                        T.C. Memo. 1996-292



                      UNITED STATES TAX COURT



                   GALEN J. SMITH, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8945-95.              Filed June 24, 1996.


     Galen J. Smith, pro se.

     Pamelya P. Herndon, for respondent.

                        MEMORANDUM OPINION

     LARO, Judge:   This case is before the Court on respondent's

motion for continuance of trial pursuant to Rule 1341 and

petitioner's motion for partial summary judgment under Rule 121.

     This case was originally set for trial on April 22, 1996, in

Albuquerque, New Mexico.   Ten days before trial, respondent

issued a statutory notice of deficiency to petitioner's former

spouse.   At the calendar call, respondent moved the Court to



     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect during the years at issue,
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 2 -

continue this case from the calendar and return it to the general

docket.   Respondent seeks additional time to allow petitioner's

former spouse time to file a petition and eventually join these

proceedings.   Petitioner has opposed respondent's motion and now

moves for partial summary judgment in his favor.

     Petitioner argues that respondent is estopped from

determining a deficiency against him due to her determination of

a deficiency against his former spouse for the same tax

liability.   Petitioner contends that respondent, by her action of

determining a deficiency and issuing a notice of same to his

former spouse, has made an admission against interest as to who

is to bear the tax liability for various distributions made to

petitioner from his former spouse's qualified pension and

retirement plans.   Petitioner maintains that respondent may not

take inconsistent positions against two taxpayers in separate

notices of deficiency with respect a single tax liability because

to do so necessarily undermines the factual basis upon which her

determinations are premised.   Thus, petitioner claims that he is

entitled to summary adjudication in his favor because, as a

matter of law, there exists no issue of material fact with

respect to his tax liability arising from the distributions from

his former spouse's tax qualified plans by reason of respondent's

determination of a deficiency against his former spouse for the

same tax liability.   Respondent objects to petitioner's motion,

and asserts that she may take an alternative, though

inconsistent, position against a second taxpayer in a separate
                                 - 3 -

notice of deficiency for the same tax liability.   We agree with

respondent for the reasons set forth below, and shall grant

respondent's motion for continuance and deny petitioner's motion

for partial summary judgment.

                            Background2

     Petitioner married Blythe Schroeder (Ms. Schroeder) on

June 13, 1981.   Ms. Schroeder filed for divorce on May 2, 1988,

and the divorce was finalized on April 12, 1989.   Contemporaneous

with this divorce decree, the State trial court issued a domestic

relations order concerning the division of Ms. Schroeder's

pension and retirement benefits.    This domestic relations order

purports to meet the requirements of section 414(p) as a

qualified domestic relations order (QDRO).   The State court

issued an additional such order with respect to Ms. Schroeder's

401(k) plan on May 12, 1989.    Petitioner has challenged in both

State and Federal court the validity of the divorce decree,

arguing that the divorce decree is void for want of due process.

     During 1992, the year in issue, Aetna Life & Casualty

(Aetna), issued petitioner a check for $9,395 from

Ms. Schroeder's section 403(b) tax shelter annuity (TSA).     Aetna

also disbursed $4,937 to petitioner from Ms. Schroeder's Aetna

individual retirement account.    Petitioner also received a check



     2
       The facts presented below do not appear to be in dispute,
and are stated solely for the purposes of deciding the pending
motions, and are not findings of fact for this case. Fed. R.
Civ. P. 52(a); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), affd. 17 F.3d 965 (7th Cir. 1994).
                                - 4 -

from SunWest Bank of Albuquerque for $14,790 from Ms. Schroeder's

401(k) plan.   At the time petitioner received these

distributions, petitioner had not attained age 59-1/2.

Petitioner did not roll these distributions over to another tax

qualified plan within the time period specified in sections

402(c), 403(a)(4), or 408(d)(3).   Petitioner did not file an

Income Tax Return for the year in issue on or before the due

date.    Respondent determined a deficiency in petitioner's Federal

income tax for the taxable year 1992 in the amount of $8,016,

together with additions to tax under section 6651(a) in the

amount of $2,004 and $349 under section 6654(a).    In his

petition, petitioner challenges the validity of the QDROs and his

tax liability for the subject distributions.

                              Analysis

A.   Motion for Continuance

     Distributions from qualified plans are generally taxed to

the distributee in the year distributed.   Sec. 402(a)(1).     The

term "distributee" as used in section 402(a)(1), is generally

accepted to be the participant or beneficiary who, under the

plan, is entitled to receive the distribution.3    Sec. 402(a)(1);

Darby v. Commissioner, 97 T.C. 51, 58 (1991).     An exception to

this general rule is provided in section 402(a)(9).    Under

section 402(a)(9) distributions made to an alternate payee, i.e.,

a spouse or former spouse of a plan participant, pursuant to a


     3
       Neither the Internal Revenue Code nor the regulations
define the term "distributee" as used in section 402(a)(1).
                               - 5 -

QDRO, are not taxable to the plan participant, but are instead,

taxable to the former spouse/alternate payee as if he or she were

the plan participant.4   Conversely, a domestic relations order

that fails to satisfy the requirements of section 414(p) is not a

QDRO, and, consequently, the exception provided in section

402(a)(9) is inapplicable to such orders.   In such a situation,

any distribution made from the plan will be taxable to the plan

participant under section 402(a)(1).

     In the instant case, respondent finds herself in a

precarious position, between two former spouses of whom one is a

party to this litigation, the other is not.   The question in

dispute is which of the former spouses ultimately will be liable

for the tax attributable to the subject distributions.    The

eventual resolution of the QDRO issue will determine whether


     4
       Sec. 401(a)(13)(A) was added by the Employee Retirement
Income Security Act of 1974 (ERISA), Pub. L. 93-406, sec.
1021(c), 88 Stat. 829, 935, to require tax-qualified plans to
provide "that benefits provided under the plan may not be
assigned or alienated". ERISA, sec. 514(a), 29 U.S.C. sec.
1144(a) (1988), provides that the labor title of ERISA preempts
State law. Consequently, after the enactment of ERISA, it was
unclear whether this preemption provision applied to prohibit the
attachment or assignment of pension plan benefits under State
community property and family support laws. Congress enacted the
Retirement Equity Act of 1984 (REA), Pub. L. 98-397, 98 Stat.
1426, to clarify the application of ERISA antialienation
provisions to State family support laws and community property
laws. See S. Rept. 98-575, at 19 (1984), 1984-2 C.B. 447, 456.
REA provided new rules for the treatment of certain domestic
relations orders, requiring the distribution of all or part of a
participant's benefits under a qualified plan to an alternate
payee. Sec. 204(b) of REA, 98 Stat. 1445, added sec. 414(p),
which defines a QDRO. Sec. 401(a)(13)(B) provides that the
creation, recognition, or assignment of an alternate payee's
right to plan benefits under a QDRO does not violate the
antialienation provisions of ERISA and sec. 401(a)(13)(A).
                               - 6 -

petitioner or his former spouse is responsible for the resulting

income tax liability.   Respondent has not taken a position as to

whether the subject marital property settlements satisfy the

requirements of section 414(p).   Instead, respondent merely seeks

additional time to allow Ms. Schroeder to file a petition in

response to the notice of deficiency issued to her.    Respondent's

ultimate goal is to join Ms. Schroeder as a party to these

proceedings.   Respondent has represented to us that Ms. Schroeder

is expected to file a petition in response to the notice of

deficiency issued to her, and that a motion to consolidate will

be filed shortly thereafter.

     Rule 134 permits us to grant a continuance where a motion

for same is timely, sets forth good and sufficient cause, and

complies with all applicable rules.    Generally we disfavor

postponing trials once a case has been set on calendar; however,

we have broad discretion in handling motions for continuance.

Manzoli v. Commissioner, 904 F.2d 101, 106 (1st Cir. 1990), affg.

T.C. Memo. 1988-299; Estate of Van Loben Sels v. Commissioner,

82 T.C. 64 (1984).

     Respondent argues, and we agree, that a continuance is

necessary in this case, to conserve the Court's resources and

avoid any undue hindrance in the resolution of the issues

presented.   Respondent urges us to grant a continuance in this

case so as to avoid multiple trials concerning the same

transaction and the possible risk of inconsistent determinations

as to the validity of the subject QDROs at issue herein.
                               - 7 -

Respondent argues that by continuing this case and eventually

joining the two taxpayers, we shall be able to make a

determination in one proceeding as to who should bear the tax

burden resulting from the subject distributions.    We shall grant

respondent's motion for continuance of trial.

B.   Motion For Partial Summary Judgment

     1.   Standard of review

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials of phantom factual issues.

Kroh v. Commissioner, 98 T.C. 383, 390 (1992);     Florida Peach

Corp. v. Commissioner, 90 T.C. 678, 681 (1988).    Summary judgment

may be granted with respect to all or any part of the legal

issues in controversy "if the pleadings, answers to

interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law."    Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753,

754 (1988).   Because summary judgment decides an issue against a

party before trial, we grant such a remedy sparingly, and only

after carefully ascertaining that the moving party has met all of

the requirements entitling him to summary judgment.     Associated

Press v. United States, 326 U.S. 1, 6 (1945); Espinoza v.

Commissioner, 78 T.C. 412, 416 (1982).
                                - 8 -

     The Court will not resolve disagreements over material

factual issues in a summary judgment proceeding.      Espinoza v.

Commissioner, supra at 416.    The moving party bears the burden of

proving that there is no genuine issue of material fact, and

factual inferences will be read in a manner most favorable to the

non-moving party.   Kroh v. Commissioner, supra at 390;

Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).

     2.   Separate notices of deficiency

     Respondent determined that petitioner owes an income tax

deficiency arising from the distributions from his former

spouse's qualified retirement and pension plans.     In the

alternative, and in a separate notice of deficiency, respondent

determined that petitioner's former spouse is liable for an

income tax deficiency attributable to the same distributions.

Deficiency determinations asserted by respondent in a statutory

notice of deficiency are presumed correct, Welch v. Helvering,

290 U.S. 111, 115 (1933).    It is immaterial whether the

alternative claims were contained in a single notice of

deficiency or in separate notices.      Doggett v. Commissioner,

66 T.C. 101, 103 (1976).    The fact that respondent has made a

separate determination of tax against each of the former spouses

for the same tax liability does not negate the presumption of

correctness as to either notice.     Clapp v. Commissioner, 875 F.2d

1396, 1401 (9th Cir. 1989); Malat v. Commissioner, 302 F.2d 700,

704 (9th Cir. 1962), affg. 34 T.C. 365 (1960); Revell, Inc. v.

Riddell, 273 F.2d 649 (9th Cir. 1959).
                                - 9 -

       It is well established that respondent may assert

alternative claims for deficiencies when there is a basis for

doing so.    Wiles v. Commissioner, 499 F.2d 255, 259 (10th Cir.

1974), affg. 60 T.C. 56 (1973); Estate of Goodall v.

Commissioner, 391 F.2d 775, 781-784 (8th Cir. 1968), vacating

T.C. Memo. 1965-154; Malat v. Commissioner, supra at 706;

Revell, Inc. v. Riddell, supra at 658-660; Doggett v.

Commissioner, supra at 103; L.C. Bohart Plumbing & Heating, Co.

v. Commissioner, 64 T.C. 602, 615-616 (1975); Hoeme v.

Commissioner, 63 T.C. 18, 20-21 (1974).     For example, respondent

may claim, in separate notices, that the same income was received

by different taxpayers.    See Doggett v. Commissioner, supra at

103.

       We have previously recognized that, in those instances where

it is undisputed that one of two taxpayers is liable for the tax

arising out of a single transaction, "[respondent] is not bound

to proceed against only one party at the peril of an unfavorable

decision and the possible inability to * * * pursue the other

[thereafter]".    L.C. Bohart Plumbing & Heating, Co. v.

Commissioner, supra at 615.    In this instance it is appropriate

for respondent to proceed against both petitioner and, in the

alternative, his former spouse for the tax liability arising out

of the same transaction, even though the positions taken by

respondent may be inconsistent.    See, e.g., Wiles v.

Commissioner, supra at 259; L.C. Bohart Plumbing & Heating, Co.

v. Commissioner, supra at 615-616.      In such a situation
                             - 10 -

respondent is essentially placed in the posture of a stakeholder

in trying to protect the revenue by resolving the question as to

which party is ultimately responsible for the tax liability.    See

Estate of Goodall v. Commissioner, supra at 781, 784; L.C. Bohart

Plumbing & Heating, Co. v. Commissioner, supra at 616.

                           Conclusion

     Material facts remain in dispute as to whether the subject

distributions were made pursuant to valid QRDOs.    We shall deny

petitioner's motion for partial summary judgment.

     We have considered all of petitioner's arguments for a

contrary holding and, to the extent not addressed above, have

found them to be without merit.

     To reflect the foregoing,

                                        An appropriate order will

                                   be issued granting

                                   respondent's motion for

                                   continuance of trial and

                                   denying petitioner's motion

                                   for partial summary judgment.
