                     T.C. Summary Opinion 2008-46



                        UNITED STATES TAX COURT



                    MARILYN L. RAGA, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 821-07S.              Filed April 29, 2008.



        Jeffrey W. Brend and Gregory A. Papiernik, for petitioner.

     Karen L. Baker, for respondent.



     COHEN, Judge:     This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.    Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and

this opinion shall not be treated as precedent for any other

case.     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue.
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     Respondent determined a deficiency of $5,097 in petitioner’s

Federal income tax for 2004.   The sole issue for decision is

whether $21,450 petitioner received in 2004 is includable in her

gross income as alimony.

                             Background

     All of the material facts have been stipulated.    Petitioner

resided in Illinois at the time she filed her petition.

     Petitioner was married to Dennis Raga (Mr. Raga) in 1992 and

had two children during that marriage.     She filed for divorce on

December 31, 2003.    A temporary order was entered in the divorce

action on February 2, 2004, directing Mr. Raga to pay petitioner

$450 per week until further notice.     On March 10, 2004, orders of

continuance were entered in the divorce action ordering Mr. Raga

to “continue to pay $450.00 per week as unallocated maintenance

and child support”.   A judgment for dissolution of marriage

(divorce decree) was entered in June 2004.    The divorce decree

provides in relevant part:

                             ARTICLE III

                             MAINTENANCE

          3.1 Dennis agrees to waive any claim for
     maintenance from Marilyn and further acknowledges that
     he forever waives any right to maintenance from
     Marilyn.

          3.2 Dennis further agrees to pay to Marilyn as
     and for unallocated support and maintenance the sum of
     $450.00 per week for a period of 30 months following
     the entry of an order for the Dissolution of their
     Marriage in the Circuit Court of Cook County, Illinois.
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          3.3 Marilyn agrees to accept the unallocated
     support referred to in paragraph 3.2 above and further
     agree [sic] that unallocated support shall terminate at
     the expiration of 30 months as described above, that
     the issue of maintenance shall not be reviewable as to
     Marilyn and that after the 30 month period, that Dennis
     shall thereafter pay child support in the statutory
     amount then in effect with regard to his actual income
     at that time.

                            ARTICLE IV

                              SUPPORT

          4.1 Dennis shall pay to Marilyn as and for
     unallocated support for Marilyn and the children the
     sum of $450.00 per week for a period of 30 months
     following the entry of an order for the Dissolution of
     their Marriage in the Circuit Court of Cook County,
     Illinois. This unallocated support shall terminate at
     the expiration of 30 months following the entry of an
     order for the dissolution of their marriage.
     Thereafter, Dennis shall pay child support in the
     statutory amount then in effect.

          4.2 Dennis’ obligation to pay child support as
     described herein shall terminate upon the emancipation
     of [the younger child]. * * *

     The divorce decree does not state whether Mr. Raga’s

payments are includable in petitioner’s gross income under

section 71.   It does not state that the unallocated support

payments from Mr. Raga will terminate upon the death of

petitioner or Mr. Raga.   The divorce decree grants petitioner and

Mr. Raga joint legal custody of their children.

     During 2004 petitioner received payments from Mr. Raga

totaling $21,450.   The Illinois State Disbursement Unit

classified the payments as child support.   Petitioner did not
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report receipt of any alimony on her 2004 Federal income tax

return.

                            Discussion

     The parties dispute whether the payments petitioner received

from Mr. Raga in 2004 are alimony or child support.   Section

71(a) provides for the inclusion in income of any alimony or

separate maintenance payments received by an individual during

his or her taxable year.   Section 71(b)(1) defines “alimony or

separate maintenance payment” as 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
     includable 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 no liability to make any payment (in cash or
     property) as a substitute for such payments after the
     death of the payee spouse.

Section 71(c)(1) provides that the general inclusion rule under

section 71(a) “shall not apply to that part of any payment which

the terms of the divorce or separation instrument fix (in terms

of an amount of money or a part of the payment) as a sum which is

payable for the support of children of the payor spouse.”
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Amounts payable under a divorce decree will not be treated as

child support for purposes of section 71(c) unless specifically

designated as such in the document.    See, e.g., Berry v.

Commissioner, T.C. Memo. 2005-91.

     Under section 71(b)(1)(D), if the payor is liable for any

qualifying payment after the recipient’s death, none of the

related payments required will be alimony deductible by the payor

and includable in income by the payee.    See Kean v. Commissioner,

407 F.3d 186, 191 (3d Cir. 2005), affg. T.C. Memo. 2003-163.

Whether a postdeath obligation exists may be determined by the

terms of the divorce or separation instrument or, if the

instrument is silent on the matter, by State law.    Morgan v.

Commissioner, 309 U.S. 78, 80-81 (1940); see also Kean v.

Commissioner, supra.

     The divorce decree does not explicitly state that payments

terminate upon the death of petitioner.   Thus, we look to

Illinois State law to determine whether the payments would

terminate upon petitioner’s death by operation of law.     Illinois

law does not specifically address whether an obligation to pay

unallocated maintenance and support terminates upon the death of

the payee spouse.   However, section 510(c) of the Illinois

Marriage and Dissolution of Marriage Act provides that, in the

absence of a written agreement approved by the court, “the

obligation to pay future maintenance is terminated” upon the
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death, remarriage, or cohabitation of the recipient.    750 Ill.

Comp. Stat. Ann. 5/510(c) (West 1999).

     The parties dispute whether the payments at issue meet the

requirement of section 71(b)(1)(D).    Petitioner contends that

because Mr. Raga was required to make unallocated support and

maintenance payments to her for a definite period of 30 months

and because an undefined portion of those payments was child

support, those payments would not cease under Illinois State law

upon her death.   Petitioner contends further that, although

Mr. Raga was awarded joint custody, upon petitioner’s death a

child custody proceeding would be necessary to determine the

children’s future residence because their primary residence under

the divorce decree is with petitioner, not Mr. Raga.    Petitioner

contends that the Ragas’ eldest daughter, not Mr. Raga, would

most likely be granted custody of the minor children upon

petitioner’s death, and that Mr. Raga would be responsible for

continuing to make payments under the divorce decree to the

daughter instead of petitioner.   To support her position that

Mr. Raga would be required to continue payments as delineated in

the divorce decree upon petitioner’s death, petitioner cites an

Illinois appellate case, In re Marriage of Semonchik, 733 N.E.2d

811, 817 (Ill. Ct. App. 2000), which held, in the context of a

modification of unallocated support and maintenance payments due

to one spouse’s unemployment, that “where a marital settlement
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agreement contains an unallocated combination of child support

and taxable maintenance payment, that payment is subject to the

statutory right to modification contained in the Marriage Act”.

     Respondent argues that the payments to petitioner under the

divorce decree do not fail to qualify as alimony under section

71(b)(1)(D) merely because the unallocated support and

maintenance contains an element of child support.   Respondent

also contends that, contrary to petitioner’s belief regarding

their residence upon her death, the children would reside with

Mr. Raga, their joint custodian, under Illinois law.   Thus, the

payments for unallocated support and maintenance would cease upon

petitioner’s death because Mr. Raga would not need to make

payments to himself for support of the children.    Regardless of

the resolution of hypothetical custody issues upon petitioner’s

death, respondent argues that the maintenance portion of the

payments constitutes alimony and would cease upon her death.

Additionally, respondent argues that the child support portion of

the payments, if it could be separated from the maintenance

portion, does not qualify for the child support exclusion from

gross income under section 71(c), which requires that the divorce

instrument “fix a sum payable for the support of the children”.

     We agree with respondent.    See Berry v. Commissioner, supra,

in which we rejected “the notion that the applicability of

section 71(b)(1)(D) to an unallocated support obligation is to be
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determined by invariably assuming that a third party would take

custody of the children upon the payee spouse’s death, thereby

ensuring the existence of a substitute payment obligation.”

Petitioner has cited no Illinois law providing that the children,

upon her death, would not reside with Mr. Raga, their father and

joint custodian, absent a legal proceeding to establish physical

custody in a sibling, as petitioner desires.   Petitioner’s

reliance on In re Marriage of Semonchik, supra, is relevant only

to the extent that any new custody arrangement would entail

potential modification of the level of support that Mr. Raga

could be required to pay.   We agree with petitioner only to the

extent that we cannot know whether the Ragas’ children would

reside with Mr. Raga or someone else upon petitioner’s death.

However, the unallocated maintenance portion of the payments to

petitioner under the divorce decree would terminate upon her

death pursuant to the above-quoted section 510(c) of the Illinois

Marriage and Dissolution of Marriage Act.   Any other person

seeking and receiving physical custody would then have to seek

support payments as well.

     Because the terms of the divorce decree do not fix any

portion of the payments as payable for the support of the Ragas’

children, the payments do not satisfy section 71(c).   Thus, the

unallocated payments are includable in petitioner’s gross income

as alimony under section 71(a).
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     In reaching our decision, we have considered all arguments

presented and, to the extent not mentioned, we conclude that they

are irrelevant, moot, or without merit.


                                          Decision will be entered

                                   for respondent.
