                     T.C. Summary Opinion 2010-125



                        UNITED STATES TAX COURT



                 HENRY ANTHONY WILLIAMS, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 11734-08S.             Filed August 26, 2010.



        Henry Anthony Williams, pro se.

        Bryan E. Sladek and Robert D. Heitmeyer, for respondent.



     GOLDBERG, Special Trial Judge:       This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect when 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 the year in issue,
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and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     Respondent determined a $2,290 deficiency in petitioner’s

2005 Federal income tax.    The deficiency resulted from the

disallowance of a $9,750 deduction petitioner claimed for alimony

payments.   The sole issue for decision is whether petitioner is

entitled to a deduction under section 215 for alimony payments he

made in 2005 to his former wife.

                             Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.      Petitioner resided in

California when he filed his petition.

     Petitioner married Phyllis Eve Williams (Ms. Williams) in

January 1985.    Their marriage produced one child.     The couple

separated in 1991.    Throughout the marriage Ms. Williams abused

petitioner.   When they separated, they did not obtain a court

order of separation; but subsequently petitioner drafted an

informal handwritten agreement (informal agreement) on January

12, 1993, which they both signed.       In this informal agreement

petitioner agreed:    (1) To make alimony payments to Ms. Williams

“during the time of the separation”; and (2) that Ms. Williams

“shall receive as alimony payment, the rental income from the

property owned by Henry A. Williams.      The amount is $550 per
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month.”    The informal agreement did not discuss petitioner’s

obligation to Ms. Williams upon or after her death.

     Without petitioner’s knowledge, Ms. Williams fraudulently

obtained a second mortgage on the rental property.      Petitioner

became aware of the second mortgage in late 1997 but was unable

to prevent his loss of the property in a foreclosure in late 1998

or 1999.

     After the foreclosure petitioner and Ms. Williams made oral

changes to the terms of petitioner’s spousal support obligation

to Ms. Williams.    They never reduced these oral understandings to

writing.    The Court received into evidence copies of three checks

and one money order, each for $400, dated June through September

2005 from petitioner payable to Ms. Williams.      The Court also

received a copy of a check for $1,242 dated January 24, 2005,

from petitioner payable to “PFCS”.      Petitioner did not explain

this acronym.

     Petitioner obtained a judgment of dissolution (divorce

decree) terminating the marriage, which the Superior Court of

California, Los Angeles County (superior court), entered on

December 20, 2005.    Ms. Williams was not present at the hearing.

The divorce decree ordered spousal support and a property

division, referencing an attached, terse “Written Judgment”

(attachment).    The divorce documents did not discuss child

custody and did not order child support.      Under the attachment
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the Superior Court retained jurisdiction over income tax debts

from 1989-1991 and spousal support and stated that Ms. Williams

had defrauded petitioner of $200,000.     Neither the divorce decree

nor the attachment stated a fixed amount of spousal support or

provided a mechanism to determine the precise amount of spousal

support.

                            Discussion

     The Commissioner’s determinations are presumed correct, and

the taxpayer bears the burden of proving that a determination set

forth in a notice of deficiency is incorrect.    See Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).     Deductions are a

matter of legislative grace, and taxpayers must satisfy the

statutory requirements for claiming the deductions.     INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice

Co. v. Helvering, 292 U.S. 435, 440 (1934).     This includes the

burden of substantiation.   Hradesky v. Commissioner, 65 T.C. 87

(1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).    Section

6001 requires taxpayers to maintain records sufficient to

establish the amount of each deduction.    See also Ronnen v.

Commissioner, 90 T.C. 74, 102 (1988); sec. 1.6001-1(a), (e),

Income Tax Regs.

     Under section 7491(a) the burden may shift to the

Commissioner regarding factual matters if the taxpayer produces

credible evidence and meets other requirements of the section.
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Petitioner has neither argued for a burden shift nor established

his compliance with the requirements of section 7491(a).

Petitioner, therefore, bears the burden of proving that

respondent’s determination in the notice of deficiency is

erroneous.

     As a threshold matter, petitioner has failed to satisfy his

burden of substantiating the $9,750 expenditure.   Petitioner

provided copies of disbursements showing that he paid $1,600 to

Ms. Williams during 2005.   The $1,242 check to PFCS is

inconclusive.   A payment to a third party can “certainly” qualify

as alimony under the right circumstance, including payments for

the payee spouse’s shelter or utilities.   See Leventhal v.

Commissioner, T.C. Memo. 2000-92.   However, petitioner did not

elucidate the PFCS payee, the type of expense he paid, or the

separation or divorce instrument that purportedly required the

$1,242 check.   Petitioner also did not provide evidence to

support the rest of his $9,750 figure.   Therefore, at best,

petitioner has substantiated $1,600 of the deduction.     However,

for the reasons stated below, petitioner is not entitled to a

deduction for alimony even for that reduced amount.

     Section 215 allows an individual a deduction for alimony or

separate maintenance payments made during a year if those amounts

are includable in the gross income of the recipient under section

71(a).   Section 215 provides in relevant part:
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     SEC. 215. ALIMONY, ETC., PAYMENTS.

          (a) General Rule.--In the case of an individual, there
     shall be allowed as a deduction an amount equal to the
     alimony or separate maintenance payments paid during such
     individual’s taxable year.

          (b) Alimony or Separate Maintenance Payments Defined.--
     For purposes of this section, the term “alimony or separate
     maintenance payment” means any alimony or separate
     maintenance payment (as defined in section 71(b)) which is
     includible in the gross income of the recipient under
     section 71.

     Section 71(a) provides that “Gross income includes amounts

received as alimony or separate maintenance payments.”   As

previously stated, alimony or separate maintenance payments are

defined by section 71(b)(1), which provides:

          SEC. 71(b). Alimony or Separate Maintenance
     Payments Defined.--For purposes of this section–-

               (1) In general.--The term “alimony or separate
          maintenance payment” means 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
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                 make any payment (in cash or property) as a
                 substitute for such payments after the death
                 of the payee spouse.

     A payment is deductible as alimony only if all four

requirements of section 71(b)(1) are satisfied.     See Jaffe v.

Commissioner, T.C. Memo. 1999-196.      The only two elements at

issue here are subparagraphs (A) and (D):     Whether petitioner

made the payments under a divorce decree or separation

instrument and whether petitioner’s obligation to Ms.

Williams did not extend beyond her death.

     We first discuss the requirement of section 71(b)(1)(D)

that the liability not extend beyond the death of the payee

spouse.   In instances as here where the separation instrument

and divorce decree are inconclusive or silent as to the

alimony obligation after the death of the payee, the Court

will look to any applicable default provision in the

jurisdiction in which the divorce took place.      Le v.

Commissioner, T.C. Memo. 2008-183.

     The applicable statute is Cal. Fam. Code sec. 4337 (West

2004).    See Hilton v. McNitt, 315 P.2d 1, 4 (Cal. 1957)

(citing predecessor statute).    According to this California

family law code section:    “Except as otherwise agreed by the

parties in writing, the obligation of a party under an order

for the support of the other party terminates upon the death

of either party or the remarriage of the other party.”      Cal.
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Fam. Code sec. 4337.   Consequently, because the applicable

California default statute terminates the alimony payments

upon Ms. Williams’ death, the informal agreement and the

divorce decree satisfy the termination requirement of section

71(b)(1)(D).

     That leaves one final requirement; namely, whether

petitioner made his payments “under a divorce or separation

instrument” in accordance with section 71(b)(1)(A).    Section

71(b)(2) defines a qualifying “divorce or separation

instrument” as follows:

          (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.

     The term “written separation agreement” is not defined

by the Code, the legislative history, or applicable

regulations.   Bogard v. Commissioner, 59 T.C. 97, 100 (1972);

Leventhal v. Commissioner, T.C. Memo. 2000-92.     While courts

have interpreted the writing requirement leniently, see

Leventhal v. Commissioner, supra; Azenaro v. Commissioner,

T.C. Memo. 1989-224, courts require, nonetheless, an actual

writing that expresses a clear, ascertainable standard by

which to calculate support amounts, Herring v. Commissioner,
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66 T.C. 308, 311 (1976) (holding that payments made under an

oral agreement were not alimony); Leventhal v. Commissioner,

supra.

     Petitioner’s 1993 informal agreement may have qualified

as a written separation agreement before the foreclosure of

his rental property in 1998 or 1999.    However, once

petitioner lost his stated source of rental income with which

to make the contractual support payments, the couple made

oral changes to their informal agreement.    Petitioner

acknowledges that they did not reduce the changes to writing.

     While it is strange that petitioner would continue to

make support payments to Ms. Williams after she defrauded him

of $200,000, the key point is that the 1993 informal

agreement is simply not a written separation agreement that

governed the payments petitioner made in the year at issue,

2005.    In other words, because the 1993 informal agreement

did not reflect the oral changes that the couple made to

their arrangement, the 1993 informal agreement does not

satisfy section 71(b)(1)(A), which requires that Ms. Williams

received the payments in 2005 “under a divorce or separation

instrument”.

     The divorce decree and the attachment are likewise

insufficient for purposes of section 71(b)(1)(A).    First, as

a matter of timing, petitioner made the payments in 2005
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before the entry date of the divorce decree, December 20,

2005.     “Payments made before the existence of a written

divorce or separation instrument are not deductible by the

payor spouse”.     Ali v. Commissioner, T.C. Memo. 2004-284.

Therefore, with respect to the divorce decree, because

petitioner made the payments to Ms. Williams before the

Superior Court entered the divorce decree, he did not make

the payments “under a divorce or separation instrument” as

section 71(b)(1)(A) requires.

        Further, the divorce decree and its attachment ordered

petitioner to provide a property division as well as spousal

support but did not provide a specific amount or an

ascertainable standard by which to compute these obligations.

Therefore, the language in the divorce decree and the

attachment fails to establish that petitioner’s payments were

for spousal support and not for a nondeductible purpose such

as a property settlement.     Accordingly, petitioner’s divorce

decree and its attachment do not satisfy the section

71(b)(1)(A) requirement.

        For the foregoing reasons, we sustain respondent’s

determination.     None of petitioner’s payments in 2005 to Ms.

Williams qualify as alimony, and therefore petitioner is not

entitled to an alimony deduction for 2005 under section 215

or any other provision.
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     We have considered the other arguments made by

petitioner, and, to the extent that we have not specifically

addressed them, we conclude that those arguments are without

merit, irrelevant, or moot.

     To reflect the foregoing,


                                       Decision will be entered

                                 for respondent.
