Casey v. Comm'r of Internal Revenue, Docket No. 16631.

• Decision Date: 21 February 1949
• Docket Number: Docket No. 16631.
• Citation: 12 T.C. 224
• Parties: FRANK R. CASEY, PETITIONER, v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

12 T.C. 224

FRANK R. CASEY, PETITIONER,

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT.

Docket No. 16631.

Tax Court of the United States.

Promulgated February 21, 1949.

Petitioner was divorced from his wife on July 12, 1944. Under the decree of that date he was obligated to pay alimony in the amount of $5,000 at the rate of $100 per month until the full amount was paid or until the wife's remarriage. Petitioner's claim, under section 23(u), for a deduction of the alimony paid in 1944 was disallowed by respondent. Thereafter, counsel for petitioner prepared an amended order which was entered under date of September 10, 1947, which provided that petitioner was to pay alimony in the sum of $100 per month for a period of 50 months from the date of the original decree, that the payments were to be regarded as ‘periodic,‘ and that the wife was to pay the Federal income tax on all such payments. Held, the alimony payments provided for under both court orders constituted ‘installment‘ payments within the meaning of section 22(k) and are therefore not deductible by the petitioner under section 23(u) of the Internal Revenue Code. George Kerr, Esq., for the petitioner.

Clarence E. Price, Esq., for the respondent.

This proceeding involves a deficiency in income tax for the calendar year 1944 in the amount of $296.45.

The single issue presented is whether respondent was correct in disallowing, under the provisions of sections 23(u) and 22(k) of the Internal Revenue Code, a deduction of $1,150 claimed by petitioner in 1944 for alimony paid to his former wife.

FINDINGS OF FACT.

The petitioner, Frank R. Casey, is an individual whose last known residence was at 1274 Hall Avenue, Lakewood, Ohio. His income tax return for the calendar year 1944 was filed with the collector of internal revenue for the eighteenth district of Ohio.

Frank R. Casey was divorced from his wife, Emma Casey, by an order of the Court of Common Pleas for the County of Cuyahoga, State of Ohio, dated July 12, 1944. The journal entry therein provided in part as follows:

It is further ordered, adjudge(d) and decreed that the defendant pay to the plaintiff as alimony the sum of Five Thousand Dollars ($5,000.00) at the rate of One Hundred Dollars ($100.00) per month, said payments to start upon the signing of this decree and to continue until the full amount is paid out, or until the plaintiff remarries.

In his individual income tax return for 1944 petitioner claimed a deduction of $1,150 for alimony payments made in that year pursuant to the court order of July 12, 1944. After being advised of the Commissioner's determination that such amounts were not deductible from his gross income under the provisions of section 23(u) of the Internal Revenue Code, counsel for petitioner drew a journal entry which was signed by the Court of Common Pleas of the County of Cuyahoga, State of Ohio, and entered in its records on September 10, 1947. This journal entry reads as follows:

* * * the court being fully advised that the Income Tax Division of the Internal Revenue Department has placed an interpretation upon the former Journal Entry in this case, dated July 125h 1944, which is inconsistent with and does not comply with or express the intention of the Court and counsel originally intended.

Now, THEREFORE, THE COURT HEREBY ORDERS, ADJUDGED (sic) AND DECREES that the original order in this case be amended nuno pro tuno (sic) to read as follows:

It is further ordered, adjudged and decreed that the defendant pay to the plaintiff as alimony the sum of One Hundred Dollars ($100.00) per month for the period of fifty (50) months from the date of the original decree, that the above order is not a lump sum judgment or settlement, but merely periodic payments of alimony, and said payments are to cease and terminate when and if the plaintiff remarries.

It is further ordered, adjudged and decreed that the plaintiff shall pay the income tax to the Federal Government on said payments.

OPINION.

ARUNDELL, Judge:

If we are to follow our decision in J. B. Steinel, 10 T.C. 409, there can be no doubt that the alimony provision embodied in the court order dated July 12, 1944, resulted in ‘installment‘ rather than ‘periodic‘ payments under section 22(k) of the Internal Revenue Code.¹ Such payments are not deductible by the husband under section 23(u) of the code.² Thus, unless the court order dated September 10, 1947, entitles the petitioner to deduct the alimony payments made by him in 1944, it is clear that the respondent's determination must be sustained.

In order to eliminate from the order of July 12, 1944, the statement of the principal sum of $5,000, in figures, the journal entry in the order of September 10, 1947, provided simply for the payment of ‘One Hundred Dollars ($100.00) per month for the period of fifty (50) months.‘ It further stated that the payments were ‘per...