Sydnes v. C. I. R., 77-1919
| Decision Date | 08 June 1978 |
| Docket Number | No. 77-1919,77-1919 |
| Citation | 577 F.2d 60 |
| Parties | 78-2 USTC P 9487 Richard J. SYDNES, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Richard Sydnes, pro se.
M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews, Richard W. Perkins and Richard D. Buik (argued), Tax Division, Dept. of Justice, Washington, D.C., on brief for appellee.
Before VAN OOSTERHOUT, Senior Circuit Judge, LAY and HENLEY, Circuit Judges.
VAN OOSTERHOUT, Senior Circuit Judge.
This is a timely appeal by taxpayer, Richard J. Sydnes, from final decision of the Tax Court determining deficiency in income tax due from the taxpayer for the year 1971 in the amount of $406.20. Jurisdiction in this court exists under 26 U.S.C. § 7482. 1
The issues presented by this appeal are:
I. Whether the Tax Court correctly found taxpayer and his wife were not separated within the meaning of 26 U.S.C. § 71(a)(3) and thus taxpayer was not entitled to deduct from his gross income support payments made pursuant to a separate maintenance order in an Iowa divorce proceeding.
II. Whether the Tax Court correctly determined that mortgage payments made in 1971 by taxpayer pursuant to the final dissolution of marriage decree were part of a property settlement and thus not deductible as alimony.
We reverse the Tax Court on Issue I and affirm on Issue II for the reasons hereinafter set forth.
Petitioner, a resident of Des Moines, Iowa, filed a 1971 income tax return as a single taxpayer. He deducted from his income $1229.90 as temporary support money paid as ordered by the state court and $545.30 as payment on a rental property mortgage as ordered by the final dissolution decree. Taxpayer and his wife, R. Lugene Sydnes, were married on June 15, 1946. They had two daughters, both of whom had married and left the home. Lugene on February 17, 1971, filed a petition for dissolution of marriage in the Polk County, Iowa, district court. She asked for temporary and permanent alimony and the award of specified property owned by the parties. On March 18 Lugene filed an application for temporary support. On April 1 an order was entered requiring petitioner to pay the usual family bills and to allow Lugene to write checks on a joint account not to exceed $30.00 per check. The $1229.90 deduction is based on disbursements made by taxpayer pursuant to such order.
On July 9, 1971, a decree of dissolution of marriage was entered and filed which provided that substantial property be transferred to the wife, including a duplex upon which the principal payment remained due on a mortgage in the amount of $8,473.62, which the taxpayer agreed to assume and pay on an installment basis in accordance with the mortgage provisions. Lugene was awarded the home, most of the personal property and an automobile. The total assets of the parties at the time of the decree is not set out in the record since the parties through negotiations had agreed upon the settlement. It would appear that the property settlement was liberal for the purpose of inducing a denial of alimony. 2
Twenty-six U.S.C. § 71(a)(3) provides:
(3) Decree for Support. If a wife is separated from her husband, the wife's gross income includes periodic payments (whether or not made at regular intervals) received by her after the date of the enactment of this title from her husband under a decree entered after March 1, 1954, requiring the husband to make the payments for her support or maintenance.
Treasury Regulations on income tax, 1954 Code, 26 C.F.R. § 1.71-1(b), make substantially the same provision.
The Tax Court's disallowance of maintenance and support payments made under the support order is based upon its determination that the parties were not living separately during the pertinent period. The Tax Court holds:
We conclude that "separated" as used in the statute and "separated" as used in the regulations mean living in separate residences. Only when living in separate residences do the parties incur the duplicate living expenses normally incurred by divorced or separated couples.
We disagree with such holding to the extent that it holds that under no facts and circumstances can husband and wife live separately in the same residence. Neither the statute nor the regulations specifically state that in order to live separately or apart the parties cannot occupy separate quarters in the same residence. We believe the issue of whether the parties are living separately in the same residence presents a factual issue. We are of the view that the evidence in this case on this issue, which is not materially in dispute, establishes that the parties were living separately. The taxpayer testified:
Q. And you did see her in the home during that period too, did you not?
A. There was one instance in which her daughter was visiting us. My daughter was staying with me and Lugene came in while she was there and that's the only time.
Q. And did she reside after the filing of the petition in the front bedroom of the house?
A. She never occupied it to my knowledge.
Lugene testified that she took the front bedroom in the house. On cross-examination she testified that the defendant entered her bedroom on one occasion after April 1 to show her some pictures that he had taken on a trip to Hawaii. She was then asked:
Q. Was that not after the dissolution?
A. I...
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