Mavity v. Comm'r of Internal Revenue, Docket No. 2422-62.

• Citation: 42 T.C. 283
• Decision Date: 22 April 1964
• Docket Number: Docket No. 2422-62.
• Parties: DAVID MAVITY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: United States Tax Court

42 T.C. 283

DAVID MAVITY, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 2422-62.

Tax Court of the United States.

Filed April 22, 1964.

Edmund C. Grainger, Jr., for the petitioner.

Robert A. Trevisani, for the respondent.

Held, an $8,600 payment made by petitioner to his wife in 1958 in settlement of arrearages in alimony or separate maintenance is not deductible by petitioner under section 215, 1954 Code, for the reason that such payment is not taxable to petitioner's wife under the provisions of section 71(a), 1954 Code.

OPINION

KERN, Judge:

Respondent determined a deficiency of $8,316.22 in petitioner's Federal income tax for the year 1958. Petitioner has not assigned error to all of respondent's determinations. In the petition it is alleged that respondent erred in disallowing a deduction claimed by petitioner for alimony in the amount of $8,600, and that respondent erred in increasing petitioner's business income in the amount of $7,029.77. Petitioner has not presented any evidence nor made any argument on brief with respect to the latter assignment of error. Accordingly petitioner is deemed to have abandoned that issue. The only issue presented for our decision is whether petitioner is entitled to a deduction for alimony payments pursuant to section 215 of the Internal Revenue Code of 1954 in excess of the amount allowed by respondent.

All of the facts have been stipulated and are found accordingly.

Petitioner, David Mavity, is an individual and a resident of Greenwich, Conn. He filed an individual Federal income tax return for the year 1958 with the district director of internal revenue for the Upper Manhattan district of New York on August 17, 1959.

Petitioner and his former wife, Mary Mavity, were married on April 7, 1931, and ceased living together as husband and wife in 1939. On June 30, 1949, petitioner wrote the following letter to his wife:

Dear Mary:

I understand that your doctors have suggested that our complete separation is advisable at this time and furthermore that you are to dispose of the apartment in Pelham.

In line with this I will undertake to place in your account, beginning August 1st, $300. each month, which amount it is to be understood will cover all your expenses.

I trust that this arrangement will provide agreeable to you and that you will soon be feeling much better.

Sincerely,

(S) David

The payments called for in the June 30, 1949, letter were made regularly by petitioner up to and including December 1953. In January 1954 petitioner, through his attorney, sent his wife $300. In August 1954 he sent her $1,000. He made no further payments.

On May 1, 1955, petitioner's wife commenced an action against him in the Court of Common Lease, Fairfield County, Conn. In that action petitioner's wife sought the recovery from him of a total of $3,500, representing $300 per month from the period petitioner had ceased paying her until the date of commencement of the action, less the two payments totaling $1,300. The action was tried on February 6, 1957, and resulted in a decision for petitioner's wife. Judgment was entered against petitioner on March 4, 1957, for $3,500 plus interest and costs, making a total of $4,030.83.

Petitioner appealed the decision to the Supreme Court of Errors of the State of Connecticut. In the meantime petitioner's wife, on April 25, 1956, commenced a separate action against him in the U.S. District Court for the Southern District of New York seeking to recover $300 per month from May 1, 1955 (the period at which the Connecticut action stopped), to the date of the filing of the complaint. Petitioner's attorneys advised him that the decision of the court in Connecticut would be binding on a court in New York. Thereupon petitioner and his wife entered into a separation agreement. The agreement was signed by petitioner's wife on August 12, 1958, and by petitioner on August 15, 1958. The agreement provided in pertinent part as follows:

4. Immediately upon the request of the husband, the wife agrees to execute a waiver of dower of any interest she may have because of her having been his wife, satisfactory to the lender for the purpose of inducing the loan by the lender of $8,000. on the unimproved property owned by the husband in Parrish Township, Benton County, Indiana, and upon receipt thereof, the husband agrees to borrow from the lender $8,000. and to mortgage such property as security therefor and upon receipt of such $8,000. forthwith but in no event later than August 1st, 1958, to pay that sums of money to Buckley and Buckley, the attorneys for the wife, and upon receipt of such payment the wife agrees to acknowledge the receipt thereof and to accept the aforesaid sum of $8,000. from the husband as and for a satisfactory, reasonable and sufficient provision for her support and maintenance past, present and future and for the discharge and payment of any and all debts or obligations owed by the wife up to and including the date of which such payment is made, in connection with which in particular she agrees as follows:—

(a) to deliver to the husband a general release in a form satisfactory to discharge him from any claims of any kind or character against him which she may have or any third persons may claim through her because of services rendered to her; but such release shall specifically exclude a release from the payment of $300.00 per month from the 1st day of January, 1958, pursuant to this agreement and/or any other or prior agreement, including the agreement sued upon by the wife in the State of Connecticut. The wife agrees, however, that she will upon receipt by Buckley and Buckley of the $8,000 referred to in Paragraph 5 hereof, deliver a general release to her husband for all claims she has against him for support and maintenance for each of the months of January, February, March, April and May in the year 1958, and that upon receipt by Buckley and Buckley of checks in the amount of $300 each she will also execute a general release covering any claims by her for the support and maintenance by her husband for the months of June and July, 1958.

(b) to acknowledge the payment and satisfaction of any judgment she may have against the husband in the State of Connecticut and to execute a satisfaction piece, or such other legal document as shall reflect such payment and satisfaction of any such judgment and to have such legal document recorded so that the payment and satisfaction of such judgment is recorded as a matter of public record;

(c) to pay and discharge the fees of any firm of attorneys which has acted for her, or on her behalf, in the State of Connecticut, by virtue of which that firm has any claim against her or her husband, and to deliver to the husband a written acknowledgement by any such firm of the receipt of such payment.

(d) to secure the release of any attachment of any real property which has been levied in the State of Connecticut, or elsewhere, against any property, real or personal, belonging to the husband and to record such release as a matter of public record.

(e) to cease and discontinue any actions or proceedings against the husband in any Court other than in the State of Connecticut and to record such discontinuance as a matter of public record;

(f) to pay and discharge to Buckley and Buckley any and all monies due them for legal services to be rendered for the wife up to the date of this agreement and for one year thereafter;

(g) in the event that the wife shall commence any proceedings for divorce, to pay and discharge from the aforesaid sum any fee or costs which may be incurred or required for any such divorce proceedings.

5. Buckley and Buckley agree to the application of the $8,000. as aforesaid and that they will be paid by the wife out of such $8,000. any fees and disbursements incurred by the wife and owed by the wife or the husband up to the date of this agreement, and for a period of six months thereafter, and to hold such sum as shall remain after the payment of the items hereinbefore described in escrow, so that in the event the wife shall have procured a divorce within six months of the date of the execution of this agreement, then and in that event Buckley and Buckley are authorized to pay over to the wife any monies thus held in escrow; but should such a divorce not have been procured by the wife, then and in that event Buckley and Buckley are instructed to pay such monies to the husband, with the exception that the husband agrees as follows:—

To pay to the wife each month commencing with the month of January, 1958, for the wife's support and maintenance during her natural life the sum of $300. per month so that $1,500. of the aforesaid $8,000. is and shall be constituted as payments on account of the aforesaid monthly indebtedness of $1,500., $300. for the months of January, February, March, April and May respectively, and after the execution of this agreement and the payment of the $8,000. as aforesaid, and commencing with the first of June, 1958, the husband shall pay to the wife on the first of each month thereafter the sum of $300. until such time as the wife shall die or remarry, in either of which events the obligation of the husband to pay shall thereupon cease and terminate. In the event the husband predeceases the wife, the husband does hereby agree for himself, his heirs, distributees and representatives that the said $300. per month shall be paid to the wife until such time as she shall die or remarry. Such payments are to be made by the Executors or Administrators of the husband, or, in the event that a Trustee or Trustees are designated and appointed for such purpose, such payments are to be made by such Trustee or Trustees, and the same shall be a charge upon all of the estate, real and personal, of which the husband may die seized.

6. The wife agrees to accept and hereby accepts the aforesaid payments as and for a satisfactory, reasonable, and...