Wick v. Comm'r of Internal Revenue

• Citation: 7 T.C. 723
• Decision Date: 16 September 1946
• Docket Number: Docket No. 9514.
• Parties: GEORGE D. WICK, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

7 T.C. 723

GEORGE D. WICK, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 9514.

Tax Court of the United States.

Promulgated September 16, 1946.

1. On the facts, held that payments to wife for her support prior to issuance of an order to pay alimony pendente lite are not within section 22(k), and are not deductible under section 23(u), I.R.C. Charles L. Brown, 7 T.C. 715; Frank J. Kalchthaler, 7 T.C. 625.

2. Petitioner's wife filed a libel for divorce in Pennsylvania in 1943, and the court ordered petitioner to make payments to her as alimony pendente lite. A decree of divorce was not entered until January 1944. Held, that payments of alimony pendente lite are not within section 22(k), and are not deductible under section 23(u). G. W. Smith, Esq., for the petitioner.

Homer F. Benson, Esq., for the respondent.

The respondent determined deficiencies in income tax and income and victory tax for the years 1941 and 1943 in the respective amounts of $3,467.58 and $10,028.63. He also added negligence penalties under section 293(a) of the Internal Revenue Code in the respective amounts of $173.38 and $501.43. Respondent has stipulated that the 5 per cent negligence penalties are not applicable to the deficiencies determined for the taxable years. Effect will be given to this stipulation in a recomputation under Rule 50.

The deficiencies in income tax result from several adjustments in each of the taxable years. By stipulations, the parties have disposed of all items except a claim for deductions under section 23(u) of the code, and that claim presents the only issue for decision by this Court. Effect will be given to the stipulations of the parties with respect to the amounts of petitioner's taxable net income for the years 1941, 1942, and 1943 in recomputations to be made by the parties under Rule 50.

The only question remaining is whether petitioner can deduct, under section 23(u), payments made to his wife during 1942 and 1943 for her support. No issue remains for 1941.

Petitioner filed his returns with the collector for the twenty-third district of Pennsylvania.

FINDINGS OF FACT.

For the year 1942 petitioner deducted $2,712.83 as payments made to his wife as ‘alimony.‘ That is the correct amount of payments made from July 7 to December 31, 1942. The above sum was paid to the wife for her support.

For the year 1943 petitioner deducted $5,606.85 as payments made to his wife as ‘alimony.‘ The correct amount of the payments is $5,407.20. Petitioner concedes that the difference between the two amounts properly has been added to his taxable income. Of the sum of $5,407.20, $2,298.42 was made pursuant to oral agreement, and $3,108.78 was made pursuant to a court order requiring the payment of alimony pendente lite and counsel fees, i.e., $250 for fees, and $100 for expenses of counsel in the divorce action.

Petitioner was married to Margaret I. Wick. He left his home on July 7, 1942.

On May 28, 1943, Margaret Wick started an action for a divorce a mensa et thoro, a limited divorce. On June 3, 1943, she filed a petition for alimony pendente lite and counsel fees. After hearing, the Court of Common Pleas of Allegheny County entered an order dated July 20, 1943, ordering petitioner to pay Margaret Wick $600 for maintenance and support up to August 1, 1943, and to pay her, thereafter, $375 per month for maintenance and support as alimony pendente lite; and to pay counsel fees of $250, and expenses of $100. The order provided as follows:

ORDER OF COURT

And now, to-wit, this 20th day of July, 1943, the petition of the libellant for alimony and counsel fees and expenses pendente lite, having come on to be heard and after full hearing thereon and due consideration of the testimony presented at said hearing, it is ordered, adjudged and decreed that the respondent, George D. Wick, shall pay counsel fees of the libellant to date, in the sum of Two hundred fifty ($250.00) Dollars; that the said George D. Wick shall pay expenses to date in the sum of One hundred ($100.00) Dollars; that the respondent, George D. Wick, shall pay to Margaret I. Wick, libellant, the sum of Six hundred ($600.00) Dollars for maintenance and support up to August 1st, 1943, and thereafter, that the said George D. Wick shall pay to Margaret I. Wick, libellant, the sum of Three hundred and seventy-five ($375.00) Dollars per month for maintenance and support as alimony pendente lite.

It being understood that, in addition to these amounts, the respondent, George D. Wick, should pay for the maintenance and upkeep of the property in which the libellant and her minor daughter live; the taxes thereon and the upkeep; without prejudice to the right of counsel for libellant to make application for additional amounts of counsel fees and expenses and that the amount or amounts of alimony pendente lite shall not be final or conclusive or indicative of the amount of money to be paid to the libellant, should there be a decree for divorce a mensa et thoro. The counsel fees and expenses allowed herein do not include any allowance for the proceedings at No. 1965 July Term, 1943, in this Court, for which no allowance is asked at this time.

On July 2, 1943, petitioner filed suit against Margaret Wick asking for a divorce from the bonds of matrimony, an absolute divorce.

The two cases were tried together.

On January 22, 1944, the Court of Common Pleas denied petitioner's libel for an absolute divorce, and granted to Margaret Wick a divorce a mensa et thoro.

The petitioner appealed both decisions to the Superior Court of Pennsylvania and on September 27, 1944, that court sustained the Court of Common Pleas in refusing to grant the petitioner an absolute divorce from his wife, but reversed the Court of Common Pleas in the suit of Margaret I. Wick for a divorce a mensa et thoro.

Appeals were taken from these two decisions to the Supreme Court of Pennsylvania, which court, in an opinion filed on April 9, 1945, sustained the Court of Common Pleas both in its granting Mrs. Wick a divorce a mensa et thoro and in its refusing the petitioner's action for an absolute divorce.

The net income of the petitioner for the year 1941 was $25,064.43.

The taxable net income of the petitioner for the year 1942 was $21,547.26, exclusive of any adjustment for the amount claimed as a deduction from gross income and alleged by the petitioner to represent alimony.

The taxable net income of the petitioner for the year 1943 was $26,905.61 for income tax purposes and $27,070.96 for victory tax purposes, exclusive of any adjustment for the amount claimed as a deduction from gross income and alleged by the petitioner to represent alimony.

OPINION.

HARRON, Judge:

During the period July 7 to December 31, 1942, petitioner and his wife were voluntarily separated, and the payments which petitioner made to his wife for her support, aggregating $2,712.83, were made under an oral agreement. During this period, his wife was not legally separated or divorced from petitioner under a decree of separate maintenance or under a decree of divorce. Therefore, the payments made in 1942 were not payments which Margaret Wick was required to report in her gross income under section 22(k) of the Internal Revenue Code. It follows that petitioner is not entitled to any deduction from his income for 1942 under section 23(u). It is so held. See Charles L. Brown, 7 T.C. 715, and Frank J. Kalchthaler, 7 T.C. 625.

The above holding applies equally to payments made to Margaret Wick during 1943, aggregating $2,298.42.

There remains the question whether payments made as alimony pendente lite for the support of Margaret Wick, which were made pursuant to the court order of July 20, 1943, are deductible from petitioner's 1943 income. The total amount of these payments was $3,108.78.

Respondent contends that since no decree of divorce was entered until January 22, 1944, the payments of ‘temporary alimony‘ were not deductible under section 23(u). He relies upon section 22(k); T.D. 5425; and Regulations 111, Supplement, section 29.22(k). In that regulation an example is given, which is set forth in the margin.¹

Petitioner contends, under this part of the general issue, that the Court of Common Pleas, by its order of July 20, 1943, recognized the existence of the separation, and that the payments of alimony pendente lite were made pursuant to a decree of separate maintenance within the meaning of section 22(k). Petitioner regards the entire sum of $3,108.78, including fees and costs, as ‘alimony,‘ or payments received by the wife subsequent to a ‘decree of separate maintenance.‘ Petitioner does not cite any cases or authorities to support his argument other than section 22(k),...