Lester v. CIR
Decision Date | 06 June 1960 |
Docket Number | No. 301,Docket 26020.,301 |
Citation | 279 F.2d 354 |
Parties | Jerry LESTER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
Court | U.S. Court of Appeals — Second Circuit |
Louis Mandel, for petitioner, Leonard J. Lefkort, New York City, of counsel.
Norman H. Wolfe, Washington, D. C., Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, C. Guy Tadlock, Attys., Dept. of Justice, Washington, D. C., for respondent.
Before LUMBARD, Chief Judge, HAND, Circuit Judge, and JAMESON, District Judge.
Lester, the taxpayer, petitions to review an order of the United States Tax Court, holding him liable for deficiencies in his income tax for the years 1951-52, based upon the disallowance of deductions claimed by him as payments of alimony. The facts were as follows: Lester and his wife had three children, aged 13, 11 and 9. They lived in Los Angeles and had been married on August 24, 1934. On April 16, 1951, while the wife was still living in California, though he had himself moved to New York, they entered into an agreement in anticipation of a divorce. This agreement provided that the custody and control of the children should be given to the wife subject to plaintiff's reasonable right of visitation and of having the children with him for thirty days during the summer vacation. The important provision was paragraph 11, which we quote in part:
By paragraph 8(e) the parties also agreed that, so long as the husband was required by the agreement or by law to support the children, he would cause them to be jointly named as beneficiaries to the extent of $30,000 of the proceeds payable under three life insurance policies assigned by his wife to him.
The taxpayer performed the agreement by paying to his wife the sums specified in paragraph 11 and deducted on his income tax returns as alimony the "periodic payments" made during the years 1951-52. The Commissioner and the Tax Court held that he was entitled to deduct only one half of these as alimony, because subdivision (i) of paragraph 11 showed that one half was all that she was entitled to keep for her own use, the other half being paid for the maintenance and support of the children.
The question involved has been the subject of a number of decisions as to the proper interpretation of § 22(k) of the Internal Revenue Code of 1939, 26 U. S.C.A. § 22(k), which provides that "periodic payments * * * in discharge of, a legal obligation which, because of the marital or family relationship, is imposed upon * * * such husband * * shall be includible in the gross income of such wife." The "periodic payments" prescribed by the agreement were clearly imposed upon the taxpayer because of a "marital or family relationship"; and were therefore deductible by him. However, a difficulty arises from the succeeding sentence of § 22(k), which reads as follows: "This subsection shall not apply to that part of any such periodic payment which the terms of the decree or written instrument fix, in terms of an amount of money or a portion of the payment, as a sum which is payable for the support of minor children of such husband." The courts are not unanimous as to what is meant by the phrase, "fix, in terms of an amount of money or a portion of the payment." In the case at bar the Commissioner and the Tax Court have read the language in paragraph 11(i) of the agreement as "fixing" one half of all the payments made to the wife as sums "payable for the support of minor children of such husband." If they are so read, the decision of the Tax Court was of course right; if not, all the payments are to be regarded as gross income of the wife, and the deficiencies should be expunged.
In Weil v. Commissioner, 240 F.2d 584, 586, we held that a very similar agreement did not "fix, in terms * * * or a portion of the payment" what the...
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Ashe v. CIR
...Circuit has again carefully considered the question and has restated and adhered to its previous ruling in the Weil case. Lester v. Commissioner, 279 F.2d 354. See also: Hirshon's Estate v. Commissioner, 2 Cir., 250 F.2d In Eisinger, in Metcalf, and in the present case, major emphasis is pl......
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Commissioner of Internal Revenue v. Lester
...him under § 23(u) of the Code.1 The Tax Court approved the Commissioner's disallowance, 32 T.C. 1156, but the Court of Appeals reversed, 279 F.2d 354, holding that the agreement did not 'fix' with requisite clarity any specific amount or portion of the periodic payments as payable for the s......
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Thomson v. Comm'r of Internal Revenue, Docket Nos. 1099-63
...as being contrary to the conclusion of the United States Court of Appeals for the Second Circuit in the case of Commissioner v. Lester, 279 F.2d 354 (C.A. 2, 1960), which opinion the Supreme Court affirmed. Arthur argues that under the doctrine of collateral estoppel, this Court is bound by......
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GAMSE v. Commissioner, Docket No. 25352-82.
...of the payments she received from him, citing Commissioner v. Lester 61-1 USTC ¶ 9463, 366 U.S. 299 (1961), affg. 60-2 USTC ¶ 9501 279 F. 2d 354 (2d Cir. 1960), revg. Dec. 23,746 32 T.C. 1156 (1959). Petitioner contends that the separation agreement, read as a whole, does "fix" the amount o......