Wilder v. Commissioner

• Court: U.S. Tax Court
• Writing for the Court: SCOTT
• Citation: Wilder v. Commissioner, 34 T.C.M. (CCH) 271, 1975 TC Memo 42 (T.C. 1975)
• Decision Date: 27 February 1975
• Docket Number: Docket No. 9195-72,2947-73.,9274-72
• Parties: Robert E. Wilder and June Wilder v. Commissioner. Audrey S. Wilder v. Commissioner.

34 TCM (CCH) 271

1975 TC Memo 42

T.C. Memo. 1975-42.

Robert E. Wilder and June Wilder v. Commissioner.

Audrey S. Wilder v. Commissioner.

Docket Nos. 9195-72, 9274-72, 2947-73.

United States Tax Court.

Filed February 27, 1975.

Jack Crenshaw and Sam I. Diamond, Jr., P.O. Box 7175, Montgomery, Ala., for the petitioners in Docket Nos. 9195-72 and 2947-73. Neilson S. Jacobs and J. Edgerton Pierson, Jr., for the petitioner in Docket No. 9274-72. Roy S. Fischbeck, for the respondent.

Memorandum Findings of Fact and Opinion

SCOTT, Judge:

Respondent determined deficiencies in the Federal income tax of petitioners Robert E. and June Wilder in the amounts of $45,086.52, $30,203.28, and $34,727.75 for the calendar years 1968, 1969, and 1970, respectively. Respondent determined deficiencies in the Federal income tax of petitioner Audrey S. Wilder in the amounts of $15,509.92 and $6,485.53 for the calendar years 1969 and 1970, respectively.¹

The parties have disposed of some of the issues by agreement, leaving for decision whether the annual cash payments made by Robert E. Wilder during the years 1968, 1969, and 1970 to Audrey S. Wilder, his former wife, are includable in her gross income for such years as alimony under the provisions of section 71(a)(1), I.R.C. 1954,² and therefore deductible for such years by Robert E. and June Wilder pursuant to the provisions of section 215.

Findings of Fact

Some of the facts have been stipulated and are found accordingly.

Petitioners Robert E. Wilder (Robert) and June Wilder were husband and wife as of December 31, 1968, and during their taxable years 1969 and 1970. They were residents of Montgomery, Alabama, at the time of the filing of their petitions in this case. They filed joint Federal income tax returns for each of their taxable years 1968, 1969, and 1970 with the director of internal revenue, Southeast Service Center, Chamblee, Georgia.

Petitioner Audrey S. Wilder (Audrey) was a resident of North Little Rock, Arkansas, at the time of the filing of her petition in this case. She filed her individual Federal income tax returns for each of her taxable years 1969 and 1970 with the internal revenue service center, Austin, Texas.

Robert and Audrey were married in Arkansas in 1940. They moved to Baton Rouge, Louisiana in 1954 where they lived together as husband and wife until they separated sometime prior to September 6, 1967, when Audrey, through her attorney, filed a legal separation suit against Robert in the Family Court in and for the Parish of East Baton Rouge, Louisiana. In this suit Audrey sought a judgment granting her a separation from bed and board, requiring Robert to pay court costs and her attorney's fees, and awarding her alimony pendente lite in the amount of $5,500 per month and a temporary restraining order enjoining Robert from disposing of or encumbering any of the community property. On September 6, 1967, the Family Court ordered the issuance of the requested temporary restraining order and directed Robert to show cause on September 18, 1967, why he should not be required to pay Audrey the sum of $5,500 per month as alimony pendente lite and why a preliminary injunction should not be issued in accord with the temporary restraining order.

In a supplemental and amended petition filed with the Family Court on September 21, 1967, Audrey denied the allegations of a bill of complaint which had been previously filed by Robert in the Circuit Court of Montgomery County, Alabama, praying for a decree of divorce from Audrey from that Court. This complaint filed by Robert was later dismissed. In her supplemental petition Audrey alleged that Robert was not then and had never been a resident of Alabama although Robert had represented in his complaint in the Circuit Court of Montgomery County, Alabama that he was presently residing at Montgomery, Alabama and was and had been for 3 months prior thereto a bona fide resident of the State of Alabama. Audrey prayed in her supplemental petition that an attorney be appointed by the Family Court to accept service upon Robert. On September 21, 1967, the Family Court ordered the appointment of an attorney to accept service on behalf of Robert.

On November 30, 1967, Robert, through his own Louisiana attorney, filed an answer to Audrey's petition with the Family Court in which he admitted to the representation of paragraph one of Audrey's petition which was in part that he was a resident of lawful age of the Parish of East Baton Rouge, State of Louisiana. Robert had moved to Alabama in the early part of 1967 and has resided there since that time. In his answer Robert asked that a judgment be rendered against Audrey dismissing her suit at her cost.

Audrey filed a second supplemental and amending petition with the Family Court on January 12, 1968, asking that a temporary restraining order be issued enjoining Robert and others acting in concert with him from bothering her and an order be issued directing Robert to show cause on January 22, 1968, why a preliminary injunction should not follow in accordance therewith. Further, Audrey requested an additional temporary restraining order be issued enjoining Robert from disposing of or encumbering any of the community property during the pendency of the separation proceedings and an order directing Robert to show cause on January 22, 1968, why a preliminary injunction should not issue in accordance with the restraining order. The Family Court by an order dated January 12, 1968, granted the relief requested and further ordered Robert to show cause on January 22, 1968, why he should not be required to pay alimony pendente lite to Audrey in the sum of $5,500 per month.

Audrey's and Robert's attorneys filed motions with the Family Court to withdraw as counsel of record, which were both granted on January 12, 1968. Subsequently, Audrey retained other Louisiana counsel to represent her and Robert retained Alabama counsel to represent him in their marital and property dispute.

Audrey filed a third supplemental and amended petition with the Family Court on January 22, 1968, requesting the appointment of persons to make an inventory and appraisal of the community property and service of citation and process upon Robert, a partition of the community property, a judgment granting a legal separation to Audrey and dissolving the community property, and extension of the relief previously requested in her second supplemental petition. The Family Court by an order dated January 22, 1968, granted Audrey's requests and extended the temporary restraining orders issued on January 12, 1968, for an additional 10-day period and ordered Robert to show cause on January 29, 1968, why preliminary injunctions should not be issued in accord with the restraining orders and why he should not be required to pay alimony pendente lite in the sum of $5,500 per month.

The Family Court of the Parish of East Baton Rouge rendered a judgment on February 23, 1968, which was signed on February 29, 1968, granting Audrey a separation from bed and board, ordering Robert to pay Audrey the sum of $3,250 per month as alimony pendente lite for her maintenance and support, but reserving to Robert the right to seek a reduction of the alimony award, permanently enjoining Robert from in any way disposing of or encumbering any of the existing community property, charging Robert with court costs, and charging the community assets with Audrey's attorney's fees.

At Robert's request a financial statement, reflecting Robert's net worth to be $827,844 as of September 30, 1967, was prepared by certified accountants who had in the prior 11 years prepared Robert's income tax returns and personal financial statements. This statement, which was delivered in the fall of 1967 by Robert's former Louisiana attorney to Audrey's former Louisiana attorney for the purpose of effecting a property settlement, used estimated market values for the real estate assets and market quotations, when available, for the securities without considering the effect of the size of Robert's major holdings of stock. The statement showed the following:

                                                                               Estimated
                                                                                              Market Value
                                                     ASSETS
                  Cash in Banks                                                                   $  -0-
                  Stocks and Securities
                      12,078 common shares American Republic Corp. at $3.25           $ 39,254
                      114 common shares Century Shares Trust Mutual Fund
                        at $11.00                                                        1,254
                      100 common shares Continental Investment Fund, Inc
                        at $7.50                                                           750
                      48,000 common shares First Colonial Life Insurance Co.            45,000
                      50,000 common shares Fidelity National Corp
                        (estimate - no recent sales)                                     5,000
                      541,957 common shares First Colonial Corp. of America
                       at $1.25 (135,000 shares pledged)                               677,434
                      810 common shares Holiday Hills, Inc. (estimate - no
                        (estimate - no activity)                                        50,000
                      138,897 common shares National American Life Insurance
                        Co. at $4- 3/8 (127,153 shares pledged)                    607,674
                      2 common shares Sherwood Forest Country Club                         600
                      1 common share Bocage Racquet Club, Inc.                             500     1,427,466
                                                                                       _______
                  Notes Receivable
                      Richard O. Rush                                                 $359,720
                      First Colonial Corp. of America                                  101,650       461,370
                                                                                      _________
                  Real Estate

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