Walter J. Przewoznik, Petitioner

RECORDE

SERVICE

T .C . Summary Opinion 2 008-5 0

UNITED STATES TAX COUR T

WALTER J . PRZEWOZNIK, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 15519-06S .

Fi,iled May 5, 2008 .

Jonathan P . Decatorsmith and Todd Melton (specially recognized), for petitioner .

Julie A . Jebe , for respondent .

GOLDBERG, Special Trial Judge : Thi s case was heard pursuant to section 7463 of the Internal Revenue Code in effect at the time the petition was filed . Pursuant t o section 7463(b), the decision to be entered is not reviewable by any other court, an d this opinion shall not be treated as precedent for any othe r case . Unless otherwise indicated, subsequent section reference s

SERVED MAY - 5 2008

are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure .

Respondent determined a $3,113 deficiency in petitioner's Federal income tax for 2004 . The sole issue for decision is whether petitioner is entitled to an alimony deduction of $12,4611 for the taxable year in issue .

Background The stipulation of facts and the attached exhibits are incorporated herein by reference . At the time the petition was filed, petitioner resided in Illinois .

During the year in issue, petitioner was employed as a posting supervisor (responsible for managing the advertising schedule and maintenance on billboards) with Clear Channel Outdoor in Chicago .

Petitioner and his former spouse, Lisa Colquitt (Ms .

Colquitt) were married on October 23, 1982, in Cook County, Illinois . Two children were born of the marriage . On September 16, 2003, a Judgment of Dissolution of Marriage (judgment) was entered in the Circuit Court of Cook County, Illinois, Domesti c

Relations Division (circuit court) . When the judgment wa s entered, one of the children--K .P .--was'a minor .

In article III of the judgment, th e circuit court ordere d petitioner to make monthly payments of $ 1,000 described a s "unallocated family support ." With respect to "the minor child " the judgment states that petitioner's "o bligation¹² for the child as detailed in this Agreement" would cea se when "the child reaches majority or graduates from high school, whichever occurs last, but in no case later than January 15, 2005 ." K .P .

graduated from high school in June 2004 and turned 18 later tha t year . The judgment awarded sole care and custody of K .P . to Ms .

Colquitt .

The judgment is otherwise silent as to whether the payments , or any part thereof, were to be deductible as alimony by petitioner and includable in gross income by Ms . Colquitt . Th e judgment itself is also silent as to whether petitioner's obligation to make the payments would survive Ms . Colquitt's death .

The judgment incorporates a UniformOrder for Support (order), which was also entered by the circuit court on September 16, 2003 . The order characterizes the payments at issue as "unallocated support" rather than "maintenance" or "child support" . The order lists K .P . as the "Child/ren covered by thi s

order" . With respect to the termination of the payments, the order states :

TERMINATION . This obligation to pay child support terminates on January 15, 2005 unless modified by written order of the Court . The termination does not apply to any arrearage that may remain unpaid on that date .

The order also provides that the payments at issue were to be made through an order of support lodged with Clear Channel Outdoor . The payments were accordingly then deducted from petitioner's paychecks bimonthly, and were remitted to Ms .

Colquitt through the Illinois Child Support Disbursement Center .

In accordance with the terms of the judgment a final payment of $500 was deducted from petitioner's pay and remitted to Ms .

Colquitt on January 15, 2005 .

Discussion The Commissioner's determinations are presumed correct, and taxpayers generally bear the burden of proving otherwise .

Welch v . Helvering , 290 U .S . 111, 115 (1933) . Petitioner did not argue that section 7491 is applicable, nor did he establish that the burden of proof should shift to respondent . Moreover, the issue involved in this case--alimony--is a legal one to be decided on the record without regard to the burden of proof . Petitioner, therefore, bears the burden of proving that respondent's determination in the notice of deficiency is erroneous . See Rule 142(a) ; Welch v . Helvering , supra at 115 .

Section 215 allows an individual a deduction for alimony o r separate maintenance payments made during a year if those amounts are includable in the gross income the of recipient under sectio n 71(a) . However, payments to support chi ldren generally are no t deductible .

See sec . 71 (c)(1) . Section 215 provides in relevan t part :

SEC . 215 . ALIMONY, ETC ., PAYMENT S

(a) General Rule .--In the caseli of an individual, there shall be allowed as a deduction aniamount equal to the alimony or separate maintenance payments paid during such individual's taxable year .

(b) Alimony or Separate Maintenance Payments Defined .-- For purposes of this section, the term "alimony or separate maintenance payment" means any alimony or separat e maintenance payment (as defined in ',section 71(b)) which is includible in the gross income of t' he recipient under section 71 .

Section 71(a) provides that "Gross ,income includes amounts received as alimony or separate maintenance payments ." A s previously stated, alimony or separate maintenance payments are defined by section 71(b)(1), which provides in part :

SEC . 71(b) . Alimony or Separate Maintenance Payments Defined .--For purposes of ',this section-- (1) In general .--The term; "alimony or separate maintenance payment" means any payment in cash if-- (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument , (B) the divorce or separation instrument does not designate such payment as a payment which is not includible in gross income under this section and not allowable as a deduction under section 215 , (C) in the case of an individual legally separated from his spouse under a decree of divorce or of separate maintenance, the payee spouse and the payor spouse are not members of the same household at the time such payment is made, and (D) there is no liability to make any such payment for any period after the death of the payee spouse and there is n o liability to make any payment (in cash or property) as a substitute for such payments after the death of the payee spouse .

The test under section 71(b)(1) is conjunctive ; a payment is deductible as alimony only if all four requirements of section 71(b)(1) are satisfied . See Jaffe v . Commissioner , T .C . Memo .

1999-196 . The judgment is silent as to whether the petitioner would be required to make payments upon the death of the Ms .

Colquitt . Therefore, we must turn to the relevant law of the jurisdiction .

Morgan v . Commissioner , 309 U .S . 78, 80 (1940) ; Kean v . Commissioner , T .C . Memo . 2003-163, affd . 407 F .3d 186 (3d Cir . 2005) .

Illinois law provides that "Unless otherwise agreed by the parties in a written agreement set forth in the judgment or otherwise approved by the court, the obligation to pay future maintenance is terminated upon the death of either party" . 750 Ill . Comp . Stat . Ann . 5/510(c) (West 2004) . Accordingly, it appears that the judgment meets the criteria set forth in section 71(b)(1) .

Section 71 ( c)(1), however , provides that section 71(a) "shall not apply to that part of any payment which the terms o f the divorce or separation agreement fix # * * as a sum which i s payable for the support of children of t e payor spouse . " Petitioner argues that because the judgment is silent as t o a fixed amount of child support, the "un llocated family support " payments must be alimony . See Commissioner v . Lester , 366 U .S .

299 (1961) . Petitioner relies on Lester for the proposition tha t unless the judgment specifies a specific', sum as child support, none of an "unallocated" payment will bejtreated as child suppor t under section 71(c)(1) . To be sure, in applying Lester , this Court had repeatedly refused to allow inference, intent, or othe r nonspecific designations--such as "unallocated family support"-- to override the clearly defined rule of section 71(c)(1) . See , e .g ., Mass v . Commissioner , 81 T .C . 112, 1 123 (1983) ; Blakey v .

Commissioner , 78 T .C . 963 (1982) ; Giordano v . Commissioner , 63 T .C . 462 (1975) ; Grummer v . Commissioner , 46 T .C . 674 (1966) .

The Deficit Reduction Act of 1984 „Pub . L . 98-369, sec . 422,

deducted bimonthly from his paycheck and remitted--pursuant to the order--to Ms . Colquitt by the Illinois Child Disbursement Center . We fail to see how that particular agency would be used other than for the disbursement of child support payments .

Finally, the order's termination clause, previously quoted, specifically refers to the $1,000 monthly payments as "child support" and states that the "child support terminates on January 15, 2005 ." Petitioner testified that a final payment was deducted from his paycheck on January 15, 2005 . Accordingly, and on the basis of the foregoing, we fail to see how petitioner and Ms . Colquitt's use of the term "unallocated family support" could--by itself--characterize the payments as alimony where the aforementioned facts suggest the contrary .

Moreover, pursuant to section 72(c), the contingency clause in the judgment supports our conclusion because it reduced the amount of petitioner's payments as a result of either the happening of an event related to K .P . or at a time clearly associated with such an event . The last deduction from petitioner's pay occurred on January 15, 2005, the same date specified in the contingency clause . We simply do not follow petitioner's argument that the date of his last payment and the date specified in the contingency clause were identical as a result of coincidence . We are also not persuaded to hold for petitioner on the ground that January 15, 2005, was not the date on which K .P . turned 18 or graduated frorh high school (the tw o events specifically mentioned in the contingency clause) .

Our review of the entire record--including the contingency clause--has led us to conclude that the Phrase "unallocated family support" as used in the judgment is not alimony but child support . The facts lead us to conclude that the monthly payment s at issue, which were made pursuant to anlorder referring to the payments as "child support", and which ended on a date specified in a contingency clause in the judgment, ; were--for child support .

The facts indicate the true nature of the payments was for child support and not alimony, and taking into' account that th e cessation date of the payments comports With a date specified i n a contingency clause pursuant to section 72(c), we cannot hold that petitioner is entitled to an alimony deduction on the basis of his use of the ambiguous term "unallo~cated family support" .

Accordingly, and on the basis of the foregoing , Decision will be entere d for respondent .

1. Although petitioner claimed an alimony deduction for payments totaling $12,461 for 2004, the record indicates that petitioner actually made payments totaling only $12,000 during 2004 .
2. "Obligation" is not defined in the judgment .
98. Stat . 795, which is applicable to divorce instruments execute d after December 31, 1984 , amended section 71 and overturned the result in Lester that held that no amount would be considere d child support unless it was specifically designated as such i n the divorce or separation agreement .