                  T.C. Summary Opinion 2006-50



                     UNITED STATES TAX COURT



         ROBERT E. AND LORI K. REICHNER, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2211-05S.             Filed April 11, 2006.


     Robert E. and Lori K. Reichner, pro sese.

     Robert W. Dillard, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect at the time the petition was filed.    The

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

this opinion should not be cited as authority.   Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

     Respondent determined a deficiency of $7,070 in petitioners’

2002 Federal income tax.   After concessions,1 the issues for

decision are:   (1) Whether petitioners must include in gross

income $12,000 of a $25,100 distribution they received from

petitioner husband’s retirement plan,2 and (2) to the extent the

$12,000 is included in gross income, whether petitioners are

entitled to an alimony deduction for payments made to petitioner

husband’s former wife.

                            Background

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

The stipulation of facts, supplemental stipulation of facts, and

the attached exhibits are incorporated herein by this reference.

Petitioners resided in Belleview, Florida, at the time they filed

their petition.   Unless otherwise indicated, all references to

petitioner are to Robert Reichner.

     Petitioner and Gloria Reichner (Ms. Reichner) were married

on November 7, 1970.   During their marriage, petitioner

contributed to a retirement plan maintained by his employer,

Delta Airlines (the Delta plan).     Petitioner and Ms. Reichner

were divorced on March 28, 2000, pursuant to a divorce decree



     1
       Respondent concedes that petitioners are not liable for an
additional tax of $3,941 on distributions they received from one
or more qualified retirement plans.
     2
       Petitioners do not dispute that the remaining $13,100 of
the distribution is included in gross income.
                                - 3 -

issued by the Superior Court of Carroll County, Georgia (the

State court).3    The decree provides in part:

     3. PROPERTY SETTLEMENT

          3.(A) RETIREMENT-PENSION - The husband shall pay
     to the Wife as property settlement [sic] from his
     retirement pension check the amount of $1000.00 per
     month on the 30th of each and every month beginning
     March 30 2000 [sic] from the Delta Airlines benefit
     check. * * * This monthly payment * * * shall be paid
     through a wage attachment from * * * [petitioner’s]
     retirement check. * * * [Petitioner] is ordered to
     sign the necessary documents allowing Delta to take out
     the monies * * * from his monthly benefits check.

The decree also provides that petitioner and Ms. Reichner

“specifically agree to waive, renounce and relinquish, now and

forever, any and all rights or claims either may have to alimony

from the other party.”

     The record does not indicate whether petitioner signed the

“necessary documents” to permit the wage attachment.    For more

than 2 years after the divorce, however, the Delta plan did not

make direct payments to Ms. Reichner.    Instead, the Delta plan

paid retirement benefits to petitioner, who in turn mailed a

$1,000 check to Ms. Reichner each month.

     In May 2002, the State court issued a stipulated order that

was incorporated into the divorce decree (the stipulated order).

The stipulated order states that it is intended to be a

“Qualified Domestic Relations Order” (QDRO) as defined in section


     3
         The decree was issued in July 2000 nunc pro tunc Mar. 28,
2000.
                                - 4 -

414(p), and designates Ms. Reichner as an “Alternate Payee” of

the Delta plan.   It directs the Delta plan to make monthly

payments of $1,000 to Ms. Reichner once the plan administrator

has determined that the stipulated order is a QDRO.   It also

provides that the “Alternate Payee shall include all retirement

benefits received by her pursuant to this Order as and when

received by her in her gross income and * * * [petitioner] need

not do so.”

     It is not clear when Ms. Reichner provided a copy of the

stipulated order to the Delta plan administrator, although

petitioner believed it was sometime after he moved to Florida in

September 2002.   Canceled checks written by petitioner indicate

he sent Ms. Reichner monthly payments at least through November

of that year.   Petitioner was unsure when he stopped sending

checks to Ms. Reichner but believed it was “probably” in

December, at which time the Delta plan began paying her directly.

     The Delta plan issued a Form 1099-R, Distributions From

Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc., to petitioner for the taxable year

2002 showing a $25,100 gross distribution, all of which was

taxable.    Petitioners reported the distribution as gross income

on their joint Federal income tax return, but they claimed a

$12,000 alimony deduction for the monthly payments made to Ms.

Reichner.
                               - 5 -

     In the notice of deficiency, respondent determined the

payments were not alimony and therefore disallowed the claimed

deduction.4   Respondent indicated he also issued a notice of

deficiency to Ms. Reichner for the taxable year 2002.   Although

that notice of deficiency was not made part of the record,

respondent contends that Ms. Reichner did not report the $12,000

of monthly payments she received as gross income.   Respondent

determined that the payments she received were alimony and

therefore includable in her gross income.   Ms. Reichner did not

petition the Tax Court for a redetermination.

                            Discussion

     In general, the Commissioner’s determinations set forth in a

notice of deficiency are presumed correct, and the taxpayer bears

the burden of showing that the determinations are in error.     Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).   Pursuant

to section 7491(a), the burden of proof as to factual matters

shifts to respondent under certain circumstances.   Furthermore,

if a taxpayer asserts a reasonable dispute with respect to the

income reported on an information return and fully cooperates


     4
       Respondent was unaware of the stipulated order until
shortly before trial. As a result, the notice of deficiency does
not address whether, because of the stipulated order, a portion
of the $12,000 was excludable from petitioners’ gross income. At
the end of trial, the Court kept the record open to allow
petitioners to produce a copy of the stipulated order. When the
document was received as part of a supplemental stipulation of
facts, the Court admitted the document into evidence and closed
the record.
                                 - 6 -

with the Commissioner (including providing access to an

inspection of all witnesses, information, and documents within

the control of the taxpayer as reasonably requested by the

Commissioner), then the Commissioner shall have the burden of

producing reasonable and probative information in addition to

such information return.   Sec. 6201(d); Tanner v. Commissioner,

117 T.C. 237 (2001), affd. 65 Fed. Appx. 508 (5th Cir. 2003);

McQuatters v. Commissioner, T.C. Memo. 1998-88.

     With respect to whether the $12,000 is includable in

petitioners’ gross income, petitioners did not raise this issue

until trial; therefore, they did not satisfy the requirements of

section 7491(a)(2) (complied with requirements to substantiate

any item and maintained records required and cooperated with

reasonable requests for information, documents, etc.), and the

burden of proof remains with petitioners.   With respect to

whether the monthly payments are deductible as alimony, the facts

are not in dispute; therefore, we decide this issue without

regard to the burden of proof.

     Although petitioners did not raise the issue, we note that

the Commissioner is allowed to make inconsistent determinations

against former spouses in order to protect the revenue in a

“whipsaw” situation.   See Doggett v. Commissioner, 66 T.C. 101,

103 (1976); Smith v. Commissioner, T.C. Memo. 1996-292.

Inconsistent notices of deficiency do not negate the presumption
                                - 7 -

of correctness as to either notice.     Smith v. Commissioner,

supra; INI, Inc. v. Commissioner, T.C. Memo. 1995-112, affd.

without published opinion 107 F.3d 27 (11th Cir. 1997).

1.   Whether Petitioners Must Include the $12,000 in Gross Income

      In general, a distribution from a qualified retirement plan5

is taxable to the distributee under section 72 (relating to

annuities).    Sec. 402(a); Darby v. Commissioner, 97 T.C. 51, 57

(1991).    Neither the Code nor the regulations define the term

“distributee”.    This Court has concluded, however, that the term

ordinarily means the participant or beneficiary who, under the

plan, is entitled to receive the distribution.     Darby v.

Commissioner, supra at 58; Seidel v. Commissioner, T.C. Memo.

2005-67.

      Section 402(e)(1)(A) provides an exception to the general

rule of section 402(a).    It provides that the “spouse or former

spouse” of the plan participant who receives “any distribution or

payment made * * * under a qualified domestic relations order (as

defined in section 414(p))” shall be considered an “alternate

payee” and taxed on such distribution or payments as the

distributee.    Sec. 402(e)(1)(A); Darby v. Commissioner, supra at




      5
       Although the parties did not address the qualified status
of the Delta plan, there is nothing in the record that would lead
us to believe that the employees’ trust is not described in sec.
401(a) and not exempt from tax under sec. 501(a).
                                - 8 -

58-59; Seidel v. Commissioner, supra; see also sec. 414(p)(8)

(defining “alternate payee”).

     As is relevant here, a domestic relations order is any

judgment, decree, or order that relates to the provision of

alimony payments or marital property rights to a spouse or former

spouse and is made pursuant to a State domestic relations law.

Sec. 414(p)(1)(B).   A QDRO is a specific type of domestic

relations order that (1) creates, recognizes, or assigns an

alternate payee’s right to receive all or part of the benefits

payable with respect to a participant under a plan, (2) clearly

specifies certain facts,6 and (3) does not alter the amount of

the benefits under the plan.    Sec. 414(p)(1)-(3); Simpson v.

Commissioner, T.C. Memo. 2003-294.

     The stipulated order is a domestic relations order because

it relates to petitioner’s provision of marital property rights

to Ms. Reichner and was made pursuant to Georgia State law.      It

is a QDRO because it recognizes Ms. Reichner’s right to receive a

portion of petitioner’s retirement plan benefits, clearly

specifies the necessary facts, and states that it shall not be

construed as altering the benefits available under the Delta

plan.


     6
       Such facts are: (A) The last known mailing address of
each party; (B) the amount of the participant’s benefits to be
paid to the alternate payee; (C) the period to which the order
applies; and (D) the plan to which the order applies. Sec.
414(p)(2)(A)-(D).
                               - 9 -

     The question remains whether Ms. Reichner received any

distributions “under” the QDRO.    See sec. 402(e)(1)(A).   Section

414(p) provides certain procedural rules with respect to domestic

relations orders.   Sec. 414(p)(6) and (7); Rodoni v.

Commissioner, 105 T.C. 29, 36 (1995).    “Implicit in these

procedural rules * * * is the requirement that a domestic

relations order be presented to the plan administrator and

adjudged ‘qualified’ before any distribution is made by the plan

to the spouse or former spouse.”    Rodoni v. Commissioner, supra;

see also Bougas v. Commissioner, T.C. Memo. 2003-194

(distribution from a plan was not made under a QDRO where

taxpayer failed to submit the domestic relations order to the

plan administrator for approval).

     The stipulated order does not have a date stamp or other

notation indicating when it was adjudged qualified.

Nevertheless, it appears the determination was made, at the

earliest, in December 2002.   The stipulated order provides that

the Delta plan shall make direct payments to Ms. Reichner “as

soon as administratively possible” after the order is adjudged

qualified.   Petitioner continued to send Ms. Reichner $1,000

monthly checks through at least November 2002.   The fact that the

Delta plan made no direct payments to Ms. Reichner before

December indicates the stipulated order had not been adjudged

qualified before that time.   Accordingly, we conclude that the
                                 - 10 -

monthly payments Ms. Reichner received from January through

November 2002 were not made under the QDRO.

     The monthly payment for December 2002 presents a closer

question.    Petitioner believed he “probably” stopped sending Ms.

Reichner checks in December 2002 but admitted he was not sure.

The absence of a canceled check for that month is circumstantial

evidence that the Delta plan had begun making distributions to

Ms. Reichner under the QDRO.     Petitioner testified, however, that

he had lost some of his canceled checks either when he moved or

when he suffered a house fire.     Furthermore, petitioner reported

the entire $12,000 as gross income and claimed a $12,000

deduction.   Had petitioner stopped making payments after

November, one would have expected him to report only $11,000 as

gross income and claim an $11,000 deduction.     In sum, considering

petitioner’s equivocal testimony, the position he took in the tax

return, and the lack of direct evidence, we find that Ms.

Reichner did not receive a distribution from the Delta plan in

December 2002.   We therefore conclude that petitioner is the

distributee of the $12,000 at issue, which amount is taxable to

him under section 72.   See sec. 402(a).

     Amounts received under section 72 generally are includable

in gross income.   Sec. 72(a).    Although section 72 provides

exceptions to this rule, nothing in the record indicates that
                               - 11 -

petitioner satisfies any such exception.   Accordingly, we

conclude that the $12,000 is includable in his gross income.

2.   Whether Petitioners Are Entitled to an Alimony Deduction

      The Federal tax consequences of a payment made incident to

divorce depend upon the characterization of such payment.

Property settlements, or equitable divisions of marital property,

generally are neither deductible from the income of the paying

spouse nor includable in the income of the receiving spouse.

Sec. 1041; Estate of Goldman v. Commissioner, 112 T.C. 317, 322

(1999), affd. without published opinion sub nom. Schutter v.

Commissioner, 242 F.3d 390 (10th Cir. 2000).   On the other hand,

payments made or received as alimony generally are deductible by

the paying spouse under section 215(a) and includable in gross

income by the receiving spouse under sections 61(a)(8) and 71.

      Section 215(b) provides that the paying spouse may deduct a

payment as alimony if the payment is “includible in the gross

income of the recipient under section 71.”   Section 71(b)(1)

defines an alimony payment as any cash payment meeting each of

the following four criteria:

           (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
                                - 12 -

     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.

     Respondent contends that petitioner fails to satisfy

subparagraph (B) of section 71(b)(1) because the divorce decree

designates the $1,000 monthly payments as not includable in Ms.

Reichner’s gross income and not allowable as a deduction under

section 215.    A divorce or separation instrument “contains a

nonalimony designation if the substance of such a designation is

reflected in the instrument.”    Estate of Goldman v. Commissioner,

supra at 323.   Generally, the divorce or separation agreement

must provide a “clear, explicit and express direction” that the

payments are not to be treated as alimony, but the designation

need not mimic the statutory language of sections 71 and 215.

Richardson v. Commissioner, 125 F.3d 551, 556 (7th Cir.1997),

affg. T.C. Memo. 1995-554; Estate of Goldman v. Commissioner,

supra at 323.

     In this case, the divorce decree unambiguously designates

the payments from petitioner’s retirement benefits as nonalimony.

It provides that the payments are to be made “as [a] property

settlement” and that the “parties specifically agree to waive,

renounce and relinquish * * * any and all rights or claims either
                              - 13 -

may have to alimony from the other party”.   We conclude that the

divorce decree clearly, explicitly, and expressly designates the

payments from petitioner’s retirement benefits as nonalimony

payments.   Accordingly, petitioners are not entitled to an

alimony deduction.   Respondent’s determination is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,


                                         Decision will be entered

                                    under Rule 155.
