Jacklin v. Comm'r of Internal Revenue

Decision Date17 August 1982
Docket NumberDocket Nos. 4722-79,7554-79.
Citation79 T.C. 340
PartiesPATIENCE C. JACKLIN (FORMERLY PATIENCE C. RIVKIN), PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENTDEWEY K. RIVKIN, PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
CourtU.S. Tax Court

OPINION TEXT STARTS HERE

Rule 121, Tax Court Rules of Practice and Procedure.—-Motions for summary judgment by petitioner W and respondent, seeking a decision that petitioner H's payments under the spouses' written separation agreement are not deductible as a matter of law. For purposes of her motion only, W concedes that she and H were separated and that they executed the separation agreement. Held: Where the written separation agreement is not wholly without some standard for W's support, it is not insufficient as a matter of law under sec. 71(a)(2), I.R.C. 1954, for failing to state a definite amount for her support. Motions will be denied, and the issue will be decided on the basis of all of the facts and circumstances of the case, including the terms of the agreement. Douglas E. McKinley, for the petitioner in docket No. 4722-79.

Paul A. Burns, for the petitioner in docket No. 7554-79.

Patrick Putzi, for the respondent.

OPINION

PARKER , Judge:

Respondent determined deficiencies in petitioners' 1975 Federal income taxes in the amounts of $3,007.36 in docket No. 4722-79 and $12,260.39 in docket No. 7554-79. Petitioner Patience C. Jacklin (formerly Patience C. Rivkin) (Patience or the wife) filed a motion for summary judgment in her favor in docket No. 4722-79, under Rule 121, Tax Court Rules of Practice and Procedure, and respondent at the same time filed a motion for summary judgment in his favor in docket No. 7554-79.1 Patience and respondent filed briefs in support of their respective motions, and petitioner Dewey K. Rivkin (Dewey or the husband) filed a brief in opposition to both motions.

The issue for decision is whether payments made to the wife during 1975 constitute alimony deductible by the husband under section 215 and includable in income by the wife under section 71(a). To resolve this question, we must decide whether the husband made the payments under a “written separation agreement” within the meaning of section 71(a)(2).

The pertinent facts have been stipulated for purposes of our ruling on the motions for summary judgment. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.

Patience resided in McLean, Va., at the time she filed her petition in docket No. 4722-79. Dewey also resided in McLean, Va., at the time he filed his petition in docket No. 7554-79. Both petitioners timely filed individual Federal income tax returns for the year 1975 with the Internal Revenue Service Center in Memphis, Tenn.

Dewey and Patience were married on May 8, 1965, in Arlington, Va. No children were born or adopted of their marriage.

Due to marital difficulties that subsequently developed, Dewey and Patience executed a written “Separation Agreement” dated April 3, 1973.2 The preamble to the agreement recited certain facts surrounding its execution and stated its purpose as follows:

WHEREAS the parties have separated and are now living apart and choose to remain apart, and

WHEREAS the Wife is working and chooses to remain working and independent, and

WHEREAS the parties desire to confirm their separation and make arrangements in connection therewith, including the settlement of their property rights, and the support and maintenance of the Wife * * *

Paragraph 4 of the agreement stated that the parties had divided their personal effects and property between them. In paragraphs 6 and 7 of the agreement, respectively, Dewey promised to retain Patience as beneficiary of a life insurance policy on his life and to reimburse her for “all medical and dental expenses” incurred by her and her two minor children by a previous marriage as long as they were covered by the medical reimbursement program of the husband's business.

In addition, the agreement contained the following provisions for Patience's support:

(5) The Husband shall pay the Wife for her assistance and maintenance whatever supplementary funds are necessary to sustain a standard of living equivalent to that which obtained before the separation. The Wife intends to work and be independent. If the Wife ceases to work, payment will increase to meet the needs of the Wife. The payments will be at least quarterly and will continue until one of the following events should first occur: (a) the death of the Husband; (b) the remarriage of the Wife; (c) the death of the Wife. *ss

(9) The Wife acknowledges that the provisions of this Agreement for her support and maintenance are fair, adequate, and satisfactory to her, and in keeping with her accustomed standard of living and her reasonable requirements. The Wife, therefore, accepts these provisions in full and final settlement and satisfaction of all claims and demands for alimony or for any other provision for support and maintenance, and fully discharges the Husband from all such claims and demands except as provided in this Agreement. *ss

(11) If the parties hereto are divorced and the Wife thereafter remarried [sic], all obligations of the Husband to provide for the support and maintenance of the Wife shall cease.

Finally, paragraph 10 expressly provided that the agreement was to be incorporated in any decree of divorce later entered, but that the agreement would not merge in such decree and would survive such a decree and be forever binding and conclusive on the parties.

Dewey and Patience filed separate individual Federal income tax returns for 1973, 1974, and 1975. On his 1973 return, Dewey deducted $7,000 for separate maintenance payments to Patience, but the record does not show how Patience treated any such payments on her 1973 tax return.3

In 1974, Dewey made payments to Patience totaling $21,325 and deducted that entire amount as separate maintenance payments. Patience received amounts totaling $21,325 from Dewey in 1974 and reported that entire amount as alimony on her return. The 1974 payments are evidenced in part by 39 personal checks made out at irregular intervals and in varying amounts from $110 to $2,100. 4 All of the checks were payable to Patience with the exception of one $900 check to Hicks Realty and one $201.35 check to McGuire Appliances, Inc. The only check showing a purpose for any of the payments was the check to Hicks Realty which bore a notation about a month's rent and deposit.

During the taxable year 1975, Dewey made payments to Patience by personal checks in amounts totaling $24,250. The payments are evidenced by 30 checks made out at irregular intervals and in varying amounts ranging from $50 to $3,900. The checks list Patience as the payee but do not specify a purpose for any of the payments. Dewey also paid $129.20 for medical services for Patience by a personal check to Holy Cross Hospital dated May 14, 1975.

On his 1975 tax return, Dewey claimed a deduction of $24,379.20 labeled “Separate Maintenance Agreement” for the full amount of the payments he made to Patience during 1975. On her 1975 tax return, Patience reported $14,400 as alimony received from Dewey.

On October 1, 1976, the parties executed a written property settlement agreement with terms substantially different from the terms of their earlier separation agreement. This agreement contained a provision fixing definite monthly amounts payable for Patience's support beginning on October 1, 1976, and ending on February 1, 1987. Those payments were to terminate upon the death or remarriage of Patience. Dewey and Patience were divorced on January 5, 1977, and the divorce decree affirmed, ratified, and incorporated petitioners' property settlement agreement of October 1, 1976. The characterization of payments made under the 1976 agreement is not in issue in this case.

The present dispute concerns the proper treatment for Federal tax purposes of payments made by Dewey to Patience during 1975. In his notices of deficiency, respondent took inconsistent positions in order to protect the revenue and to insure consistent treatment of the payments in question.5 Respondent determined that the full amount of payments by Dewey to Patience during 1975 was includable in income by Patience under section 71(a)(2) and was not deductible by Dewey under section 215. However, in the motions for summary judgment now before us, respondent and Patience argue that Dewey's 1975 payments are not deductible because they were not made under a “written separation agreement” within the meaning of section 71(a)(2).

In order for us to grant the motions for summary judgment, Patience and respondent must show that there is no genuine issue as to any material fact and that they are entitled to a decision in their favor as a matter of law. Rule 121(b);6 Shiosaki v. Commissioner, 61 T.C. 861, 863 (1974). Because this burden is on the moving party in a motion under rule 121 or rule 56 of the Federal Rules of Civil Procedure ( Fed. R. Civ. P. 56), the factual materials presented and the inferences therefrom must be viewed in the light most favorable to the party opposing the motion. Adickes v. Kress & Co., 398 U.S. 144, 157 (1970); United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Hoeme v. Commissioner, 63 T.C. 18, 20 (1974).

In the present case, Dewey and Patience filed separate returns for the taxable year 1975. Furthermore, Patience has conceded for purposes of the present motions that she and Dewey separated in 1973, that they executed the 1973 separation agreement, and that Dewey made the disputed 1975 payments to her under that agreement and because of the marital or family relationship. The courts have held it proper to grant summary judgment under Fed. R. Civ. P. 56 where the moving party concedes that there is no genuine issue as to any material fact if his legal theory is accepted, but at the same time maintains that there is such...

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