as additional federal income taxes and interest after assessment by the Government for the tax years 1972 and 1973. The Government counterclaims to recover the sum of $4,078 of additional federal income taxes which it asserts is due from plaintiff for the tax year 1972. Defendant has moved for summary judgment as to both the complaint and counterclaim. There are no contested issues of fact which in any way are material or relevant to the decision herein.¹

Plaintiff, in 1970, was granted an absolute divorce from his wife by a Maryland state court. That court's decree incorporated a prior written agreement entered into by plaintiff and his then wife which provided, inter alia, that the husband pay the wife the sum of $1,800 per month until July 1, 1974, and thereafter the sum of $1,500 per month. Plaintiff claims a deduction for the years 1972 and 1973 for amounts paid to his ex-wife in excess of $1,800 per month.

For each of the years 1972 and 1973, the alimony payments under the agreement and decree amounted to $21,600 ($1,800 times 12 months). Real estate taxes with respect to the wife's property amounted to $1,146 and $1,274 in 1972 and 1973, respectively, bringing the total deductible amount, in the Government's view (the real estate taxes being deductible), to $22,746 in 1972 and $22,874 in 1973. On his 1972 and 1973 returns Blanchard claimed alimony deductions in the larger amounts of $31,000 and $33,000, respectively. The Internal Revenue Service (IRS) disallowed the sums of $8,254 and $10,126, respectively, for 1972 and 1973.

Subsequent to the audit by IRS, plaintiff obtained on October 4, 1974 from the state court which granted the original divorce, a decree which, inter alia, increased the alimony payable for the years 1972 and 1973 to the levels claimed on the tax returns, $31,000 and $33,000, respectively, and ordered that the decree "be effective as of January 1, 1972." That latter order was filed after plaintiff in August, 1974 petitioned the state court to increase the alimony payments. In his petition plaintiff noted that "it was the understanding and agreement of the parties that plaintiff would increase alimony payments to defendant consistent with plaintiff's income and defendant's needs," and that "in order to avoid litigation, plaintiff voluntarily increased alimony payments * * * to $31,000 in 1972 and $33,000 in 1973" and that he and his ex-wife had "agreed that said alimony payments for 1974 and subsequent thereafter, subject to further modification, shall be $30,000 per annum. In accordance with said understanding, plaintiff did pay to defendant the sum of $31,000 in 1972 and the sum of $33,000 in 1973."

Plaintiff timely filed his individual income tax returns for the years 1972 and 1973 and paid the taxes he computed as due. He thereafter paid the assessed taxes and interest in issue and timely filed claims for refund which were disallowed. Jurisdiction exists in this case pursuant to 28 U.S.C. §§ 1340 and 1346(a)(1).

After the complaint herein was filed, the IRS issued to plaintiff a notice of deficiency asserting its determination that Blanchard owed an additional $4,078 of 1973 tax, and interest thereon. That deficiency notice was intended merely to correct a mathematical error in the amount of tax due under the original assessment. Plaintiff waived his rights under Int.Rev. Code of 1954 § 7422(e) to have his liability adjudicated by the Tax Court, and consented to the immediate assessment and collection of the tax and interest due. The tax has now been assessed and, pursuant to Int.Rev.Code of 1954 § 7401, the Government has counterclaimed in the within case to recover the $4,078 of additional tax, and interest thereon. Plaintiff of course denies his liability for the additional tax and interest. However, there is no dispute between the parties as to the mathematical calculations or indeed as to anything other than the construction and application of the relevant statutory provisions.

Int.Rev.Code of 1954, § 215(a) provides:

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.

§ 71 provides, in part:

(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

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