Widmer v. Comm'r of Internal Revenue , Docket Nos. 11527-78
| Decision Date | 22 December 1980 |
| Docket Number | 11961-78.,Docket Nos. 11527-78 |
| Citation | 75 T.C. 405 |
| Parties | LEROY WIDMER and BONITA J. WIDMER, PETITIONERS v. COMMISSIONER of INTERNAL REVENUE, RESPONDENTPAUL E. NIELANDER and JOAN M. NIELANDER, PETITIONERS v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Petitioners Mr. Widmer and Mrs. Nielander were divorced in 1971. At the time of their divorce, their net worth was approximately $195,000. The divorce decree provided that Mrs. Nielander was to receive certain property and alimony of $4,000 a year over a 15-year period, paid quarterly. Held, under Indiana law the $4,000 annual payment constitutes a division of property. Held, further, payment thereof is neither deductible by Mr. Widmer nor income to Mrs. Nielander. See secs. 71 and 215, I.R.C. 1954. Donald C. Johnson, for petitioners Leroy and Bonita J. Widmer.
Thomas W. Munger, for petitioners Paul E. and Joan M. Nielander.
Robert D. Kaiser, for the respondent.STERRETT, Judge:
Judge: On July 20, 1978, respondent issued separate statutory notices to Leroy and Bonita J. Widmer (docket No. 11527-78) and Paul E. and Joan M. Nielander (docket No. 11961-78). Both parties timely filed petitions. Thereafter, respondent filed, and the Court granted, a motion to consolidate for the purposes of trial and disposition. After concessions by petitioners Widmer, the only remaining issue is whether payments by Mr. Widmer to his former wife Mrs. Nielander constitute alimony as described in section 71, I.R.C. 1954. The calendar years 1974 and 1975 are at issue in docket No. 11961-78. The calendar year 1975 is the only year in issue in docket No. 11527-78.
Some of the facts have been stipulated and are so found. The stipulation of facts, together with the exhibits attached thereto, is incorporated herein by this reference.
All petitioners resided in Indiana at the time they filed their petitions herein. Mr. and Mrs. Widmer and Mr. and Mrs. Nielander timely filed joint income tax returns for the calendar years 1974 and 1975.
Leroy Widmer and Joan M. Widmer (Nielander) were married on August 20, 1950. On October 12, 1971, the Superior Court of Tippecanoe County, Ind., entered a decree of divorce in Joan M. Widmer v. Harry Leroy Widmer.
At the time of their divorce, Mr. Widmer and Mrs. Nielander stipulated that they had accumulated the following assets during their marriage:
+------------------------------------------------------------------+
¦ ¦Fair market value ¦
+----------------------------------------------+-------------------¦
¦ ¦ ¦
+----------------------------------------------+-------------------¦
¦Two 160-acre parcels of farmland ¦$183,500.00 ¦
+----------------------------------------------+-------------------¦
¦Tools and machinery ¦35,100.00 ¦
+----------------------------------------------+-------------------¦
¦Household goods ¦2,375.00 ¦
+----------------------------------------------+-------------------¦
¦500 shares of stock in LeRay Investments, Inc.¦8,827,20 ¦
+----------------------------------------------+-------------------¦
¦Total ¦229,802.20 ¦
+------------------------------------------------------------------+
The land was held in tenancy by the entirety at all times. Two hundred shares of the stock in LeRay Investments, Inc., were held jointly. The certificates for the remaining 300 shares were issued to Mr. Widmer, individually. All of the stock and land set forth above were acquired by the parties during their marriage. Included in the tools and machinery owned by the parties were a 1969 Plymouth and a 1968 Chevrolet. The parties had debt obligations of $34,546.09, and thus their net worth was approximately $195,000 at the time of the divorce.
Prior to the submission of the divorce action, Mr. Widmer and Mrs. Nielander, through their respective attorneys, endeavored to work out a property division for submission to the court. The parties failed to reach an accord and the cause was submitted to the trial court for decision on all issues therein.
By its decree of divorce, the court set over to Mrs. Nielander the following: (1) The 1968 Chevrolet, and (2) household fixtures and furniture, except certain miscellaneous items.
In addition to setting over to Mr. Widmer certain miscellaneous items, the court in its decree set over to him, as separate property, the following: (1) All tools, machinery, and equipment; (2) the 1969 Plymouth; (3) the 500 shares of stock in LeRay Investments, Inc.; and (4) the two parcels of farm property. The court ordered Mrs. Nielander to assign her interest in the jointly held stock to Mr. Widmer. It further ordered that Mr. Widmer hold Mrs. Nielander harmless on obligations of the parties totaling approximately $34,500.
The decree further provided “that the plaintiff (Mrs. Nielander) should recover from the defendant (Mr. Widmer) alimony in the sum of $60,000.00, payable at the rate of $4,000.00 per year for fifteen years, said payments to be made in installments of $1,000.00 each, payable quarterly.” The unpaid portion of said judgment was made a lien upon parcel No. 1, one of the two 160-acre farms which the parties had previously owned in tenancy by the entirety.
The trial court did not file an opinion on the entry of its decree divorcing Mr. Widmer and Mrs. Nielander. However, it did render an opinion in ruling upon Mrs. Nielander's motion to correct errors assessed to that decree. It said therein, in response to Mrs. Nielander's contention that the judgment for alimony in the sum of $60,000 was too small, the following:
Plaintiff attacks the judgment for alimony as too small. If we accept the plaintiff's premise that the defendant was primarily at fault in the breakup of the marriage, or if it even appeared that the parties were approximately equally at fault, I would agree. In view of the court's finding on the question of fault, if such finding is correct, it is clearly within the power of the court to reduce the plaintiff's share below what she would receive if she were without fault.
The net value of the total property of the parties listed on the stipulation is approximately $195,000. Of this, plaintiff is receiving approximately $64,000, or roughly one third.
In addressing Mrs. Nielander's contention that the fair market value of the growing crops should have been considered in determining the alimony, the court stated:
technically, those which were growing on the parties' 320 acres were the property of the parties at the time of the trial, although clearly the plaintiff had no interest in those which were growing on the other 780 acres. But as a practical matter, the value of the crops went not to the permanent value of the property of the parties, which is the subject of the court's consideration in fixing alimony, but to the size of the defendant's yearly income, which is the basis on which the court must figure the obligation of support.
The Court of Appeals of Indiana, in its opinion rendered on Mrs. Nielander's appeal of the trial court's decree, upheld the alimony award as within the proper discretion of the trial court.
During 1974 and 1975, Mr. Widmer made payments of $3,000 and $4,000, respectively, pursuant to the divorce decree. The payments were not contingent on the death or remarriage of either party.
Five children were born to Mrs. Nielander and Mr. Widmer during the course of their marriage. The Superior Court in its decree of divorce fixed child support at $25 a week per child who had not finished high school. On January 12, 1972, the Superior Court...
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