                        T.C. Memo. 2007-180



                      UNITED STATES TAX COURT



                 TONI L. SARCHETT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11785-06.             Filed July 9, 2007.



     Toni L. Sarchett, pro se.

     Carolyn A. Schenck, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   Respondent determined a deficiency of $69,390

in petitioner’s Federal income taxes for 2004.    After a

concession by respondent, the issue for decision is whether

petitioner is entitled to deduct, as alimony under section 215,

$200,000 in payments made to her former spouse.    Unless otherwise
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indicated, all section references are to the Internal Revenue

Code in effect for the year in issue.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in California at the time that she filed her

petition.    Petitioner was previously married to Jon Sarchett (her

former spouse).    The marriage of petitioner and her former spouse

was dissolved through proceedings commenced in the Los Angeles

County Superior Court in 2001 and concluded in 2004.    Attached to

and made part of the judgment of dissolution of the marriage was

the agreement between petitioner and her former spouse, each

represented by attorneys, as to spousal support and property

division.    Section I of the agreement provided for the division

of community property.    After listing specifically property

awarded to petitioner or to her former spouse, the agreement

provided:

     II.    EQUALIZATION PAYMENT

          A. In order to equalize the division of the
     parties community property and debts, * * * [Toni
     Sarchett] shall pay to * * * [Jon Sarchett] the sum of
     two hundred twenty-five thousand * * * dollars. Said
     sum shall be paid to * * * [Jon Sarchett] as set forth
     in the following schedule:

               1. * * * [Toni Sarchett] shall pay to * * *
     [Jon Sarchett] the sum of one hundred twenty-five
     thousand * * * dollars on or before May 10, 2004;
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               2. * * * [Toni Sarchett] shall pay to * * *
     [Jon Sarchett] the sum of twenty-five thousand * * *
     dollars on or before June 30, 2004;

               3. * * * [Toni Sarchett] shall pay to * * *
     [Jon Sarchett] the sum of twenty-five thousand * * *
     dollars on or before September 30, 2004;

               4. * * * [Toni Sarchett] shall pay to * * *
     [Jon Sarchett] the sum of twenty-five thousand * * *
     dollars on or before December 31, 2004; and

               5. * * * [Toni Sarchett] shall pay to * * *
     [Jon Sarchett] the sum of twenty-five thousand * * *
     dollars on or before March 31, 2005.

In a separate section dealing with spousal support, petitioner

was ordered to pay to her former husband the sum of $4,000 per

month “continuing until death of either party, remarriage of the

supported party, or further order of Court.”   Payment of the

spousal support was to be suspended “for so long as * * * [Toni

Sarchett] is in full compliance with the equalization payment

schedule set forth above in paragraph II.”   The agreement further

provided that, in the event of default in any of the equalization

payments, the spousal support arrears would become due and

payable from April 1, 2004, through the date of default, and the

monthly spousal support payments would be reinstated and continue

until the death of either party, remarriage of Jon Sarchett, or

further order of Court.

     During 2004, petitioner made spousal support payments to her

former spouse totaling $18,000.   Petitioner also made four

equalization payments totaling $200,000, consisting of four
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payments consistent with section II of the agreement quoted

above.

     On Form 1040, U.S. Individual Income Tax Return, for 2004,

petitioner claimed a deduction for “alimony paid” in the total

amount of $218,000.   Of that amount, $200,000 remains in dispute.

                              OPINION

     Section 215(a) provides a deduction to an individual equal

to the alimony or separate maintenance payments paid during that

individual’s taxable year.   Section 215(b) defines alimony as any

payment that is includable in the gross income of the payee under

section 71.   Section 71(a) provides for the inclusion in income

of any alimony or separate maintenance payments received during

the 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
     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 no liability to make any payment (in cash or
     property) as a substitute for such payments after the
     death of the payee spouse.
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     Under section 71(b)(1)(D), if the payor is liable for any

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

required will be deductible as alimony by the payor.     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.

     Respondent argues that the payments comprising the $200,000

in dispute are clearly part of a division of property under the

settlement agreement.    Petitioner relies on cases holding that

the characterization of payments in a decree as alimony or

property settlement is not controlling.     See, e.g., Baker v.

Commissioner, T.C. Memo. 2000-164.      She correctly states a

general rule, but the general rule does not aid her case.

Whether the payments satisfy section 71 and, in this case,

particularly section 71(b)(1)(D) is controlling.     See, e.g.,

Johanson v. Commissioner, T.C. Memo. 2006-105; Berry v.

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

     In this case, the settlement agreement requires petitioner

to make the equalization payments until a fixed amount, $225,000,

is paid.    In contrast to the spousal support awarded in the

agreement, the obligation to make the equalization payments would
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continue without regard to the death of petitioner’s former

spouse.   Thus the payments are not deductible as alimony.

     Petitioner argues that the payments would terminate on death

under State law because they are alimony.     There is no persuasive

evidence that the payments were alimony, however.        The evidence

is to the contrary, and there is no need to resort to State law

to determine the character of the payments.

     We have considered the other arguments of the parties, and

they are irrelevant to our decision.     To reflect respondent’s

concession,


                                            Decision will be entered

                                       under Rule 155.
