Moitoret v. Commissioner

Dora H. Moitoret, Petitioner, v. Commissioner of Internal Revenue, Respondent Moitoret v. Commissioner Docket No. 9984 United States Tax Court 7 T.C. 640; 1946 U.S. Tax Ct. LEXIS 92; August 26, 1946, Promulgated *92 Decision will be entered under Rule 50. Petitioner received alimony from her former husband for her own care and support as well as for the care and support of their minor children. Held, the amount received is includible in the petitioner's gross income. Sec. 22 (k), Internal Revenue Code. Dora H. Moitoret pro se. Bryant R. Burton, Esq., for the respondent. Arundell, Judge. ARUNDELL *640 This proceeding involves a deficiency in income tax for the calendar year 1943 in the amount of $ 640.79. The respondent concedes that petitioner is entitled to a credit of $ 116.44 against the deficiency asserted. The sole question is whether the respondent erred in including in petitioner's taxable income certain alimony payments received by her in the taxable year. FINDINGS OF FACT. *93 The petitioner is an individual, residing at Seattle, Washington. She filed her income tax return for 1943 with the collector of internal revenue for the district of Washington. *641 In 1939 the petitioner and her then husband, Anthony F. Moitoret, entered into a property settlement agreement in contemplation of separate maintenance. The couple were the parents of four children, all of whom were minors at that time. The separation agreement, among other things, provided that the petitioner should be paid by her husband "for her care and support and the care and support of said minor children, the sum of $ 250.00 each month, payable on the first day of each month, commencing July 1, 1939." Thereafter, Anthony F. Moitoret filed suit for divorce and on October 24, 1941, an interlocutory decree of divorce was entered by the Superior Court of the State of Washington for King County. In addition to awarding the petitioner the sole care, custody, and control of the then minor children, the interlocutory decree provided: It Is Further Ordered, Adjudged and Decreed that the property settlement agreement heretofore entered into by and between the plaintiff and defendant be and the *94 same is hereby confirmed in so far as the same has disposed of the community property of the plaintiff and defendant; and that further the same is hereby confirmed in so far as it pertains to the support and maintenance of the defendant and minor children, subject however to the right of either party hereto to make application for modification. A final decree of divorce was entered by the same court on April 27, 1942. Pursuant to the terms of the separation agreement, approved in the court's decree, the petitioner received $ 250 per month during 1943. The payments continued until November 18, 1945, at which date the youngest child attained majority and the payments were stopped as a result of a stipulation between the petitioner and her former husband which was approved by the court. The petitioner filed an income tax return for 1942 in which she reported the alimony she had received as income. In 1943 the petitioner received as alimony the sum of $ 3,000, none of which was included in her gross income on her tax return for that year. The respondent included the sum of $ 3,000 in petitioner's gross income. Other minor adjustments made by the respondent are not contested. OPINION. *95 Although the separation agreement and the decree of the court refer to the alimony payments here in question as being for her own care and support as well as that of the minor children, the petitioner contends that she had not wanted any of the money; that she has not used any part of it for herself, and that it was paid over to her solely for the care and support of the children. *642 The respondent, relying upon his regulations, 1 takes the view that where the payments are received by the wife for the support of herself and the minor children without a specific designation of the portion allocable to the support of the children, the entire amount is taxable to the wife under the terms of the statute, irrespective of how the money was actually used or expended. *96 We think the respondent's determination must be sustained. Section 22 (k), Internal Revenue Code2 (added by section 120 (a) of the Revenue Act of 1942) taxes alimony payments to the wife except where the decree or other written instrument has fixed, in terms of an amount of money or a portion of a payment, a sum which is payable for the support of the minor children of the husband. In such case the amount so fixed is not included as income of the wife but is taxed to the husband. See Robert W. Budd, 7 T. C. 413. Here the alimony in question was payable to the petitioner for her own care and support and for the care and support of the minor children. Hence, it may not be said that the decree or written instrument fixed an amount payable by the husband for the support and care only of his minor children. *97 It is true that when the separation agreement was entered into by the parties the law taxed the alimony payments to the husband. It is to be noted, however, that the interlocutory decree of the court approving the arrangement set out in the separation agreement expressly provided that either party should have the right to make application for modification. Thus, the way was open through which the petitioner *643 might have endeavored to have the decree changed if it did not embody the intentions of the parties, or by which she might have sought other adjustments to take care of the situation occasioned by the change in the law. The determination of the respondent is sustained. Decision will be entered under Rule 50. Footnotes 1. Sec. 29.22 (k)-1 [Regulations 111]. * * * * * * * (d) Payments for Support of Minor Children. -- Section 22 (k) does not apply to that part of any periodic payment which, by the terms of the decree or the written instrument under section 22 (k), is specifically designated as a sum payable for the support of minor children of the husband. The statute prescribes the treatment in cases where an amount or portion is so fixed but the amount of any periodic payment is less than the amount of the periodic payment specified to be made. In such cases, to the extent of the amount which would be payable for the support of such children out of the originally specified periodic payment, such periodic payment is considered a payment for such support. * * * *↩ 2. SEC. 22. GROSS INCOME. * * * * (k) Alimony, Etc., Income. -- In the case of a wife who is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, periodic payments (whether or not made at regular intervals) received subsequent to such decree in discharge of, or attributable to property transferred (in trust or otherwise) in discharge of, a legal obligation which, because of the marital or family relationship, is imposed upon or incurred by such husband under such decree or under a written instrument incident to such divorce or separation shall be includible in the gross income of such wife, and such amounts received as are attributable to property so transferred shall not be includible in the gross income of such husband. This subsection shall not apply to that part of any such periodic payment which the terms of the decree or written instrument fix, in terms of an amount of money or a portion of the payment, as a sum which is payable for the support of minor children of such husband. * * * *↩