Sydnes v. Comm'r of Internal Revenue

• Citation: 74 T.C. 864
• Decision Date: 29 July 1980
• Docket Number: Docket No. 9965-79.
• Court: United States Tax Court
• Parties: RICHARD J. SYDNES, PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT

74 T.C. 864

RICHARD J. SYDNES, PETITIONER

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 9965-79.

United States Tax Court

Filed July 29, 1980.

Rule 121, Tax Court Rules of Practice and Procedure. —-P filed a petition in this Court to contest the disallowance of a deduction taken by him for “alimony.” P previously filed two similar petitions and was twice informed by this Court that such deductions were without merit. Held, the Commissioner's motion for summary judgment is granted since there is no genuine issue as to any material fact, and his determination of a deficiency in income tax is sustained. Held, further, on the Court's own motion, damages under sec. 6673, I.R.C. 1954, are awarded to the United States since P instituted these proceedings merely for delay. Richard J. Sydnes, pro se.

Robert M. Fowler and Richard Goldman, for the respondent.

OPINION

DAWSON, Judge:

This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's motion for summary judgment filed herein on April 18, 1980, pursuant to Rule 121, Tax Court Rules of Practice and Procedure.¹ After a review of the record, we agree with and adopt his opinion which is set forth below.²

OPINION OF THE SPECIAL TRIAL JUDGE

CANTREL, Special Trial Judge:

Respondent determined a $166.88 deficiency in petitioner's Federal income tax for 1975. The only issue for decision is whether mortgage payments made by petitioner on property awarded to his former wife under a divorce decree were support payments or part of a property settlement.

Petitioner resided in Des Moines, Iowa, on July 10, 1979, the date he filed his petition. He filed an individual Federal income tax return for 1975 as a single taxpayer.

Petitioner and R. Lugene Sydnes (Lugene) were married on June 15, 1946. Lugene, on February 17, 1971, filed a petition for dissolution of marriage in the Polk County, Iowa, District Court.

On July 9, 1971, a decree of dissolution of marriage was entered and filed. Prior to the entry of the decree, petitioner and Lugene, through their attorneys, had attempted to resolve questions of alimony and property settlement. Petitioner was adamant in his opposition to granting his wife alimony in any amount. As a result of the negotiations between the parties, an agreement was reached which was reflected in the District Court's decree. The decree provided that substantial property be transferred to Lugene, including a rental property upon which the principal sum of $8,473.62 remained due on a mortgage, which petitioner agreed to assume and pay, on an installment basis, in accordance with the mortgage provisions. The decree, in this respect, provided:

That the Petitioner (Lugene) is hereby granted the property of the parties locally known as 3403 50th Street, Des Moines, Iowa, * * * and the Respondent, Richard J. Sydnes, shall pay and satisfy the existing mortgage thereon with United Federal Savings and Loan Association in the approximate sum of $8,700.00 and shall save the Petitioner harmless from the payment of the same, and the Court hereby retains jurisdiction for the purpose of enforcing the payment by the Respondent of said mortgage. Title is hereby quieted in the Petitioner, R. Lugene Sydnes, as against any claims of the Respondent or anyone claiming through, by or under him.

The decree further provided: “That the Petitioner (Lugene) shall have no alimony nor is she entitled to any alimony.”

On his 1975 income tax return, petitioner reported that he had received wages of $19,447.69 during 1975 from his employment as an accountant for the State of Iowa and a net profit of $2,635.33 for services rendered as a clergyman. He also deducted as alimony the mortgage payments, totaling $587.23, made by him during 1975 on the rental property granted to Lugene under the July 9, 1971, decree.

Respondent, in his notice of deficiency issued to petitioner on April 11, 1979, disallowed the claimed alimony deduction on the ground that the payments were part of a property settlement. Petitioner responded by asserting in his petition: “The Commissioner erred in his determination that the Alimony payments totaling 587.23 during the taxable year ended December 31, 1975 were not deductible under Sec. 215 of the Code.”

On August 13, 1979, respondent filed his answer, wherein and pursuant to Rule 39, he affirmatively raised the doctrine of collateral estoppel (estoppel by judgment) in paragraph 6 and with respect thereto stated:

(a) The petitioner in this case is the same petitioner whose case was decided in Sydnes v. Commissioner, 68 T.C. 170 (1977),³ aff'd in part and rev'd in part, 577 F.2d 60 (8th Cir. 1978).

(b) In the statement attached to the statutory notice of deficiency issued to the petitioner it is stated that the claimed deductions were disallowed because lump-sum cash or property settlements are not deductible as alimony.

(c) In the above-cited case, the Tax Court held after a trial on the merits, that petitioner's payments on a mortgage were part of a property settlement and not alimony, and that petitioner was not entitled to deduct the mortgage payments under I.R.C. sec. 215. This holding of the Tax Court was affirmed by the Eighth Circuit Court of Appeals.

(d) The payments, which are disallowed as a deduction by the statutory notice in this case, are mortgage payments on the same mortgage, which prior payments were in issue before the Court in the above-named proceeding.

(e) The deficiency in dispute in this case arises from a determination which is identical in all respects to that decided in the above-named proceeding and the controlling facts and applicable legal principles remain unchanged.

Thereafter, the Court allowed petitioner to file his reply out of time. Therein, respecting the doctrine of collateral estoppel, he alleged in paragraph 6:

a. The Court relied on statements in the Respondent's Briefs which are untrue in Sydnes v. Commissioner, 68 T.C. 170 (1977).

b. The Respondent has steadfastly refused to correct the untrue statements made to the Court.

Later, respondent filed his motion for summary judgment, which is herein under consideration. Therein, we are advised at paragraphs 8 and 9:

8. In Sydnes v. Commissioner, Docket No. 1889-77,⁴ decided without opinion, November 7, 1979, the Tax Court granted respondent's motion for summary judgment, which was based on the ground that, by reason of the prior decision in Sydnes v. Commissioner, 68 T.C. 170 (1977), aff'd in part and rev'd in part, 577 F.2d 60 (8th Cir. 1978), the petitioner was prohibited by the doctrine of collateral estoppel (estoppel by judgment) from disputing the deficiencies determined by the respondent in that case.

9. The deficiency in dispute in this case arises from a determination that is identical in all respects to those decided in the above-mentioned proceedings and the controlling facts and applicable legal principles remain unchanged.⁵

(Emphasis in original.)

The petition filed in this case is frivolous and was filed merely for delay.

Petitioner argues that the mortgage payments in dispute are deductible on two grounds—-(1) the payments were made in lieu of support and maintenance as provided in section 71⁶ and, accordingly, they are deductible under section 215, and (2) “the Court relied on statements in the respondent's briefs which are untrue in Sydnes v. Commissioner, 68 T.C. 170 (1977),” and which “respondent has steadfastly refused to correct.”

Petitioner's argument is baseless. Both of the above grounds have been persistently pursued by petitioner in all three of the cases he has instituted in this Court and, in all three cases, have been rejected. Our opinion in Sydnes v. Commissioner, 68 T.C. 170 (1977), with respect to the mortgage payment issue is solidly backed up by the record presented to the Court. ⁷ Petitioner fully participated in that proceeding and in the appeal that ensued upon petitioner's filing of a notice of appeal.

Respondent, on the other hand, maintains that by reason of the two prior decisions of this Court involving an issue identical to that before us now, petitioner is estopped from disputing the determined deficiency for 1975. We agree.

For more than 30 years, it has been firmly entrenched in the law that collateral estoppel (estoppel by judgment) in a tax case is applicable if (1) the parties are the same; (2) the issue is identical; (3) the parties have actually litigated the issue and it has been judicially determined; and (4) there has been no change in the applicable facts or controlling legal principles. Commissioner v. Sunnen, 333 U.S. 591 (1948).

While the doctrine of res judicata applies only to the same cause of action arising between the same parties, collateral estoppel applies in a different cause of action. Cromwell v. County of Sac, 94 U.S. 351, 352-353 (1876); Amos v. Commissioner, 43 T.C. 50, 53 (1964), affd. 360 F.2d 358 (4th Cir. 1965).

Here, we are confronted with two earlier cases between this petitioner and the Commissioner of Internal Revenue which were brought to judgment in this Court on facts almost identical to those now before us. All of the criteria necessary to impose the doctrine of collateral estoppel are present. Although a different tax year is here involved, the doctrine is available to relieve this Court, other courts, and the Government from redundant litigation. Tait v. Western Maryland Ry. Co., 289 U.S. 620, 624 (1933).

Petitioner has unremittingly raised the same arguments in the three law suits he has filed with this Court contesting the same issue, and two of those suits have resulted in judgment against him. On this very point, in Gammill v. Commissioner, 62 T.C. 607, 620 (1974), we stated:

We observe first that the fact that a prior judgment may appear incorrect to petitioners, or to anyone else, will not bar its collateral estoppel effect on a subsequent proceeding. Partmar Corp. v. Paramount Corp., 347...