                        T.C. Memo. 2000-92



                      UNITED STATES TAX COURT



                HERMINE LEVENTHAL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

               HARVEY R. LEVENTHAL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 24439-95, 26613-95.         Filed March 20, 2000.



     Guy B. Maxfield, for petitioner in docket No. 24439-95.

     Stuart A. Smith, for petitioner in docket No. 26613-95.

     Anthony H. Jones, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     GALE, Judge:   By separate notices of deficiency, respondent

determined the following deficiencies, addition to tax, and

penalty with respect to petitioners' Federal income taxes:
                                  - 2 -

                            Hermine Leventhal

                                  Addition to Tax        Penalty
     Year        Deficiency       Sec. 6651(a)(1)      Sec. 6662(a)

     1990        $17,957              $4,434              $3,591
     1991         17,065                 --                 --


                           Harvey R. Leventhal

                    Year                  Deficiency

                    1990                    $18,928
                    1991                     14,345

     These cases were consolidated for trial, briefing, and

opinion.    All section references are to the Internal Revenue Code

in effect for the years in issue, and all Rule references are to

the Tax Court Rules of Practice and Procedure, unless otherwise

indicated.

     After concessions,1 the issue for decision is whether

certain payments made by petitioner Harvey Leventhal (Harvey)

constitute alimony or separate maintenance payments, includable

in the gross income of petitioner Hermine Leventhal (Hermine)

under section 71(a) and deductible by Harvey under section

215(a).    Respondent issued inconsistent notices of deficiency to

Harvey and Hermine, determining that Harvey was not entitled to

deduct and Hermine was not entitled to exclude from gross income

the disputed payments.     At trial and on brief, respondent argues


     1
       Respondent concedes that petitioner Hermine Leventhal is
not liable for the addition to tax under sec. 6651(a)(1) or the
penalty under sec. 6662(a).
                                - 3 -

in support of Hermine’s position, while reserving his rights to

assess deficiencies against her.

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts, together with the exhibits attached

thereto, is incorporated herein by this reference.   Hermine

resided in New York, New York, and Harvey had a legal address in

Staten Island, New York, at the time their petitions were filed.

     Hermine and Harvey were married on July 5, 1954.   In or

around December 1987, petitioners separated due to marital

difficulties.   At this time, Hermine moved out of the house they

had shared on Emerson Drive, Staten Island, New York (marital

home), and stayed with various friends from December 1987 until

June or July 1988.   At some point in 1988, Hermine commenced an

action for divorce in the Supreme Court of the State of New York.

Hermine engaged an attorney, Charles Moser, to handle the divorce

proceedings and property settlement and to negotiate a place for

her to live in the interim.   Harvey engaged an attorney, Irvin

Rosenthal, to handle the divorce proceedings and property

settlement as well as any interim matters.

     On April 1, 1988, Mr. Rosenthal sent a letter to Mr. Moser

(April 1 letter).    Clearly marked as “PRIVILEGED AND CONFIDENTIAL

AND WITHOUT PREJUDICE”, the letter states:
                               - 4 -

     Dear Mr. Moser:

          This is in reply to your letter of March 21,
     1988.[2]

          1.    Occupancy of Marital Home.

               Dr. Leventhal is amenable to alternate
     sharing of the marital home on an equal time-share
     basis with three months alternatively to the wife and
     husband. The foregoing is contingent on the wife
     agreeing to presently placing the marital home on the
     market for sale at the highest obtainable market price,
     with the net proceeds of sale to be held in escrow,
     until a final judgment of the Court in the divorce
     action, or agreement with the parties.

               The husband will pay all normal and usual
     expenses of maintenance and operation of the marital
     home and the alternate residence the occupancy of both
     of which are to be shared by the parties. Our clients
     shall agree with respect to the alternate residence.

               Accordingly, no appraisal will be required
     since the home will presumably be sold before the
     conclusion of the action.

          2.    Tangible Personal Property.

               With regard to the tangible personalty of
     value, viz., antiques, our client Dr. Leventhal is
     agreeable to having the parties select the items on an
     alternate selection basis, with the first selection to
     the wife. This again will obviate the necessity for an
     appraisal of the personalty.

          3.    Professional Corporation's Payment.

               In view of the fact that Mrs. Leventhal is no
     longer on the payroll of the professional corporation,
     no further payments of $154 bi-weekly can be, nor will
     they, be made to Mrs. Leventhal.




     2
        The referenced Mar. 21, 1988, letter is not a part of the
record in this case.
                         - 5 -

     4.   Counsel Fee.

          Our client and we both feel that no counsel
fee payment by the husband is indicated in this action
since your client Mrs. Hermine Leventhal has assets in
her own name and control in excess of $1,700,000 of
which at least $374,000 is in liquid funds in the form
of bank funds and marketable securities, exclusive of
real property.

          Mrs. Leventhal can well afford to advance her
own counsel and expert fees. Our client did agree
without prejudice, to advance $2,500 toward your
client's expert fees and same is enclosed under
separate cover.

     5.   Matrimonial Support.

          Mrs. Leventhal has available to her $450 per
week from a joint account regularly and periodically
funded by her husband and an additional $200 per week
paid to her by her husband from funds of a joint
account. The wife pays $120 a week for a maid from the
aforesaid sums, and the husband has in the past and
continues to pay all other expenses in connection with
the operation and maintenance of the home, and further
pays all charge accounts.

     6.   Review of Professional Corporation.

          As I advised you on the phone on March 31st,
and as my partner Rona Shays previously wrote to you,
if you will send us a list of the books and records of
the professional corporation you wish to have examined
by your accountants, the years involved, and the names
of your accountants, we will arrange to have the
professional corporation arrange a mutually
satisfactory appointment for your experts to review
same. Obviously, there will be excluded from your
inspection any records pertaining to patients, so as
not to breach patient confidentiality afforded them by
law.
                             - 6 -

           7.   Venue.

              Our position regarding venue is clearly and
    succinctly set forth in our motion papers. It is our
    intention to timely pursue our motion.

                             Very truly yours,

                             Irvin H. Rosenthal

    On June 1, 1988, Mr. Moser sent a letter to Mr. Rosenthal

stating:

    Dear Mr. Rosenthal:

    With reference to your telephone conversation with my
    offices yesterday, our prior communications and phone
    conversations and with specific reference to the Lease
    from SILVER LAKE ASSOCIATES (Owner) to our Clients
    (Tenants), it is understood and agreed as follows:
         (1) our clients will alternate, on a two (2) month
    each basis, both apartment 5N on the fifth floor of 961
    Victory Boulevard, and the marital home located at 2
    Emerson Drive, both Staten Island, New York; Harvey
    Leventhal to occupy the home for the months of June and
    July 1988, (Hermine Leventhal to occupy the apartment
    during that period) and Hermine Leventhal to occupy the
    home for the months of August and September 1988
    (Harvey Leventhal to occupy the apartment during that
    period) and thereafter they shall similarly alternate
    the occupancy of both premises.
         (2) Harvey Leventhal will pay all normal and usual
    expenses of maintenance and operation of the marital
    home and the alternate residence, the occupancy of
    which are to be shared by the parties as aforesaid.

    Of course, as we discussed on the phone earlier today,
    all of the foregoing is based upon SILVER LAKE
    ASSOCIATES (Owner) accepting the changes you made in
    the Lease previously forwarded.
                                 - 7 -

     Kindly acknowledge the acceptance of the above
     conditions by signing and returning to me, via my
     messenger, the enclosed copy of the instant
     communication together with both copies of the Lease.

                                 Very truly yours,

                              CHARLES E. MOSER
     CEM:tp
     Encl.
     UNDERSTOOD, ACCEPTED AND AGREED:_______________________
                                     ROSENTHAL & SHAYS, by:
                                     IRVIN H. ROSENTHAL,ESQ.
                                     Attorneys for Defendant
                                     HARVEY LEVENTHAL

The letter was signed by Mr. Moser and countersigned by Mr.

Rosenthal on behalf of Harvey.

     Later that day, Mr. Moser sent a second letter to Mr.

Rosenthal stating:

     Dear Mr. Rosenthal:

     Enclosed herewith is a signed copy of the communication
     hand delivered to your offices earlier today.

     This communication will further confirm the agreement
     of the parties and our understanding regarding the
     alternating occupancy of the marital home and Apartment
     5N at 961 Victory Boulevard, Staten Island, New York,
     on a two (2) month basis, assuming that the changes
     made in the Apartment Lease are accepted by SILVER LAKE
     ASSOCIATES (Owner-Lessor), as follows:
          (1) the marital home located at 2 Emerson Drive,
     Staten Island, New York, will be forthwith placed on
     the market and listed for sale at the highest fair
     market price with a Licensed Real Estate Broker a
     member of the local Multiple Listing Service; that such
     a listing will not preclude a private sale at no less
     than the listing price; and that we will hold the net
     proceeds of the sale in escrow, the same to be released
     and distributed pursuant to the Judgment of Divorce to
     be entered herein or the mutual agreement, in writing,
     of the parties.
                               - 8 -

     In the haste of the hand delivery of my earlier
     communication the instant "listing and sale" provision
     was omitted.

     Kindly acknowledge the acceptance of the above by
     signing and returning to me, in the envelope provided,
     the enclosed copy of this letter.

                               Very truly yours,

                               CHARLES E. MOSER
     CEM:tp

     UNDERSTOOD, ACCEPTED AND AGREED:_______________________
                                     ROSENTHAL & SHAYS, By:
                                     IRVIN H. ROSENTHAL,ESQ.
                                     Attorneys for Defendant

Again, this letter was signed by Mr. Moser and countersigned by

Mr. Rosenthal on behalf of Harvey.     These two letters set forth

above dated June 1, 1988, are collectively referred to

hereinafter as the "June 1 letters”.

     During 1990 and the first 6 months of 1991, petitioners

alternately occupied the apartment on Victory Boulevard in Staten

Island, New York (apartment), and the marital home on a 2-month

rotation; i.e., each petitioner occupied one of the residences

for 2 months, and then petitioners switched locations.

Petitioners were designated as tenants on the lease for the

apartment.3   In June 1991, Harvey refused to renew the lease on

the apartment, and from July 1, to December 31, 1991, petitioners

shared occupancy of the marital home but did not live together as


     3
        We reach this conclusion on the basis of the first June 1
letter, which makes specific reference to the “Lease from SILVER
LAKE ASSOCIATES (Owner) to our Clients (Tenants)”.
                                - 9 -

husband and wife.    Title to the marital home was in Hermine’s

name during this 2-year period.

     During 1990, Harvey made cash payments totaling $26,358.65

to Hermine directly.    The parties have stipulated that Harvey

also made payments “on Hermine’s behalf” for that year,

specifically described as follows:

      $891.30   as car payments
     8,331.02   as mortgage payments on the marital home
     6,720.64   as rent for the apartment
       812.75   for furniture rental
     1,252.10   to Brooklyn Union Gas
     1,829.00   to a gardener
     3,521.02   to Con Edison for electricity
     1,654.12   to Quinlan Oil
     1,172.33   to Town & Country Pool
     8,095.12   as insurance payments
       432.29   to New York Telephone
       230.74   as miscellaneous expenses (plumbing,
                 electricity, water, etc.)

On his 1990 return, Harvey deducted as alimony $66,275.4

     During 1991, Harvey made cash payments totaling $25,012.55

to Hermine directly.    The parties have stipulated that Harvey

also made payments “on Hermine’s behalf” for that year,

specifically described as follows:




     4
       Although the total amount stipulated as paid in 1990
directly to or on Hermine’s behalf equals $61,301.08, Harvey
claimed an alimony deduction for that year of $66,275. The
parties have offered no explanation for this discrepancy.
However, because we conclude that Harvey is entitled to an
alimony deduction for 1990 that is substantially less than
$61,301.08, the discrepancy has no significance.
                                 - 10 -

    $3,623.49   as   car payments
     9,166.00   as   mortgage payments on the marital home
     3,398.55   as   rent for the apartment
       419.19   to   Brooklyn Union Gas
     3,001.00   to   a gardener
     2,357.72   to   Con Edison for electricity
     2,983.12   to   Quinlan Oil
       887.42   to   Town & Country Pool
     9,952.07   as   insurance payments
       185.33   to   New York Telephone
     1,248.93   as   miscellaneous expenses (plumbing,
                        electricity, water, etc.)

On his 1991 return, Harvey deducted as alimony $62,999.5

     During 1990 and 1991, with certain exceptions, Harvey sent

weekly checks to Hermine.      These checks were generally for $530,

although they were frequently for lesser amounts, sometimes with

an offset for some item such as utilities noted on the check and

sometimes without explanation.      Similarly, Harvey generally made

out monthly checks to Hermine during this period on which “car

payment” was noted.

     Harvey did not make the $530 weekly payments unfailingly.

On June 18, 1991, Hermine’s counsel, Mr. Moser, sent a letter to

Harvey’s counsel, Mr. Rosenthal, as follows:

     Dear Mr. Rosenthal:

          I am advised that your client [Harvey] has failed
     to remit his maintenance payments for the following


     5
       As was the case for 1990, the amount deducted as alimony
by Harvey for 1991 ($62,999) does not equal the amount stipulated
as paid directly to or on behalf of Hermine ($62,235.37). The
parties have also offered no explanation for this discrepancy,
but it is likewise without significance because we conclude that
Harvey is entitled to an alimony deduction for 1991 that is less
than $62,235.37.
                                - 11 -

     periods: May 31st; June 7th; and June 14, 1991,
     representing the total sum of $1,590.00 (@ $530.00).

          In addition his check representing the car lease
     payment for the month of June, in the sum of $297.10,
     has also not been remitted.

          The only payment made of late was his check, just
     received and without explanation whatsoever, dated
     June 7, 1991 and in the sum of $210.00.

          *     *     *     *       *    *     *

          * * * if the total monies due and owing my client
     are not received by her on or before June 20, 1991, I
     will, without further notice, seek judicial
     intervention and make a formal application to the court
     on June 24th. * * *

A second letter that month from Hermine’s to Harvey’s counsel

similarly took the position that Harvey was in arrears with

respect to his obligation to make maintenance and car payments.

Finally, in February 1992, before petitioners’ execution of a

final settlement agreement, Hermine’s counsel sent a letter to

Harvey’s counsel suggesting a need to verify maintenance payments

for the last one-third of 1991.

     During 1990 and 1991, Harvey paid $6,724 and $7,471,

respectively, for homeowner’s insurance on the marital home.    The

policies listed Hermine as the named insured, and covered the

dwelling as well as certain personal property therein, including

fine art, jewelry, and furs.    The remaining amounts stipulated as

for insurance covered life and other insurance.

     There was no court decree of divorce or separate maintenance

in effect during 1990 or 1991.    A settlement agreement providing
                               - 12 -

for the division of petitioners’ marital property and settlement

of all their respective obligations was executed by petitioners

on February 27, 1992, and a final Judgment of Divorce was granted

by the Supreme Court of the State of New York on March 6, 1992.

     For both the 1990 and 1991 taxable years, petitioners each

filed Federal income tax returns under the status of married

filing separate return.   As noted earlier, Harvey claimed a

deduction for alimony payments of $66,275 in 1990 and $62,999 in

1991.    Hermine did not include any amount as alimony in her gross

income for those years.

     Respondent issued inconsistent notices of deficiency to

Harvey and Hermine, disallowing Harvey’s alimony deductions and

determining that Hermine must include in gross income for 1990

and 1991, $66,275 and $64,994,6 respectively.

                               OPINION

     “Alimony or separate maintenance payments”, as defined in

section 71(b), are includable in the gross income of the




     6
       The alimony income determined for Hermine in 1990 matches
the alimony deduction disallowed for Harvey in that year.
However, for 1991 the amount of alimony income determined for
Hermine exceeds the deduction disallowed for Harvey by $1,995.
Furthermore, as with Harvey’s deductions, the income attributed
to Hermine in both years exceeds the amounts stipulated as
received directly by or on behalf of Hermine. As we sustain
respondent’s determination with respect to Hermine’s alimony
income in amounts less than those stipulated as received by her
in each year, these discrepancies are without significance.
                              - 13 -

recipient and deductible by an individual payor in the year paid.

See secs. 71(a) and 215(a).

     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.


     The parties do not dispute that the requirements of section

71(b)(1)(B) and (C) are met in the instant case.   The principal

dispute concerns section 71(b)(1)(A); while Harvey contends that

the amounts in dispute meet the requirements of section

71(b)(1)(A), Hermine and respondent argue that the amounts were

not received by or on behalf of Hermine under a divorce or

separation instrument.   In addition, respondent argues that the

amounts do not in any event qualify as alimony or separate

maintenance payments because Harvey’s liability for the payments
                              - 14 -

did not terminate upon Hermine’s death, as required by section

71(b)(1)(D).

Were Payments Received Under a Divorce or Separation Instrument?

     Under section 71(b)(2), the term "divorce or separation

instrument" means:

                (A) a decree of divorce or separate
           maintenance or a written instrument incident
           to such a decree,

                (B) a written separation agreement, or

                (C) a decree (not described in
           subparagraph (A)) requiring a spouse to make
           payments for the support or maintenance of
           the other spouse.

     As no decree of divorce or separate maintenance was in

effect during the years in issue, we must decide whether all or

some of the payments were received by or on behalf of Hermine

under a written separation agreement.

     The term "written separation agreement" is not defined in

the Code, the applicable regulations, or in the legislative

history.   Jacklin v. Commissioner, 79 T.C. 340, 346 (1982);

Keegan v. Commissioner, T.C. Memo. 1997-359.   A written

separation agreement has been interpreted to require a clear

statement in written form memorializing the terms of support

between the parties.   See Jacklin v. Commissioner, supra at 350;

Bogard v. Commissioner, 59 T.C. 97, 101 (1972).   Letters which do

not show a meeting of the minds between the parties cannot

collectively constitute a written separation agreement.    See
                              - 15 -

Grant v. Commissioner, 84 T.C. 809, 822-823 (1985), affd. without

published opinion 800 F.2d 260 (4th Cir. 1986); Estate of Hill v.

Commissioner, 59 T.C. 846, 856-857 (1973); Ewell v. Commissioner,

T.C. Memo. 1996-253; Mercurio v. Commissioner, T.C. Memo. 1995-

312; Harlow v. Commissioner, T.C. Memo. 1984-393; Greenfield v.

Commissioner, T.C. Memo. 1978-386.     However, where one spouse

assents in writing to a letter proposal of support by the other

spouse, a valid written separation agreement has been held to

exist.   See Azenaro v. Commissioner, T.C. Memo. 1989-224.

Furthermore, a written separation agreement will not fail simply

because it does not enumerate a specific amount of required

support, so long as there is some ascertainable standard with

which to calculate support amounts.    See Jacklin v. Commissioner,

supra at 348-351.

     Harvey takes the position that the April 1 and June 1

letters together constitute a written separation agreement within

the meaning of section 71(b)(2)(B) under which he paid all

amounts stipulated as paid directly to or on Hermine’s behalf.

We do not believe the April 1 letter constitutes a written

separation agreement.   Its language is vague (e.g., “Mrs.

Leventhal has available to her $450 per week”) and when fairly

read constitutes at best a set of unilateral proposals or offers.

The letter is clearly marked “WITHOUT PREJUDICE”, and some items

are expressly contingent on Hermine’s agreement to take other
                               - 16 -

actions.   The letter has not been countersigned or otherwise

endorsed by Hermine or her attorney.    Thus, the April 1 letter

does not memorialize a mutual agreement.

     Moreover, Harvey is selective in choosing the terms of the

April 1 letter that he argues evidence an agreement regarding

Hermine’s support.   In an effort to show an agreed $530 per week

support obligation, Harvey cites the letter’s language in the

“Matrimonial Support” paragraph which represents that $450 per

week is “available” to Hermine from an account funded by Harvey,

that another $200 per week is paid by him, and that $120 per week

from these sums is paid by Hermine “for a maid”.    However, Harvey

ignores language in the same paragraph which represents that he

in addition “pays all charge accounts”; he offers no explanation

why the purported support agreement embodied in the April 1

letter either includes or excludes an obligation by Harvey to pay

charge accounts.

     It makes no difference to our conclusion that Harvey

generally (though far from consistently) paid Hermine $530 per

week during the years in issue, which she accepted and presumably

used for her support.   Mere acquiescence and receipt of a payment

by the recipient spouse do not transform a unilateral offer of

support into the bilateral written agreement contemplated in

section 71(b)(2)(B).    See Harlow v. Commissioner, supra;

Saniewski v. Commissioner, T.C. Memo. 1979-337; Greenfield v.
                                - 17 -

Commissioner, supra.    Nor does it matter that Hermine ultimately

took the position that Harvey was obligated to pay her $530 per

week.   Even if the parties eventually reached some kind of

agreement, perhaps an oral one, regarding Hermine’s support,

there is no evidence of a written agreement in the record, as

required by section 71(b)(2)(B).    See Ewell v. Commissioner,

supra; Mercurio v. Commissioner, supra; Nemeth v. Commissioner,

T.C. Memo. 1982-646.

     Harvey argues that Hermine’s failure to agree to the April 1

letter in writing does not by itself make the letter

insufficient.   In support of this argument, Harvey cites

Jefferson v. Commissioner, 13 T.C. 1092 (1949), and Osterbauer v.

Commissioner, T.C. Memo. 1982-266, where letters lacking one

spouse’s written assent were held sufficient for purposes of an

alimony deduction.    However, both cases are clearly

distinguishable.     Jefferson and Osterbauer construed predecessors

of section 71(b)(2)(A) involving the requirement of a “written

instrument incident to” a decree of divorce or separation, not

the “written separation agreement” requirement presently embodied

in section 71(b)(2)(B).    Moreover, the facts in Jefferson and

Osterbauer are readily distinguishable from the instant case.       In

both prior cases, we found that an oral agreement clearly had

been reached prior to its memorialization in a writing.       The

evidence in the instant case shows the contrary.    Hermine
                              - 18 -

vigorously denies in testimony that she agreed to $530 per week

as support in connection with the April 1 letter, the April 1

letter is ambiguous regarding the terms of support, and Harvey

routinely disregarded his purported obligation to pay this

amount; all of which suggests that petitioners had not reached an

oral agreement regarding support prior to or by means of the

April 1 letter.

     Finally, Harvey argues that the “Matrimonial Support”

paragraph of the April 1 letter was incorporated by reference in

the first of the June 1 letters.   This June 1 letter begins:

     With reference to your telephone conversation with my
     offices yesterday, our prior communications and phone
     conversations and with specific reference to the Lease
     from SILVER LAKE ASSOCIATES (Owner) to our Clients
     (Tenants), it is understood and agreed as follows
     * * *.

Harvey contends that the reference to “our prior communications”

incorporated the terms of the April 1 letter.   We reject this

contention.   The reference is too vague to support such a

construction, particularly in the context of the specificity with

which the June 1 letters address their intended subject of living

arrangements.

     While the April 1 letter does not constitute or form part of

a written separation agreement within the meaning of section

71(b)(2)(B), the June 1 letters are another matter.   These

letters, written and signed by Hermine’s attorney and
                               - 19 -

countersigned by Harvey’s attorney7 as “UNDERSTOOD, ACCEPTED AND

AGREED”, outline specific and detailed terms under which Harvey

agreed to “pay all normal and usual expenses of maintenance and

operation of the marital home and the alternate residence [i.e.,

the apartment]”, and Harvey and Hermine agreed to alternating 2-

month occupancy of both premises.

     Hermine argues that the June 1 letters are not a written

separation agreement because they constitute “only an agreement

as to providing a place to live” for her.    Respondent appears to

agree; while conceding that the June 1 letters constitute a

“meeting of the minds”, he nevertheless contends that there was

no meeting of the minds “on the issue of alimony or separate

maintenance”.   We disagree.   To the extent respondent suggests

that an agreement to pay Hermine’s rent or mortgage is not an

agreement to pay alimony, he contradicts his own regulations.

See sec. 1.71-1T(b), Q&A-6, Temporary Income Tax Regs., 49 Fed.

Reg. 34455 (Aug. 31, 1984) (“cash payments of rent, mortgage,

tax, or tuition liabilities of the payee spouse made under the

terms of * * * [a] divorce or separation instrument will qualify

as alimony or separate maintenance payments”).    Hermine points to

no authority for the proposition that a written separation

agreement must be more comprehensive than providing for shelter,


     7
       None of the parties dispute that each petitioner’s
attorney had authorization to execute the letters on that
petitioner’s behalf.
                              - 20 -

and we have found none.   Payments to third parties covering

expenses for shelter, such as utilities, pursuant to a divorce or

separation instrument can certainly constitute alimony.   See,

e.g., Graham v. Commissioner, 79 T.C. 415 (1982); Cologne v.

Commissioner, T.C. Memo. 1999-102; Zampini v. Commissioner, T.C.

Memo. 1991-395.

     As noted, neither the statute nor the regulations define

“written separation agreement” as used in section 71(b)(2)(B).

With respect to the general requirements of a “written separation

agreement”, we have stated:

          Logically, it appears Congress was interested in a
     clear statement in written form of the terms of support
     where the parties are separated. In this manner it is
     administratively convenient for the Commissioner to
     apprise himself of the amount of gross income to the
     wife and the corresponding deduction allowable to the
     husband. * * *[Bogard v. Commissioner, 59 T.C. 97, 101
     (1972).8]

We have rejected the Commissioner’s attempt to require

formalities in a separation agreement when we are satisfied that

mutual agreement is evidenced.   See id. (rejecting any

requirement that the agreement recite the fact of separation).

Nor need the agreement state a specific dollar amount of support;

it is sufficient if the agreement states an ascertainable


     8
        Although Bogard v. Commissioner, 59 T.C. 97 (1972),
construed the meaning of “written separation agreement” as used
in a prior version of sec. 71, the regulations provide that the
term has the same meaning under the current statute. See sec.
1.71-1T(a), Q&A-4, Temporary Income Tax Regs., 49 Fed. Reg. 34455
(Aug. 31, 1984).
                              - 21 -

standard.   See Jacklin v. Commissioner, 79 T.C. 340, 351 (1982)

(agreement to provide “funds * * * necessary to sustain a

standard of living equivalent to that which obtained before the

separation” not insufficient as matter of law).   Based on the

foregoing authority, we believe petitioners’ agreement in the

June 1 letters that Harvey would “pay all normal and usual

expenses of maintenance and operation” of the two identified

residences qualifies as a written separation agreement with

ascertainable standards.   That petitioners did not execute a

written agreement covering all elements of Hermine’s support does

not negate the fact that they had a written agreement covering a

part.   Accordingly, cash payments received by (or on behalf of)

Hermine within the terms of the June 1 letters were payments made

“under” a divorce or separation instrument as required by section

71(b)(1)(A).

     Applying this conclusion to the payments that were

stipulated as made by Harvey either directly to or on behalf of

Hermine, we find that some of the payments clearly fall outside

the terms of the June 1 letters, which constitute the only

section 71(b)(2)(B) written separation agreement established by

the evidence.   Specifically, the payments of $26,358.65 in 1990

and $25,012.55 in 1991 stipulated as having been made directly to

Hermine by Harvey have not been shown to come within the terms of

“normal and usual expenses of maintenance and operation” of the
                              - 22 -

two residences.   Likewise, the payments of $891.30 in 1990 and

$3,623.49 in 1991 that are described as “car payments” in the

stipulations do not come within the terms of the June 1 letters.

The letters make no mention of car payments, and we do not

believe such payments come within any fair reading of “normal and

usual expenses of maintenance and operation” of the marital home

or apartment.   Thus the direct payments to Hermine and the car

payments were not made “under” a divorce or separation instrument

and therefore are not includable in the gross income of Hermine

under section 71(a) nor deductible by Harvey under section

215(a).

     However, the mortgage payments on the marital home and rent

for the apartment clearly do come within the terms of the written

separation agreement embodied in the June 1 letters and therefore

were made “under” a divorce or separation instrument.   We believe

the remaining payments, with certain exceptions in the case of

“insurance payments”, were also made under the terms of the June

1 letters-–that is, based on the available evidence, they may

fairly be inferred as constituting “normal and usual expenses of

maintenance and operation” of the two residences.   We base this

conclusion on their stipulated descriptions (relating to

utilities, a gardener, a pool, etc.), the undisputed facts that

Hermine owned the marital home and regularly occupied it as well

as the apartment, and on the stipulation that these payments were
                                - 23 -

“on behalf of” Hermine.   Although Hermine contends-–for the first

time on reply brief-–that some of these payments have not been

shown to be connected to the marital home or apartment, she has

offered no evidence to support this speculation; we believe the

stipulation that the payments, as described, were “on her behalf”

supports the inference that the payments were related to the

marital home or apartment in the absence of any other evidence.

     We reach a different conclusion with respect to some of the

insurance payments.   The stipulated description “insurance

payments” is not, on its face, connected with the operation or

maintenance of a residence.   Further, there is other evidence in

the record bearing upon the appropriate classification of these

payments; namely, Harvey’s canceled checks and the homeowner’s

policies on the marital home.    A review of the checks written for

insurance and the homeowner’s policies shows that $6,724 of the

stipulated “insurance payments” of $8,095.12 made in 1990 was for

premiums on a homeowner’s policy covering the marital home.    The

remaining $1,371.12 went towards life insurance or other

insurance not shown to be connected to the marital home or

apartment.   Similarly, in 1991 $7,471 of the stipulated

“insurance payments” of $9,952.07 was for premiums on a policy

covering the marital home.    The remaining $2,481.07 went towards
                              - 24 -

life or other unspecified insurance.9    We thus conclude that

insurance payments of $6,724 in 1990 and $7,471 in 1991 for

coverage of the marital home10 were made “under” the written

separation agreement embodied in the June 1 letters; the

remaining insurance payments were not.

Were the Payments to Third Parties Received “on Behalf of”

Hermine?

      Rule 91(a) contemplates stipulations of matters “[involving]

fact or opinion or the application of law to fact.”    Rule 91(e)

provides generally that a stipulation shall be treated as a

conclusive admission by the party to it which the party is not

permitted to qualify, change or contradict.    Hermine has

stipulated that the payments to third parties at issue in this

case were “on Hermine’s behalf”; she is therefore generally

precluded from qualifying or contradicting that stipulation.     See

id.   However, where the Court finds that a stipulation is plainly

contrary to the facts revealed by the record, the Court is

justified in disregarding the stipulation.    See Jasionowski v.



      9
        We note in this regard the likelihood, in the context of
the record, that some of the generically described insurance
payments were for insurance covering the automobile Harvey was
providing for Hermine.
      10
        While a portion of the homeowner policy premiums for the
marital home represented extra coverage for “jewelry and furs”,
we conclude that insurance for such high value contents fairly
falls within the terms of “normal and usual expenses of
maintenance and operation” of a residence.
                              - 25 -

Commissioner, 66 T.C. 312, 318 (1976).   Insofar as Hermine’s

stipulation may be interpreted as expressing a conclusion

regarding the application of law to fact-–that is, the conclusion

that all the stipulated payments were made “on her behalf” for

purposes of the legal requirement of section 71(b)(1)(A)-–we

disregard it because the undisputed facts in this case contradict

such a conclusion.

     In the instant case, Harvey’s payments stipulated as “on

Hermine’s behalf” covered both his own housing expenses as well

as those of Hermine.   It is Harvey’s position that the entire

amount of the expenses he paid with respect to the marital home

and apartment are deductible as alimony, notwithstanding that he

occupied each of those properties for approximately the same

number of months that Hermine did during the period in issue.

What Harvey’s argument overlooks is that the separation agreement

we have found within the June 1 letters both delineated an

obligation for Harvey (payment of the expenses associated with

the marital home and apartment) and secured for him a valuable

right (sole occupancy for 6 months annually of each residence).

Insofar as Harvey’s payments secured for him a right of occupancy

and defrayed the costs of his occupancy, we conclude that they

were not made “on behalf of” Hermine within the meaning of

section 71(b)(1)(A).   They are instead merely “personal” or

“living” expenses, nondeductible under section 262(a).   Cf.
                               - 26 -

Cologne v. Commissioner, T.C. Memo. 1999-102 (spouses separately

using jointly owned second residence on equal basis pursuant to

written separation agreement; husband paying all utilities

entitled to alimony deduction for one-half of same).

     We shall determine which portion of the payments made by

Harvey with respect to the marital home and apartment related to

his own occupancy based on the available evidence in the record.

The June 1 letters indicate that both petitioners were tenants

with respect to the lease of the apartment and provided that they

would equally share occupancy in alternating 2-month intervals.

Payments of the rent obligations of the payee spouse under the

terms of a divorce or separation instrument are payments “on

behalf of” the payee spouse that qualify as alimony.   Sec. 1.71-

1T(b), Temporary Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31,

1984).   Thus, we conclude that one-half of the rent payments

satisfied Hermine’s liabilities and related to her occupancy of

the apartment, making them deductible as alimony by Harvey, and

includable in Hermine’s income, pursuant to sections 215(a) and

71(a), respectively.    The remaining one-half of the rent payments

related to the occupancy of Harvey and are not deductible by him

or includable by her.   Similarly, we conclude that one-half of

the payments for furniture rental, to Brooklyn Union Gas, to a

gardener, to Con Edison for electricity, to Quinlan Oil, to Town

& County Pool, to New York Telephone, and for miscellaneous
                              - 27 -

plumbing, electrical, and water expenses, whether made with

respect to the marital home or the apartment, related to the

occupancy of Harvey.   These expenditures do not appear to have

been capital in nature but merely ordinary expenses of operation

and maintenance.   Thus, one-half of these payments were not

received “on behalf of” Hermine.   The remainder were, and are

therefore alimony includable in Hermine’s income and deductible

by Harvey.

     The mortgage payments on the marital home and payment of

premiums on the homeowner’s policies covering the home require

different treatment.   Hermine held sole title to the marital

home.   Neither Hermine nor Harvey offered evidence concerning the

terms of the mortgage indebtedness on it.   In the absence of any

other evidence, we rely on Hermine’s stipulation that the

mortgage payments on the marital home were “on her behalf” to

conclude that Hermine alone was liable on the indebtedness.     The

temporary regulations provide that payment of the mortgage

liabilities of the payee spouse under the terms of a divorce or

separation instrument qualifies as alimony, see sec. 1.71-1T(b),

Q&A-6, Temporary Income Tax Regs., supra, and thus an amount

equal to the stipulated mortgage payments on the marital home

must be included in income by Hermine and is deductible by
                               - 28 -

Harvey.11   Likewise we believe the entire amount of the payments

for the homeowner’s insurance covering the marital home is

alimony income to Hermine and a deduction for Harvey.   We reach

this conclusion because Hermine stipulated that such payments

were “on her behalf”, she is the named insured on the policies,

and the insurance primarily protected real property owned by her.

The question arises, should only one-half of the mortgage

payments or homeowner’s insurance premiums be considered to be

“on behalf of” Hermine due to Harvey’s half-time occupancy of the

marital home?   We think not, in light of a position taken in the

temporary regulations.   The temporary regulations provide:

     Any payments to maintain property owned by the payor
     spouse and used by the payee spouse (including mortgage
     payments, real estate taxes and insurance premiums) are
     not payments on behalf of a spouse even if those
     payments are made pursuant to the terms of the divorce
     or separation instrument. [Sec. 1.71-1T(b), Q&A-6,
     Temporary Income Tax Regs., supra.]

We infer from the regulation that payments on a mortgage or of

insurance or taxes relating to property owned by one spouse do

not benefit, and are not “on behalf of”, the nonowner spouse who

(merely) uses the property pursuant to a divorce or separation

instrument.   Thus the mortgage and homeowner’s insurance payments




     11
        To the extent the mortgage payments included “qualified
residence interest” within the meaning of sec. 163(h), Hermine
may be entitled to a deduction for such interest in the year
paid. We expect the parties to address this issue as part of
their Rule 155 computations.
                                - 29 -

are entirely “on behalf of” Hermine, notwithstanding Harvey’s

part use of the marital home.

Would Harvey’s Liability for the Payments Have Terminated With

Hermine’s Death?

     Under section 71(b)(1)(D), liability to make payments must

terminate on the death of the payee spouse for such payments to

qualify as “alimony or separate maintenance payments”.

Respondent, citing section 1.71-T(b), Q&A-11, Temporary Income

Tax Regs., 49 Fed. Reg. 34456 (Aug. 31, 1984), argues that even

if we find a written separation agreement did exist, such an

agreement is insufficient because it does not state that

liability for payments terminates on the death of Hermine.12

However, Congress amended section 71(b)(1)(D) in 1986, after the

promulgation of the temporary regulations, specifically to remove

the requirement that a divorce or separation instrument

affirmatively state that liability terminates upon the death of

the payee spouse, effective for instruments executed after



     12
       Sec. 1.71-1T(b), Q&A-11, Temporary Income Tax Regs., 49
Fed. Reg. 34456 (Aug. 31, 1984), states:
          Q-11. What are the consequences if the divorce or
     separation instrument fails to state that there is no
     liability for any period after the death of the payee
     spouse to continue to make any payments which would
     otherwise qualify as alimony or separate maintenance
     payments?
          A-11. If the instrument fails to include such a
     statement, none of the payments, whether made before or
     after the death of the payee spouse, will qualify as
     alimony or separate maintenance payments.
                                - 30 -

December 31, 1986.    See Tax Reform Act of 1986, Pub. L. 99-514,

sec. 1843(b), 100 Stat. 2085, 2853.      Thus, payments qualify so

long as termination would occur under State law.      See Notice 87-

9, 1987-1 C.B. 421, 422; Human v. Commissioner, T.C. Memo. 1998-

106.    In the instant case, the June 1 letters are silent as to

whether Harvey is liable to make any payments after the death of

Hermine, but Harvey argues that the payments would otherwise

terminate under New York law.    We agree.

       Under New York law, “maintenance” is defined as:

       payments provided for in a valid agreement between the
       parties or awarded by the court in accordance with the
       provisions of subdivision six of this part, to be paid
       at fixed intervals for a definite or indefinite period
       of time, but an award of maintenance shall terminate
       upon the death of either party or upon the recipient's
       valid or invalid marriage, or upon modification
       pursuant to * * * [sec. 236B9.b.]. [N.Y. Dom. Rel. Law
       sec. 236B1.a. (McKinney 1999); emphasis added.]

Thus, the statute differentiates between maintenance payments

made pursuant to agreement and those made under court decree.

See Scheinkman, Practice Commentaries, in McKinney’s Consol. Laws

of N.Y., Book 14, Domestic Relations Law C236B:10, at 330-331

(1999).    With respect to court-awarded maintenance, the payments

automatically terminate upon any of the events listed in the

statute (terminating events).    See id.     In the case of

maintenance payments made pursuant to agreement, the obligation

generally terminates upon the death of either spouse, but the

parties may modify or extend the duration of the payments by
                                - 31 -

agreement.    See In re Riconda, 688 N.E.2d 248, 251 (N.Y. 1997)

(“Generally, the obligation to make maintenance payments

terminates upon the death of either party”); 2 Foster et al., Law

and the Family New York, sec. 12:57 (2d ed., 1988 & Supp. 1999);

4 New York Civil Practice:    Matrimonial Actions, sec. 51.02[6]

(1998).13    Because there is nothing in the record to indicate

that Harvey had agreed or was otherwise obligated to make the

payments required by the June 1 letters after Hermine’s death,

the requirement of section 71(b)(1)(D) is satisfied.14

     Conclusion

     For the reasons discussed above, Harvey’s direct payments to

Hermine of $26,358.65 in 1990 and $25,012.55 in 1991 and the

stipulated “car payments” of $891.30 in 1990 and $3,623.49 in

1991 do not qualify as alimony or separate maintenance payments



     13
        Although we concluded in Megibow v. Commissioner, T.C.
Memo. 1998-455, that a payment liability at issue therein did not
automatically terminate on the death of the payee spouse under
New York law, the single payment at issue in that case had the
appearance of an equitable distribution, and the payor’s
liability would therefore not have terminated on the death of the
payee spouse.
     14
       Although in the event of Hermine’s death, Harvey might
remain contractually liable to third parties for some of these
payments (e.g., apartment rent, utility bills, etc.), any such
post mortem payments would no longer be received “on behalf of”
Hermine. Israel v. Commissioner, T.C. Memo. 1995-500; cf.
Cologne v. Commissioner, T.C. Memo. 1999-102 (fact that husband’s
liability for utility bills on shared second residence would
continue after wife’s death does not disqualify alimony deduction
under sec. 71(b)(1)(D) for utility payments attributable to
wife’s use).
                              - 32 -

under section 71(b).   However, the mortgage payments on the

marital home of $8,331.02 for 1990 and $9,166 for 1991 do so

qualify.   In addition, one-half of the rent for the apartment and

one-half of the amounts stipulated as paid for furniture rental,

to Brooklyn Union Gas, to the gardener, to Con Edison, to Quinlan

Oil, to Town & Country Pool, to New York Telephone, and as

miscellaneous expenses for plumbing, electricity, and water

qualify as alimony or separate maintenance payments; the other

half does not.   Finally, $6,724 in 1990 and $7,471 in 1991 of the

stipulated insurance payments which the record demonstrates were

for homeowner’s policies covering the marital home, qualify as

alimony or separate maintenance payments; the remaining insurance

payments do not.   Thus, in total, Harvey is entitled to deduct as

alimony $23,867.52 for 1990 and $23,877.63 for 1991, and Hermine

must include these amounts as gross income.

     To reflect the foregoing and concessions,

                                    Decisions will be entered

                               under Rule 155.
