                  T.C. Summary Opinion 2007-97



                      UNITED STATES TAX COURT



      RAYMOND AND CYNTHIA DALEY ZAKRZEWSKI, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9623-05S.               Filed June 18, 2007.



     Raymond and Cynthia Daley Zakrzewski, pro sese.


     Julie A. Jebe, for respondent.


     GOLDBERG, 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.   Pursuant to section

7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be treated as precedent

for any other case.   Unless otherwise indicated, subsequent

section references are to the Internal Revenue Code in effect for
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the year in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

     Respondent determined a $4,224 deficiency in petitioners’

2002 Federal income tax.   The sole issue before the Court is

whether petitioners are entitled to an alimony deduction for

amounts they paid in the year in issue.

                            Background

     Some of the facts are stipulated and so found.   At the time

the petition in this case was filed, petitioners resided in

Elmhurst, Illinois.

     Raymond Zakrzewski (petitioner) and his ex-wife, Pamela

Zakrzewski (Ms. Zakrzewski), were married in 1975.    Although the

record is silent as to when the couple separated, it is known

that they did physically separate and remained separated for at

least 2 years before petitioner initiated divorce proceedings

against Ms. Zakrzewski sometime in 1995.   On December 14, 1995,

the Circuit Court of Cook County, Illinois, Domestic Relations

Division (circuit court) entered a judgment for dissolution of

marriage between petitioner and Ms. Zakrzewski.

     The judgment provides, in pertinent part, the following:

                            ARTICLE V.

                           MAINTENANCE

         1. The Husband shall pay to the Wife the sum of
    $300.00 per month in maintenance based on an approximate
    $3,100.00 net take home pay. Said sum shall be paid until
    the end of March 2000.
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     2. Said maintenance payments shall be includable in
the gross income of Wife and deductible from the gross
income of Husband for Federal and State income tax purposes,
within the meaning and intendment of the provisions of
Section 71 and 215 of the United States Internal Revenue
Code of 1954, as amended, or of any identical or comparable
provision of any revenue code or amendment thereto which may
be hereinafter enacted.

     3. So long as Wife is receiving maintenance payments
from Husband, she shall be entitled to claim TRACY LYNN as a
dependency exemption on her Federal and State income tax
returns.

                        ARTICLE VI.

          LUMP SUM SETTLEMENT OF PROPERTY RIGHTS

     A. At the end of the sixth year from the date of this
Judgment, and in full settlement of all claims to property
and maintenance, Husband shall pay to Wife the sum of
$30,000.00 in cash.

     B. Husband shall pay to wife one-half of any Christmas
bonus received for ten years from the date of this Judgment
while he is an employee of UPS as a lump sum settlement of
property rights and not as maintenance and further
consideration for covenants herein contained.

   *        *       *         *        *    *      *

                        ARTICLE XIV.

                    GENERAL PROVISIONS

   *        *       *         *        *     *     *

       C. BINDING ON HEIRS

     1. All of the provisions of this Agreement shall be
binding upon the respective heirs, next-of-kin, executors,
assigns and administrators of the parties hereto.

       D. ILLINOIS LAW TO APPLY

     2. This Agreement shall be construed in accordance
with the laws of the State of Illinois, entirely independent
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     of the forum in which this Agreement or any part thereof may
     come up for construction and/or enforcement.

     Petitioners drafted two checks payable to Ms. Zakrzewski

during taxable year 2002.     The first check (No. 1964), in the

amount of $13,579.91, was dated January 15, 2002.      The memo line

of this check reads:     “property settlement.”   This check was

deposited by Ms. Zakrzewski on February 4, 2002.      The second

check (No. 2101), in the amount of $693, was dated June 19, 2002.

The memo line of this check reads: “CHRISTMAS - BONUS; final

settlement payment.”     This check was deposited by Ms. Zakrzewski

on August 6, 2002.     A third check (No. 1963), in the amount of

$2,500, was dated January 30, 2002.      This check was made payable

to a law firm (“Sotiras & Mannix”).      The memo line of this check

reads:   “retainer.”

     On January 17, 2002, Ms. Zakrzewski initiated postmarital

decree proceedings against petitioner by filing a Petition For

Rule To Show Cause And Other Relief.     He responded with a Motion

to Dismiss on February 5, 2002.     Petitioner then filed a Petition

to Enforce Settlement, Or Alternatively, To Set Hearing Date On

Previously Filed Motion To Dismiss, For Declaratory Judgment And

Other Relief, on November 22, 2002.      Before these pleadings were

resolved, but after the close of the 2002 taxable year, the

formerly married couple entered into a Settlement Agreement on

March 17, 2003.
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     On line 33(a) of their Federal income tax return,

petitioners claimed a deduction for alimony paid in the amount of

$16,773.   In the notice of deficiency, respondent disallowed the

alimony deduction because petitioners did not prove either that

this amount was for alimony or that it was actually paid.

                            Discussion

     The Commissioner’s determinations are presumed correct, and

taxpayers generally bear the burden of proving otherwise.     Welch

v. Helvering, 290 U.S. 111, 115 (1933).   Petitioners did not

argue that section 7491 is applicable in this case, nor did they

establish that the burden of proof should shift to respondent.

Moreover, the issue involved in this case, alimony, is a legal

one and will be decided on the record without regard to the

burden of proof.   Petitioners, however, bear the burden of

proving that respondent’s determination in the notice of

deficiency is erroneous.   See Rule 142(a); Welch v. Helvering,

supra at 115.

     Taxpayers may deduct from their gross income payments made

during a taxable year for alimony or separate maintenance.    Sec.

215(a).

     Section 71(b)(1) defines an “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,
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          (B) the divorce or separation instrument does not
     designate such payment as a payment which is not
     includable 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 test under section 71(b)(1) is conjunctive; a payment is

deductible as alimony only if all four requirements of section

71(b)(1) are present.   See Jaffe v. Commissioner, T.C. Memo.

1999-196.

Characterization of 2002 Payments

     Petitioners argue that they are entitled to deduct $16,773

from their 2002 gross income pursuant to section 71(b)(1) as

alimony paid to Ms. Zakrzewski.   They claim that they have

substantiated payments through the three checks received into

evidence.   Respondent disagrees and contends that the payments

made by petitioners to Ms. Zakrzewski in 2002 do not qualify as

alimony under section 71(b).   Respondent argues that the payments

previously discussed were made pursuant to a divorce instrument

that did not explicitly designate the payments as not allowable

as an alimony deduction in compliance with section 71(b)(1)(A)

and (B).    Respondent also maintains that the two checks at issue
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were made pursuant to a lump-sum settlement agreement wherein the

liability of the payor spouse to make such payments would extend

to the payee’s estate had the payee spouse died before such

payments were due.    For the foregoing reasons, we agree with

respondent.

     Check No. 1964, in the amount of $13,579.91, and check No.

2101, in the amount of $693, were paid by petitioners pursuant to

“Article VI, Lump Sum Settlement of Property Rights, section A”,

of the marital settlement agreement between Mr. Zakrzewski and

Ms. Zakrzewski.    At trial, petitioners and, in particular,

petitioner wife, fervently argued that this Court should hold the

payments petitioners made to Ms. Zakrzewski in 2002 to be alimony

since a settlement agreement entered into between petitioner and

Ms. Zakrzewski on March 13, 2003, “dismissed with prejudice the

marital settlement agreement of 1995, [and also] it invalidates

the clause that any payments would be binding on the heirs.”      We

note, however, that the payments at issue were made in taxable

year 2002.    The payments were made before the 2003 settlement

agreement was reached.    There is nothing in the 2003 settlement

agreement or, more importantly, the law, which permits us to

apply the terms of the 2003 settlement agreement retroactively to

characterize these payments petitioners made to Ms. Zakrzewski in

2002.   Gordon v. Commissioner, 70 T.C. 525, 531 (1978).
                               - 8 -

Accordingly, it is the marital settlement agreement of 1995 that

we look to as the sole, operative document at issue in this case.

     First, we note that the payments at issue were not included

in “Article V, Maintenance,” which expressly provided that the

payments were allowed as an alimony deduction in accordance with

section 71(b)(1)(A) and (B).   Rather, these payments were made

pursuant to a provision of the marital settlement agreement

segregated from those payments that were clearly indicated as

alimony.   Second, “Article XIV, General Provisions, section C,

provides that “All of the provisions of this Agreement shall be

binding upon the respective heirs, next-of-kin, executors,

assigns and administrators hereto.”    This conflicts directly with

section 71(b)(1)(D), and therefore, leads us to the holding that

these payments are not deductible by petitioners as alimony or

separate maintenance.

     Petitioners next argue that the terms of the marital

settlement agreement should not be construed in accordance with

Illinois law, and that we should look only to the parties’

intent, which would undoubtedly then lead us to the holding that

these payments were, in fact, alimony or separate maintenance

because petitioners intended them to be for that purpose.    As

evidence of this intent, petitioners testified that had they

known that they would not be entitled to deduct the payments from

their gross income, they would not have made them.
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     First, “Article XIV, General Provisions, Section D”

unequivocally applies Illinois law irrespective of the fact that

the case is before this Court.    Second, we note that under

section 504(a) of the Illinois Marriage and Dissolution of

Marriage Act, the court may grant maintenance payments (alimony)

only if it finds that the spouse seeking maintenance lacks

sufficient property to provide for her reasonable needs and is

unable to support herself otherwise.     750 Ill. Comp. Stat. Ann.

5/504(a) (West 1999); see also In re Marriage of Lees, 587 N.E.2d

17, 20 (Ill. App. Ct. 1992).   In this case, there was no evidence

presented that the circuit court made such a finding with respect

to the payments defined in “Article VI.”

     Lastly, and with respect to petitioners’ argument that we

should disregard the language of the operative marital settlement

agreement and Illinois law in favor of their intent that the

payments at issue be alimony or maintenance of the type for which

a deduction under section 71 applies, petitioners provided no

factually credible evidence to support that these payments were

nothing more than their attempt to comport with Mr. Zakrzewski’s

legal obligations then-existing under the terms of the marital

settlement agreement.   As previously stated, we believe that the

payments under the marital settlement agreement do not comport

with the requirements of section 71(b)(1).
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     With regard to the third check, No. 1963, payable to the law

firm of Sotiras & Mannix, the memo line of this check reads:

“retainer.”   This check was drafted and deposited only 2 weeks

after Ms. Zakrzewski initiated postdecree proceedings against

petitioner.   We believe, given that petitioner was obligated,

pursuant to the operative settlement agreement, to make a cash

payment of $30,000 to Ms. Zakrzewski no later than December 31,

2001, and that he made a payment of only $13,579.91 to Ms.

Zakrzewski 2 weeks after that deadline, that this check

represents his personal outlay to retain counsel in defense of

Ms. Zakrzewski’s subsequent suit against him.   There is nothing

in the record to suggest that this amount was ever sent to Ms.

Zakrzewski, let alone for her support.   There is nothing in the

record, or, moreover the law, that allows us to entertain the

possibility that the cash paid by petitioners in their retention

of legal counsel might be construed as an alimony payment to Ms.

Zakrzewski.

     Accordingly, and based on the foregoing facts and

discussion, we hold that the disputed payments made by

petitioners in 2002 were not alimony pursuant to section 71.



                                         Decision will be entered

                                    for respondent.
