                         T.C. Memo. 1999-49



                       UNITED STATES TAX COURT



                 FOREST R. PRESTON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No.    19597-97.              Filed February 23, 1999.



     Robert R. Lomax, for petitioner.

     Eric B. Jorgensen, for respondent.



                         MEMORANDUM OPINION


     LARO, Judge:    The parties submitted this case to the Court

without trial.    See Rule 122.   Petitioner petitioned the Court to

redetermine deficiencies in his 1992, 1993, and 1994 Federal

income tax and an accuracy-related penalty for 1994 under section

6662(a).   Following concessions, the only issue left to decide is
                                - 2 -

whether petitioner may deduct $47,482, $40,089, and $24,340 of

alimony1 for the respective years.      We hold that his alimony

deductions for the respective years are $1,878, $5,014, and zero.

Unless otherwise stated, section references are to the Internal

Revenue Code in effect for the subject years.      Rule references

are to the Tax Court Rules of Practice and Procedure.      Dollar

amounts are rounded to the nearest dollar.

                             Background

     All facts were either stipulated or found by the Court from

exhibits accompanying the stipulation of facts.      The stipulations

of fact and accompanying exhibits are incorporated herein by this

reference.   Petitioner is a cash method taxpayer who resided in

Hamilton, Georgia, when he petitioned the Court.

     Petitioner claimed alimony deductions of $60,102, $34,946,

and $24,202 on his 1992, 1993, and 1994 Federal income tax

returns, respectively.   Respondent disallowed these deductions,

determining that the payments were not alimony.      Petitioner

concedes that some of the reported amounts did not constitute

alimony.    Petitioner argues that his alimony deductions for the

respective years are $47,482, $40,089, and $24,340.

     Petitioner married Dianne Sowell (Ms. Sowell) in 1974, and

they had two children (collectively, the children) during their

marriage.    The older child, Ashley Denise Preston (Ashley), was

born October 19, 1976.   The younger child, Martin Barron Sowell

Preston (Barron), was born October 3, 1984.      For most of 1991,


     1
       We use the term "alimony" to include "separate maintenance
payments".
                              - 3 -

petitioner lived with his family in Columbus, Georgia, in a house

(the Columbus house) that he owned jointly with Ms. Sowell.

Petitioner moved out of the Columbus house in December 1991, and

he moved into a cabin that he owned in Harris County, Georgia.

     In March 1992, Ms. Sowell petitioned the Superior Court of

Muscogee County, Georgia, for a divorce from petitioner.    One

month later, on April 3, 1992, the superior court issued a

temporary order nunc pro tunc to March 19, 1992.   The temporary

order stated:

                               1.

          Plaintiff [Ms. Sowell] shall have the temporary
     custody of the two (2) minor children of the parties,
     and the Defendant [petitioner] shall have the right to
     visit said children and have said children visit with
     him at all reasonable times and places.

                               2.

          Plaintiff shall have the temporary exclusive use
     of the [Columbus] house and premises and all household
     furniture and furnishings located therein * * * and the
     Cadillac automobile in her possession. The Defendant
     shall have the temporary exclusive use of all marital
     property now in his possession and the property located
     in Harris County, Georgia known as the house or cabin
     in the backwater.

                    *     *    *      *   *   *     *

                               4.

          Defendant shall pay for the support of Plaintiff
     and the two (2) minor children of the parties and the
     following household and family expenses until further
     Order of the Court:

          (a) The mortgage payments, ad valorem taxes and
     insurance on the * * * [Columbus house] * * *;

          (b) All utility expenses at the * * * [Columbus
     house], including electricity, water, garbage and
                               - 4 -

     sewer, telephone, gas, pest control, cable television
     and lawn care;

          (c) Wife's automobile expenses, including gasoline
     and oil, repairs, automobile tags, licenses and
     insurance;

          (d) The medical and dental expenses of Wife and
     the children and prescription drug expenses;

          (e) The children's school tuition, supplies and
     activities;

          (f) The cost of clothing for Wife and the children
     * * *.

          In addition to making the payments above
     enumerated, Defendant shall pay to Plaintiff the sum of
     ONE THOUSAND DOLLARS ($1,000) per month, commencing
     April 1, 1992, with a payment of FIVE HUNDRED DOLLARS
     ($500.00), and the payment of an additional FIVE
     HUNDRED DOLLARS ($500.00) on the 15th of April, 1992,
     and continuing with like payments during each calendar
     month thereafter until further Order of the Court; with
     the provision, however, that Defendant may at his
     option pay the monthly sum on the 1st day of each
     calendar month rather than in two (2) installments; and
     Defendant shall pay to Plaintiff immediately an amount
     so that the total sum given to her for support of
     herself and the children during the month of March,
     1992 will equal the sum of ONE THOUSAND DOLLARS
     ($1,000).

     On June 3, 1993, the superior court held petitioner in

contempt of the temporary order because he had failed to pay

certain bills covered by the order.    The court ordered him to pay

these bills and to pay $350 of attorney's fees at the rate of $50

per month commencing with June 1993.

     On September 4, 1993, the superior court entered a final

judgment and decree (the final decree) granting Ms. Sowell a

divorce from petitioner.   The final decree provided in relevant

part:
                         - 5 -

               FINAL JUDGMENT AND DECREE

     * * * it is the judgement of the Court that a
total divorce be granted. * * * Each party is awarded
their personal property and other property which is in
their possession.

                          1.

     The Plaintiff is awarded permanent custody of the
two minor children of the parties * * *

               *     *    *      *   *     *   *

                          4.

     Defendant shall pay to the Plaintiff the sum of
$800.00 per month per child as child support and
Defendant shall commence said payments of child support
on August 1, 1993, with a payment of $800.00 and an
equal payment of $800.00 on August 15, 1993 and said
payments shall continue on the 1st and 15th of each
calendar month until each child attains the age of 18,
marries, dies, becomes fully self-supportive or
otherwise emancipated, whichever event shall first
occur the child support shall terminate. * * *

               *     *    *      *   *     *   *

                          6.

     The Plaintiff is awarded the * * * [Columbus
house], and the Plaintiff is to make payments on the
indebtedness secured by said real property and shall
hold the Defendant harmless therefrom for payments due
on said property.

                          7.

     The Defendant shall pay to the Plaintiff a lump
sum award of alimony total of $180,000.00 with
$120,000.00 payable at $1,000.00 per month for ten (10)
years, beginning on August 1, 1993, and then in five
(5) years, due on the 14th day of July, 1998, the
Defendant shall pay to the Plaintiff a lump sum of
$10,000.00 and then in ten (10) years, due on the 14th
day of July, 2003, the Defendant shall pay to the
Plaintiff $50,000.00. * * *

               *     *    *      *   *     *   *
                              - 6 -

                               10.

          The Defendant is ordered to pay and be responsible
     for tuition at Brookstone School for the minor child,
     Barron, for 1993-1994 school year.

                               11.

          The Defendant shall pay the insurance for the
     minor child, Ashley's, car until she reaches 18 years
     of age.

                    *     *    *      *   *   *    *

                               13.

          The Defendant is ordered to buy the Plaintiff a
     car not to exceed $17,000.00 within the next ninety
     (90) days. Defendant may finance said purchase and he
     shall be responsible and make the payments as due.

                               14.

           The Defendant shall pay the sum of $5,000.00 as
     attorney fees to be divided among the law firms HARP &
     JOHNSON, P.C. and GROGAN, JONES, RUMER & GUNBY, P.C.
     for their legal representation of Plaintiff. Said sum
     shall be payable at $200.00 per month for 25 months
     beginning on August 1, 1993 until said sum is paid in
     full.

                    *     *    *      *   *   *    *

                               16.

          The Defendant shall maintain and pay the premiums
     for major health, hospitalization and dental insurance
     for the minor children for as long as he is obligated
     to pay child support. The Defendant shall be
     responsible for all medical expenses which are not
     covered by insurance for the benefit of the minor
     children. * * *

     Pursuant to the temporary order, petitioner paid Ms. Sowell

monthly payments totaling $10,000 in 1992 and $7,000 in 1993.

Pursuant to the final decree, petitioner paid Ms. Sowell monthly

payments totaling $5,000 in 1993 and $12,000 in 1994.   Petitioner
                               - 7 -

claims an alimony deduction for the amount of these monthly

payments, and for other amounts that he paid or incurred during

the subject years for the benefit of Ms. Sowell and/or the

children.   Each amount that petitioner paid or incurred during

the subject years, and for which he claims an alimony deduction,

is listed below by year, payee, amount, and purpose.2   These

amounts are as follows:

   1992

             Payee          Amount        Purpose

          Ms. Sowell       $10,000   Monthly payments
          Ms. Sowell         2,232   Clothes for children
          Pacelli High       1,109   Ashley's tuition
          Southern Bell        783   Telephone--Columbus house
          Sears                375   Pest control--Columbus house
          Ms. Sowell           212   Clothes for Ms. Sowell
          Ms. Sowell           350   Barron's school picture
          CB&T               1,525   Barron's tuition
          N. C. Pharmacy       447   Drug bill
          Galaxie              210   Satellite T.V.--Columbus house
          Dr. Hudson           406   Children's physician
          Telecable            514   Cable T.V.--Columbus House
          Un. Cities Gas       470   Gas Heat--Columbus House
          Dr. Allison          443   Ms. Sowell's dentist
          Brookstone School 2,373    Barron's tuition/related exp.
          Dr. Helms            665   Ms. Sowell's dentist
          Associates           533   Satellite T.V.--Columbus house
          Georgia Power      2,125   Electric bill--Columbus house
          Columbus Water       524   Water bill--Columbus house
          C. Wilson             86   Children's piano activities
          Columbus Ledger      116   Newspaper--Columbus house
          Ms. Sowell           166   Activities for Barron
          R. Waters            385   Tree removal--Columbus house
          Grasshopper          685   Lawn care--Columbus house
          Ms. Sowell           666   Miscellaneous expenses
          Bob's Pool         1,408   Pool liner--Columbus house


     2
       Petitioner paid all these amounts, but for the $2,204 and
$566 amounts shown with Preston Oil for 1992 and 1993,
respectively. Ms. Sowell charged the $2,204 and $566 amounts to
petitioner's account at Preston Oil. Preston Oil is a
corporation owned and operated by petitioner.
                             - 8 -

       J.P Lanier Co.        548   Homeowner ins.--Columbus house
       Ms. Sowell            136   Children's dental bill
       Ms. Sowell            130   Ms. Sowell's medical bill
       Ms. Sowell            200   Barron's birthday party
       CB&T               10,000   Buy automobile for Ashley
       D.J. Ins.             428   Insurance--Ms. Sowell's car
       D.J. Ins.             340   Insurance--Ashley's car
       Ms. Sowell            468   Misc. activities of children
       World Book            200   Encyclopedia for children
       S. Chemical           100   Pool chemicals--Columbus house
       Preston Oil         2,204   Ms. Sowell's car expenses
       Preston Oil           187   Ashley's car expenses
       GAO Ins.            3,133   Ms. Sowell/children health ins
       Ms. Sowell            600   Children's Christmas
                          47,482

1993

          Payee          Amount          Purpose

       Ms. Sowell        $7,000    Monthly payments
       Harp & Johnson     1,150    Legal fees
       Ms. Sowell         5,000    Monthly payments
       Barnett Bank         669    Buy automobile for Diane
       Lee Grogan           400    Diane's attorney fees
       Hirsch, et al.       900    Children's clothing allowance
       Brookstone         4,838    Barron's tuition
       Ms. Sowell            22    Reimbursement
       Southern Bell      1,191    Telephone--Columbus house
       Sears                510    Pest control--Columbus house
       Ms. Sowell            95    Ms. Sowell's bills
       Ms. Sowell           148    Children's activities
       Ms. Sowell            46    Children's activities
       Un. Cities Gas       788    Gas Heat--Columbus House
       Associates           599    Satellite T.V.--Columbus house
       Georgia Power      2,492    Electric bill--Columbus house
       Columbus Water       478    Water bill--Columbus house
       N. C. Pharmacy       209    Drug bill--Ms. Sowell
       N. C. Pharmacy       142    Drug bill
       Dr. Allison          746    Ms. Sowell's dentist
       Telecable            403    Cable T.V.--Columbus House
       S. Chemical          319    Pool Chemicals--Columbus house
       Dr. Aranas            65    Children's doctor bill
       Dr. Helms          1,312    Ms. Sowell's dentist
       Brookstone           423    Barron's school related exp.
       Dr. Thomason         139    Children's dentist
       Gayfers               54    Clothes for Barron
       Dr. Phelts            40    Ashley's doctor bill
       Columbus Ledger       70    Newspaper--Columbus house
       Dr. Hutchins         378    Children's eye doctor bill
       World Book           857    Encyclopedia for children
                              - 9 -

       Telecom               193   Telephone--Columbus house
       Josten's              347   Ring for Ashley
       Ms. Sowell            116   Tire for Ashley's car
       Grasshopper           630   Lawn care--Columbus house
       Pastoral Inst.        290   Counseling for Ashley
       Prem Collections      296   Ashley's medical bill
       Olan Mills             22   Children's pictures
       Ms. Sowell             28   School supplies
       Ms. Sowell             11   Children's activities
       Ms. Sowell             30   Ms. Sowell's automobile bill
       D.J. Ins.              60   Insurance--Columbus house
       Dr. Chhokar           454   Ms. Sowell's medical bill
       Dr. Hudson            164   Children's doctor bill
       Auto Owners Ins.      585   Insurance on Ms. Sowell's car
       Fuller Auto           437   Ms. Sowell's car repair
       St. Fran. Hosp.       110   Ashley's medical bill
       St. Fran. Hosp.        30   Ms. Sowell's medical bill
       Radiology               9   Ashley's doctor bill
       Prof. College         464   Ms. Sowell's medical bill
       Path Em Re             86   Ms. Sowell's bill
       Columbus College       75   Children's camp and karate
       Muscogee County       701   Tax on Ashley's car
       Jeane Teaster          60   Ashley's tutor bill
       Ms. Sowell            468   Misc. expenses of children
       GAO Ins.            2,222   Ms. Sowell/children health ins.
       Preston Oil           566   Ms. Sowell's car expenses
       Preston Oil           152   Ashley's car expenses
                          40,089

1994

          Payee           Amount         Purpose

       Dr. Helms        $1,647     Ms. Sowell's dentist
       Ms. Sowell       12,000     Monthly payments
       Barnett Bank      2,692     Purchase of car for Ms. Sowell
       Harp & Johnson    1,100     Ms. Sowell's legal fees
       Lee Grogan        1,100     Ms. Sowell's legal fees
       Lane's              128     Portrait of Barron
       South Trust Bank    755     Purchase of car for Ms. Sowell
       Brookstone        2,588     Barron's tuition
       Gen. Amer. Ins.   2,048     Pay loan on Ms. Sowell's
                                      insurance policy
       Auto Owner Ins.       282   Ashley's automobile insurance
                          24,340
                                  - 10 -

                                Discussion

       We must determine whether petitioner may deduct any of the

disputed payments as alimony.       Respondent determined that he

could not.       Petitioner bears the burden of proving respondent's

determination wrong.       See Rule 142(a); Welch v. Helvering, 290

U.S. 111, 115 (1933).

       An individual may generally deduct a payment made during the

taxable year to a spouse3 to the extent it is alimony that is

includable in the spouse's gross income.        See sec. 215(a) and

(b).       A payment is alimony that is includable in a spouse's gross

income when:       (1) The payment is made in cash, (2) the payment is

received by (or on behalf of) the spouse under a divorce or

separation instrument, (3) the divorce or separation instrument

does not provide that the payment is not reportable as alimony,

(4) the spouses reside in separate households at the time the

payment is made, (5) the spouses do not file a joint return, and

(6) the liability for payment does not continue for any period

after the spouse's death.       See sec. 71 (b)(1), (e).   Each of

these requirements must be met before a payor may deduct a

payment as alimony.       We concern ourselves only with the three

requirements in dispute.

       First, the need for a cash payment requires that alimony be

paid in cash or a cash equivalent.         A check or money order that

is payable on demand is a cash equivalent.        A debt instrument


       3
       We use the term "spouse" to refer to a present or former
spouse.
                               - 11 -

that is issued or transferred is not.     See sec. 71(b)(1); sec.

1.71-1T(b), Q&A-5, Temporary Income Tax Regs., 49 Fed. Reg. 34455

(Aug. 31, 1984).

     Second, only those payments that are received by or on

behalf of a spouse pursuant to a divorce or separation instrument

may qualify as alimony.   Amounts that are paid as child support

do not qualify as alimony.    See sec. 71(c)(1).   Payments made

under a divorce or separation instrument are considered child

support to the extent that they will be reduced upon the

happening of a contingency related to a child, e.g., the child's

reaching a specified age.    See sec. 71(c)(2).

     Third, alimony does not include amounts that must continue

to be paid after the payee's death.     See sec. 71(b)(1)(D).

Whether an obligation to make a payment ceases upon the payee's

death may be determined by the terms of the applicable documents.

If the documents are silent on this matter, the answer lies in

State law.   See Sampson v. Commissioner, 81 T.C. 614, 618 (1983),

affd. without published opinion 829 F.2d 39 (6th Cir. 1987); see

also Cunningham v. Commissioner, T.C. Memo. 1994-474.

     Turning to the instant facts, we find that few of the

disputed payments qualify as alimony.     Most of these payments are

either payments of child support or payments for which petitioner

would remain liable if Ms. Sowell were to die.4    As to the latter

category of payments, nothing in the applicable documents


     4
       Some of these amounts also were not paid pursuant to the
temporary order or final decree.
                               - 12 -

conditions these payments on the fact that Ms. Sowell is living.

Nor can we find such a condition in applicable State (Georgia)

law.    Under Georgia law, alimony is either periodic or lump sum,

see Winokur v. Winokur, 365 S.E.2d 94, 95 (Ga. 1988), and the

mere fact that alimony is payable in installments does not mean

it is periodic, see Stone v. Stone, 330 S.E.2d 887, 889 (Ga.

1985).    Lump-sum alimony is payable in installments if the

applicable documents "state the exact amount of each payment and

the exact number of payments to be made without other

limitations, conditions or statements of intent".    See Winokur v.

Winokur, supra at 96; see also Stone v. Stone, supra at 889.     An

obligation to pay lump-sum alimony in installments does not

terminate upon the payee's death.    See Winokur v. Winokur, supra

at 95; see also Human v. Commissioner, T.C. Memo. 1998-106.

       As to the non-child-support amounts which would cease upon

Ms. Sowell's death--namely, $212 spent in 1992 for Ms. Sowell's

clothes, $443 spent in 1992 for Ms. Sowell's dentist, $665 spent

in 1992 for Ms. Sowell's dentist, $130 spent in 1992 for Ms.

Sowell's medical bill, $428 spent in 1992 for Ms. Sowell's car

insurance, $2,204 spent in 1992 for Ms. Sowell's car expenses,

$95 spent in 1993 for Ms. Sowell's bills, $209 spent in 1993 for

Ms. Sowell's drug bill, $746 spent in 1993 for Ms. Sowell's

dentist, $1,312 spent in 1993 for Ms. Sowell's dentist, $30 spent

in 1993 for Ms. Sowell's automobile, $454 spent in 1993 for Ms.

Sowell's medical bill, $585 spent in 1993 for Ms. Sowell's car

insurance, $437 spent in 1993 for Ms. Sowell's car repair, $30
                              - 13 -

spent in 1993 for Ms. Sowell's medical bill, $464 spent in 1993

for Ms. Sowell's medical bill, $86 spent in 1993 for Ms. Sowell's

bill, $566 spent in 1993 for Ms. Sowell's car expense, and $1,647

spent in 1994 for Ms. Sowell's dentist--we hold that these

amounts, but for the $2,204, $566 and $1,647 amounts, are

deductible as alimony.5   The deductible amounts, which aggregate

$1,878 and $5,014 for 1992 and 1993, respectively, were paid to

(or for the benefit of) Ms. Sowell's maintenance, and, naturally,

petitioner's obligation to make these payments would have ceased

upon Ms. Sowell's death.6   The $2,204 and $566 amounts are not

deductible because petitioner did not pay these amounts in cash,

as is required by section 71(b)(1).    Petitioner "paid" these

amounts to Ms. Sowell by agreeing to pay these charges in the

future.   The $1,647 amount is not deductible because we are

unable to find that it was paid pursuant to a divorce or


     5
       There are other amounts--$447 spent in 1992 for a drug
bill, $666 spent in 1992 for miscellaneous expenses, $3,133 spent
in 1992 for health insurance for Ms. Sowell and the children, $22
spent in 1993 for reimbursement, $142 spent in 1993 for a drug
bill, $2,222 spent in 1993 for health insurance for Ms. Sowell
and the children, and $2,048 spent in 1994 to pay a loan on Ms.
Sowell's insurance policy--for which we are unable to determine
what, if any, amount was paid with respect to Ms. Sowell. (We
also note that the $2,048 amount was not required by either the
temporary order or the divorce decree.) As petitioner bears the
burden of proof, we must sustain respondent's disallowance of
these amounts.
     6
       Whereas petitioner's payments for Ms. Sowell's car
expenses are deductible as alimony, petitioner's payments in
satisfaction of his obligation to buy her a car are not. As we
read the final decree, petitioner's obligation to buy the car
would not have terminated upon Ms. Sowell's death. If Ms. Sowell
had died before petitioner had bought her the car, petitioner
would have had to buy the car for the benefit of her estate.
                              - 14 -

separation instrument.   Although the temporary order stated that

petitioner must pay Ms. Sowell's medical and dental expenses, the

final decree, which did not contain a similar provision, replaced

the temporary order as of September 4, 1993.

     We hold that petitioner's alimony deductions in the

respective years are $1,878, $5,014, and zero.   In so holding, we

have carefully considered all remaining arguments made by the

parties for a result contrary to that expressed herein, and, to

the extent not discussed above, find them to be irrelevant or

without merit.

     To reflect the foregoing,

                                         Decision will be entered

                                    under Rule 155.
