Stock v. Commissioner, Docket No. 8855-74.
| Decision Date | 29 April 1976 |
| Docket Number | Docket No. 8855-74. |
| Citation | 1976 TC Memo 134,35 TCM (CCH) 596 |
| Parties | David M. Stock and Janet B. Stock v. Commissioner. |
| Court | U.S. Tax Court |
Thomas A. Travis, Jr., 1720 First Federal Bldg., Atlanta, Ga., for the petitioners. Terrell W. Dahlman, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined deficiencies in petitioners' income taxes for the taxable years 1970 and 1971, in the amounts of $2,055.29 and $1,705.62, respectively.
After certain concessions made by the parties, the following issues remain for our consideration: (1) Whether certain payments made in 1970 and 1971 by petitioners to petitioner-husband's former wife were periodic alimony payments deductible under section 215, I.R.C. 1954;1 (2) whether petitioners were entitled to deduct claimed business automobile expenses in 1970 and 1971 in excess of the amounts allowed by respondent; (3) whether petitioners were entitled to deduct expenditures for travel and entertainment in 1971 in excess of the amount allowed by respondent; and (4) whether petitioners were entitled to deduct expenditures allegedly incurred in 1971 for membership dues and entertainment expenses.2
Some of the facts have been stipulated and are so found. The stipulation together with exhibits attached thereto are incorporated herein by this reference.
Petitioners are David M. Stock and Janet B. Stock, husband and wife. At the time of filing the petition herein their legal residence was Dug Gap Road, Dalton, Ga.
Petitioners were married May 10, 1970, and filed joint Federal income tax returns for both calendar years 1970 and 1971 with the Internal Revenue Service Center, Chamblee, Ga.
Janet B. Stock is a party herein solely by virtue of filing joint returns and hereafter petitioner will refer only to David M. Stock.
Prior to his marriage to Janet, petitioner had been married to the former Shara L. Stock, now Shara L. Moss. Petitioner and Shara had two children by their marriage, Morris Craig Stock and Samuel Allen Stock.
On or about July 1969 petitioner commenced a civil action against Shara in the Superior Court of Whitfield County, Ga., in which he sought a decree of divorce. Shara, as a defendant in said suit, answered and counterclaimed against petitioner seeking relief by way of temporary and permanent alimony for herself and her children.
In furtherance of her counterclaim, on October 29, 1969, Shara filed a "Notice for Record of Lis Pendens" with the Superior Court of Whitfield County, Ga. Included in the real property described in the notice of lis pendens was a parcel owned equally by petitioner and Joseph H. Ginsburg as tenants in common, which will hereinafter be referred to as the Stock-Ginsburg property. Sometime in 1969 petitioner and Ginsburg received an offer to buy the aforementioned real property. In order to effectuate a sale thereof, petitioner entered into an agreement with Shara dated November 29, 1969. Under the terms of this agreement Shara agreed to release her claim of lis pendens on the concerned parcel in return for which petitioner agreed to enter into an escrow agreement with the Bank of Dalton, Dalton, Ga. The escrow agreement, in pertinent part, provided that the bank was to hold in escrow the portion of the proceeds from the sale of the Stock-Ginsburg property which was due petitioner, pending a final determination of the divorce proceeding. Under the escrow agreement the bank was to distribute the funds in accordance with the provisions of said final divorce decree. The Stock-Ginsburg property was thereafter sold pursuant to a contract of sale calling for a 29-percent downpayment and installment payments over a period of 5 years; pursuant to the aforementioned agreements, petitioner's share of the proceeds were held in escrow by the Bank of Dalton.
On April 16, 1970, petitioner and Shara entered into an agreement (hereafter settlement agreement) which purported to represent a final agreement between the parties with regard to any and all legal rights existing between them as a result of their marital relationship including their respective property rights, rights of support and maintenance of the wife and the children, and all dower and homestead rights. Both parties were represented by counsel in negotiating and drafting the agreement. Under the terms of the agreement petitioner made various provisions for the support and maintenance of the children; he conveyed to Shara all of his interest in all items of personal property located in their home; and he agreed to convey to Shara all his interest in two West Lakeshore Drive lots, without incumberance. In addition the agreement contained the following pertinent provisions:
On the same day the settlement agreement was executed, April 16, 1970, a final judgment and decree granting a "total divorce" vis., divorce a vinculo matrimonii, was rendered by the Superior Court for the County of Whitfield, Ga. Said decree specifically incorporated the terms of the settlement agreement:
The Court awards custody and support for the children of the parties and alimony for the wife in accordance with the agreement of the parties dated April 16, 1970, which agreement is hereby incorporated as a part of this judgment and each of the parties is directed to obey each and every provision thereof.
The following amounts were paid by petitioner to Shara in 1970 and 1971:
________________________________________________________________________________________________________
1970
Source of Payment Alleged Authority for Payment
________________________________________________________________________________________________________
From down payment in Stock-Ginsberg sale Article 9 of settlement agreement .... $1,432.32
From 1970 installment proceeds of Stock —
Ginsburg sale Article 9 of settlement agreement .... 5,307.25
Monthly alimony payments Article 11 of settlement agreement ... 800.00
_________
Total payments in 1970 .......................................................... $7,539.57
=========
1971
From 1971 installment proceeds of Stock —
Ginsburg sale Article 9 of settlement agreement ... $5,062.30
Interest on installment proceeds of Stock —
Ginsburg sale 970.85
Monthly alimony payments Article 11 of settlement agreement .. 1,800.00
_________
Total payments in 1971 .......................................................... $7,833.15
=========...To continue reading
Request your trial