Commissioner of Internal Revenue v. Evans

• Decision Date: 13 March 1954
• Docket Number: No. 4731.,4731.
• Parties: COMMISSIONER OF INTERNAL REVENUE v. EVANS.
• Court: U.S. Court of Appeals — Tenth Circuit

211 F.2d 378 (1954)

COMMISSIONER OF INTERNAL REVENUE v. EVANS.

No. 4731.

United States Court of Appeals Tenth Circuit.

March 13, 1954.

S. Dee Hanson, Washington, D. C. (H. Brian Holland, Ellis N. Slack, Lee A. Jackson and James Q. Riordan, Washington, D. C., were with him on the brief), for petitioner.

Sydney E. Shuteran, Denver, Colo., for respondent.

Before BRATTON, MURRAH and PICKETT, Circuit Judges.

MURRAH, Circuit Judge.

The question presented here is whether monthly support payments received by respondent-taxpayer in the taxable year 1948, pursuant to a property settlement agreement executed by taxpayer and her then husband incident to an interlocutory decree of divorce in the State of Colorado, constitute taxable income to her under Section 22(k) of the Internal Revenue Code, 26 U.S.C.A. § 22.¹ The facts were adopted by the Tax Court as stipulated, and from a decision holding that such payments were not taxable to her, the Commissioner has appealed.

Taxpayer and John Evans, Jr., were married in Denver, Colorado in 1938, and lived continuously together as husband and wife until 1947, when she filed an action for divorce in the District Court of the City and County of Denver. On December 5, 1947, the parties entered into a property settlement agreement providing in part that pending the hearing on the application for divorce, the husband would pay to the wife the sum of $625 per month "to be used by her as alimony pendente lite", and $125 per month for each of their three minor children; that these payments would terminate whenever a final decree of divorce in the action then pending should be entered; and that if a final decree of divorce was for any reason not entered within one year from date, or either party died before the said final decree, the agreement should cease and terminate and the rights of the parties should remain as they were prior to the execution of the agreement. The agreement then went on to provide for the terms and conditions of settlement upon the entry of a final decree of divorce.

On December 10, 1947, the Colorado trial court entered its "Interlocutory Decree in Divorce", wherein it found that a divorce should be granted the wife, and ordered that "an interlocutory decree of divorce is hereby entered dissolving the marriage of plaintiff and defendant six months after the date of this interlocutory decree. It is expressly decreed by the court that during such six months period after the signing of this Interlocutory Decree the parties hereto shall not be divorced; shall still be husband and wife, and neither party shall be competent to contract another marriage anywhere during such period. * * * The court further decrees that after six months from the date hereof this Interlocutory Decree shall be and become a final decree of divorce and the parties shall then be divorced, unless this Interlocutory Decree shall have been set aside, or an appeal has been taken, or a writ of error has been issued." On June 11, 1948, a final decree of divorce was entered.

In her income tax return for the year 1948, the taxpayer did not include as taxable income payments received from her husband under their agreement during the six months' period after entry of the interlocutory decree prior to the final decree of divorce, but only those amounts received after the entry of the absolute decree. The Commissioner determined a deficiency on the ground that when the taxpayer received such payments, she was "legally separated" within the meaning of Section 22(k) and the income was therefore taxable to her.

Following its decision in Eccles v. Commissioner, 19 T.C. 1049, later affirmed in Commissioner of Internal Rev. v. Eccles, 4 Cir., 208 F.2d 796, the Tax Court held that since the interlocutory decree did not immediately terminate the marriage, the wife was not "divorced or legally separated from her husband under a decree of divorce or of separate maintenance" within the meaning of Section 22(k), and therefore such amount received by her under the interlocutory decree was not taxable income to her. In the Eccles case, the taxpayer's wife was granted an interlocutory decree of divorce in the State of Utah, to become final after six months. The Tax Court held that under established Utah law, the taxpayer and his wife were still husband and wife until the final decree was entered, and were therefore entitled to file a joint income tax return covering the six months period under Section...