Buccola v. Commissioner

Lory Buccola, Petitioner v. Commissioner of Internal Revenue, Respondent Buccola v. Commissioner Docket No. 4331-68 United States Tax Court 54 T.C. 1599; 1970 U.S. Tax Ct. LEXIS 84; August 6, 1970, Filed *84 Decision will be entered for the respondent. Pursuant to a decree of separation providing in part for payments by the petitioner to his wife "for support and maintenance of the [wife] and the three children," petitioner paid her an amount in excess of one-half of her support and that of the children. Held, since the decree of separation does not "fix" the amount petitioner is to pay for the support of his minor children, sec. 71(b), I.R.C. 1954, the sums paid under the decree are deductible from his gross income, sec. 215, I.R.C. 1954, and includable in the wife's gross income, sec. 71(a), I.R.C. 1954, but may not be taken into account in computing the amount of support he furnished in applying the dependency exemption provisions of sec. 151, I.R.C. 1954. Lory Buccola, pro se. John E. White, for the respondent. Featherston, Judge. FEATHERSTON *1600 Respondent determined a deficiency in petitioner's Federal income tax for 1965 in the amount of $ 108.98. The only issue is whether the sums totaling $ 2,063.45 paid by Lory Buccola to his separated wife, Josephine Buccola, in 1965 constituted alimony payments and were thus includable in Josephine's gross income under section 71(a), 1 and deductible from petitioner's gross income under section 215, or were payments in support of petitioner's dependents under section 71(b). *87 FINDINGS OF FACT Lory Buccola (hereinafter referred to as Lory or petitioner) resided in Falconer, N.Y., at the time his petition was filed. He filed a Federal income tax return for 1965 with the district director of internal revenue, Buffalo, N.Y. Briefly summarized, the facts, most of which were stipulated, are as follows. On June 30, 1951, Lory married Josephine Destro (hereinafter Josephine) at Jamestown, N.Y. This marriage yielded three children: Saranne, born April 4, 1953; Joseph, born August 1, 1954; and Lory, Jr., born February 1, 1959. In 1962 Josephine commenced an action for an order of separation from Lory's bed and board in the Supreme Court for the County of Chautauqua, N.Y. On March 8, 1962, the court decreed the separation of Lory and Josephine, and the order provided in pertinent part as follows: Ordered, Adjudged, and Decreed, that the defendant [Lory Buccola] shall pay the plaintiff [Josephine Buccola] the sum of Forty Dollars ($ 40.00) per week beginning with the 16th day of February, 1962, for the support and maintenance of the plaintiff and the three children, together with the payment of hospitalization and medical expenses that might necessarily be*88 incurred. [Emphasis added.] During 1965, pursuant to this order, Lory made payments to Josephine which totaled $ 2,063.45. These payments constituted a sum in excess of half of the support of Josephine and the three children during that year. In his 1965 Federal tax return Lory claimed exemption deductions for Josephine and each of the three children. In the notice of deficiency, respondent determined that Lory's payments to Josephine were "alimony," allowed an alimony deduction in the amount of $ 2,063.45, and disallowed the exemption deductions claimed for Josephine and the three children. *1601 OPINION Petitioner paid nothing toward the support of his wife and children except the payments under the court decree. Yet he contends that, since he made a cash outlay in excess of half their total support, he is entitled to dependency deductions for them. In essence, his argument is that section 71 does not apply to him because he is not "divorced" from his wife, but rather only "separated." Section 71(a) provides in part that "If a wife is divorced or legally separated from her husband under a decree * * *, the wife's gross income includes periodic payments * * * received*89 * * * in discharge of * * * a legal obligation which * * * is imposed on or incurred by the husband under the decree * * * incident to such divorce or separation." (Emphasis added.) This section makes no distinction between decrees of divorce and decrees of legal separation. Under either type of decree (assuming other section 71 requirements are met), all payments are includable in the gross income of the wife and are deductible by the husband by virtue of section 215. Section 71(b) prescribes a formula whereby payments which are, in fact, made for the support of the husband's minor children are not includable in the wife's gross income and may be taken into account in computing the amount of the husband's support for the children. That section provides in part that section 71(a) "shall not apply to that part of any payment which the terms of the decree * * * fix, in terms of an amount of money or a part of the payment, as a sum which is payable for the support of minor children of the husband." It is this provision to which Commissioner v. Lester, 366 U.S. 299, 303 (1961), speaks most directly, as follows: This language leaves no room for doubt. *90 The agreement must expressly specify or "fix" a sum certain or percentage of the payment for child support before any of the payment is excluded from the wife's income. The statutory requirement is strict and carefully worded. It does not say that "a sufficiently clear purpose" on the part of the parties is sufficient to shift the tax. It says that the "written instrument" must "fix" that "portion of the payment" which is to go to the support of the children. Otherwise, the wife must pay the tax on the whole payment. * * * See also Van Oss v. Commissioner, 377 F. 2d 812 (C.A. 2, 1967), affirming a Memorandum Opinion of this Court. In the present case, the separation decree only provides for payments to be made "for the support and maintenance of [Josephine] and the three children." There is no mention of the manner in which the money is to be used, and, as in Van Oss v. Commissioner, supra, the wife is not required to apply any minimum portion of the payments to the care and support of the children. She is "free to spend *1602 the monies paid under the agreement as she sees fit." Commissioner v. Lester, supra at 304.*91 Since no amount is "fixed" for the support of the children, there is no way to shift the tax burden from Josephine; the full amount of the payments is includable in her gross income. This conclusion that Lory's payments under the decree of separation are includable in Josephine's gross income is decisive of his claim for dependency deductions for the children under sections 151(a) and 152(a)(1)2 because section 152(b)(4) provides: "A payment to a wife which is includible in the gross income of the wife under section 71 * * * shall not be treated as a payment by her husband for the support of any dependent." Since Lory did not show that he furnished more than half of their support over and above his payments under the court decree, he is not entitled to dependency exemptions for the children. *92 Nor is petitioner entitled to the claimed exemption for Josephine. She had gross income within the meaning of section 151(b). 3 Indeed, as demonstrated above, she had gross income at least equal to the payments under the court decree. See also sec. 61(a)(8). Decision will be entered for the respondent. Footnotes 1. All section references are to the Internal Revenue Code of 1954, as in effect during the tax years in issue, unless otherwise noted.↩ 2. SEC. 152. DEPENDENT DEFINED. (a) General Definition. -- For purposes of this subtitle, the term "dependent" means any of the following individuals over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer * * *: (1) A son or daughter of the taxpayer, * * *↩ 3. SEC. 151. ALLOWANCE OF DEDUCTIONS FOR PERSONAL EXEMPTIONS. (b) Taxpayer and Spouse. -- An exemption of $ 600 for the taxpayer; and an additional exemption of $ 600 for the spouse of the taxpayer if a separate return is made by the taxpayer, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.↩