Marshall v. Commissioner, Docket No. 695-74
| Decision Date | 09 February 1976 |
| Docket Number | Docket No. 695-74,2517-74. |
| Parties | Rita G. Marshall v. Commissioner. |
| Court | U.S. Tax Court |
George C. Shattuck, for the petitioner. Louis J. Zeller, Jr., for the respondent.
In these consolidated cases, respondent has determined the following deficiencies in petitioner's Federal income tax:
Docket No. Year Deficiency
695-74 ........... 1966 $ 515.75
1967 4,891.39
1968 4,424.36
1969 6,881.76
2517-74 ........... 1970 2,766.37
1971 2,350.55
The parties have reached a settlement as to a portion of the 1971 deficiency. The issues remaining for decision are (1) whether petitioner received alimony income in excess of the amounts she reported for the taxable years 1966 through 1970; (2) whether the statute of limitations bars the assessment and collection of the tax for the year 1967; and (3) whether petitioner may claim a bad debt deduction for unpaid alimony or child support for the 1971 taxable year.
The parties stipulated all of the evidentiary facts and the case was submitted under Rule 122. Tax Court Rules of Practice and Procedure. This stipulation and the exhibits attached thereto are incorporated herein by reference.
Petitioner, a resident of Syracuse, New York, at all relevant times, was married to Dr. David Marshall from 1944 until she was granted a decree of absolute divorce in the State of New York on January 5, 1971. Petitioner filed her Federal income tax returns for the years 1966 through 1968 with the district director of internal revenue, Buffalo, New York, and for the years 1969 through 1971 with the Internal Revenue Service Center at Andover, Massachusetts. For the taxable year 1967, Dr. Marshall filed a return on which he claimed rates for married persons filing jointly although petitioner never signed such return, petitioner's income was not reported therein, and petitioner filed her own separate return for the same taxable year. In a later year, Dr. Marshall amended this and several other returns to claim "head of household" status. In 1973, petitioner notified respondent by letter that she wished to adopt Dr. Marshall's 1967 purported joint return as her own.
Five children were born of petitioner's marriage to Dr. Marshall. The youngest child, born blind, deaf, and quadriplegic, died in 1965 at two years of age. The child's condition and the fact of her death caused much tension in the Marshalls' marital bond. Also contributing to marital strife were the investigation, indictment, and 1965 conviction of Dr. Marshall for income tax evasion.
Dr. Marshall moved out of the family home in 1963. He stayed away for several months, but then began coming back to the house after business hours and staying until midnight. During these periods, he isolated himself in an office he maintained in the home. In 1966, petitioner commenced separation proceedings against Dr. Marshall on grounds of abandonment and cruel and inhuman treatment.
On November 7, 1966, petitioner filed a petition for an order of support and on November 17, 1966, the Family Court of the State of New York issued an order of support on behalf of petitioner and her children, which read in part as follows:
The not too readily apparent intention of the above-quoted support order was subsequently clarified in an affidavit by the issuing judge in anticipation of this litigation. The affidavit states that the court intended to award the following:
In 1968, a petition was filed in the Family Court on behalf of petitioner charging Dr. Marshall with violation of the 1966 support order. In response thereto, the Family Court issued a new order awarding petitioner and her children a $325 weekly allowance "for and toward the support of wife and children." This order superseded the prior support order. No provision for any additional payments by Dr. Marshall was made in the 1968 order. In 1971, a divorce was granted to petitioner. The divorce decree provided for $15,000 annual alimony and $3,000 annual payments for each of two of the children during their minority.
For the years in question, petitioner received and reported as income the following amounts of the payments received from Dr. Marshall pursuant to the support orders and 1971 alimony award:
Amount Amount
Year received reported
1966 ........ $ 3,043.77 $ 480.00
1967 ........ 21,016.82 4,160.00
1968 ........ 16,719.58 2,615.00
1969 ........ 17,037.10 -0-
1970 ........ 8,900.00 -0-
1971 ........ 21,500.001 17,484.25
1 Consisting of $12,500 current alimony
$8,775.00 arrearages and $225.00 prepayment
of 1972 alimony
Petitioner apparently excluded from income amounts she expended for her children which she thought to be her husband's obligation under the support orders and which Dr. Marshall failed to pay.
Section 71(a) (3)2 requires a wife to include in her gross income periodic payments made by her husband to her pursuant to a court decree of support where the wife and husband are separated and do not file a joint return for the year in which payments are made. Section 71(b) excludes from income reportable by the recipient spouse those payments which the terms of such decree "fix, in terms of an amount of money or a part of the payment, as a sum which is payable for the support of minor children of the husband."
Notwithstanding the fact that she reported some alimony income in all but two of the years for which respondent has determined deficiencies, petitioner resists the application of section 71(a)(3) to payments received by her under the 1966 and 1968 court orders on various grounds. Petitioner contends that she and her husband were not separated until at least 1967 when Dr. Marshall purchased a home for himself, that payments required under the 1966 support order were not "periodic," that she and her husband filed a joint return for the 1967 taxable year, and that the unreported portion of payments received was excludable child support under section 71(b).
Section 71(a)(3) does not require a legal separation in order to trigger income; it merely requires husband and wife to be living apart. Income Tax Regs. section 1.71-1(b)(3)(i). The record amply demonstrates (irrespective of the location of the burden of proof, which is involved in the statute of limitations issue, see p. 17, infra) that petitioner and Dr. Marshall were separated for purposes of this section at all pertinent times during the taxable years in question. Petitioner's commencement of separation proceedings against her husband on grounds of abandonment in 1966 belies a contrary finding. Moreover, the decision of the court granting the petitioner her divorce states that she and her husband were separated since 1963. We are not persuaded that Dr. Marshall's address at the family home, as listed in the telephone directory for certain of the years in issue, supports a finding of cohabitation. Nor are we convinced that Dr. Marshall shared petitioner's abode until such time as he purchased a home for himself in 1967. Petitioner cites isolated incidents of Dr. Marshall's harassment of herself and other family members as evidence of Dr. Marshall's presence in the family home. We note that all of the cited incidents occurred prior to the years in question; yet, even had they occurred during the period involved herein, such isolated instances would hardly be indicative of living together, given all the surrounding circumstances.
Petitioner maintains that payments made pursuant to the 1966 and 1968 support orders are not income because they are not periodic.3 Petitioner argues that the support payments would cease upon the youngest child's reaching majority; since the youngest child would attain age 21 within 10 years of the first order, the payments were not periodic. Although the 1966 order had some preprinted language limiting payments to the duration of the children's minority, the court's insertions (see footnote 1, supra) did not contain such limitations. But whether or not the order was so limited, payments thereunder to cover various specified expenses would be periodic for want of a calculable principal sum. See Herbert v. Riddell 52-1 USTC ¶ 9209, 103 F. Supp. 369, 387 (S.D. Cal. 1952); Rev. Rul. 62-106, 62-2 C.B. 21. Furthermore, the stated weekly allowance payments thereunder would be periodic owing to the presence of contingencies. Income Tax Regs. section 1.71-1(d) (3) provides that support payments of a determinable principal sum spanning less than 10 years are nevertheless periodic if subject to any one of the contingencies of death of either spouse,...
To continue reading
Request your trial