Feinberg v. Comm'r of Internal Revenue, Docket No. 22898.
| Decision Date | 29 June 1951 |
| Docket Number | Docket No. 22898. |
| Parties | GEORGE J. FEINBERG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Philip J. Smith, Esq., for the petitioner
Graham Loving, Esq., for the respondent.
SECTIONS 22(k) AND 23(u)— ALIMONY — SEPARATION AGREEMENT— INCIDENT TO DIVORCE.— Petitioner and his wife entered into a separation agreement. Subsequently petitioner secured a divorce in which no provision was made for alimony nor any reference made to the separation agreement. Held, that the payments in question were not made under decree of divorce or separate maintenance nor under a written instrument incident to such decree. Payments were not deductible by petitioner.
This proceeding involves a deficiency of $1,865.04 in income tax for the calendar year 1943. By reason of the Current Tax Payment Act of 1943 the taxable year 1942 is also involved.
The issue is whether respondent erred in disallowing deductions of $3,900 for payments to petitioner's wife in each of the years 1942 and 1943.
The stipulated facts are so found.
Petitioner is an individual residing in Englewood, New Jersey. His income tax return for the calendar year 1942 was filed with the collector of internal revenue for Florida. His income and victory tax return for 1943 was filed with the collector of internal revenue for the sixth district of New Jersey.
Petitioner and his first wife, Anna Feinberg, were married in 1918 in New York and were continuously domiciled there until at least December 16, 1943. Two children were born of their marriage: Bernice, born in 1920, and Arthur, born in 1922. Petitioner lived with his wife until about the middle of 1939.
On February 10, 1940, after marital difficulties, petitioner and Anna Feinberg entered into a separation agreement providing in part:
NOW, THEREFORE, it is mutually agreed as follows:
6. That the first party (petitioner), while the said parties hereto shall both remain alive and so long as the second party (Anna Feinberg) shall fully keep and perform the covenants and conditions to be kept and performed by her under this agreement shall pay to the second party the sum of Three Thousand Nine Hundred ($3,900) Dollars per annum in equal weekly installments of Seventy-five ($75) Dollars each, commencing with the date hereof.
14. The first party further agrees that in the event the children of the marriage, to wit: BERNICE FEINBERG and ARTHUR FEINBERG, marry and become self-supporting, that then, and in that event, the alimony to be paid to the second party, as provided in paragraph 6 hereof, shall be reduced to Fifth (sic) ($50) Dollars per week instead of Seventy-five ($75) Dollars per week; in other words, as and when each of the children of the parties hereto marries and becomes self-supporting, the alimony to be paid to the second party shall be reduced Twelve and 50/100 ($12.50) Dollars per week per child.
15. That if, at any future time, the first party shall obtain a valid decree of divorce in the State of New York, against the second party, then, and in that event, this agreement and all the terms and conditions hereof, insofar as they relate to the second party only, shall cease and terminate and neither of the parties hereto shall thereafter be liable hereunder.
16. That in case either party hereto should at any future date and in any jurisdiction, institute suit against the other for a Separation or Divorce, then, and in such event, such party bringing the action shall be obligated to have incorporated in the final Decree in said action the provisions of this agreement.
On or about March 21, 1940, petitioner instituted an action against Anna Feinberg in Florida. Service by publication only was made on Anna Feinberg. When informed that the suit had been instituted, she gave instructions to her attorney to take all steps short of an appearance to prevent a decree of divorce. On May 27, 1940, petitioner was granted a decree of divorce a vinculo matrimonii by the Circuit Court of the Eleventh Judicial District of Dade County, Florida.
In June 1940 petitioner married his present wife, the former Frances Finn, in Union City, New Jersey. In 1941 Anna Feinberg instituted an action against petitioner herein in the Supreme Court of New York requesting a declaratory judgment to the effect that the Florida divorce decree was null and void and that she was still the true and lawful wife of the petitioner and a reformation of the separation agreement on the ground of fraud. That a(ion was settled by stipulation of the parties dated June 29, 1942, and pursuant thereto the Supreme Court of New York entered a consent judgment in November 1942 declaring that Anna Feinberg was still petitioner's true and lawful wife and also reforming the separation agreement in part as follows:
ORDERED, ADJUDGED AND DECREED that the separation agreement between GEORGE J. FEINBERG and ANNA FEINBERG entered into on the 10th day of February, 1940 be reformed in accordance with the stipulation of settlement * * * .
Subsequently, on or about March 5, 1943, Anna Feinberg instituted suit in the Supreme Court of New York County to compel petitioner herein to comply with the terms of the separation agreement as reformed by the judgment of the Supreme Court of Bronx County. Petitioner counterclaimed, seeking to modify this judgment by eliminating therefrom the provision that Anna Feinberg was his true and lawful wife. On May 18, 1943, the Supreme Court of New York County rendered its decision allowing Anna Feinberg's claim and denying petitioner's counterclaim.
Pursuant to the separation agreement of February 10, 1940, petitioner made payments to Anna Feinberg in each of the taxable years 1942 and 1943 in the amounts of $3,900 of which amounts $1,300 in each year were payments for the support of petitioner's two children.
The issue presented for our decision is whether respondent erred in disallowing deductions of $3,900 each paid by petitioner during the taxable years 1942 and 1943 pursuant to the terms of a separation agreement entered into with his wife on February 10, 1940.
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