                         T.C. Memo. 2011-200



                       UNITED STATES TAX COURT



                  JAMES F. MOORE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23193-09.              Filed August 16, 2011.



     Keith Wolak, for petitioner.

     K. Elizabeth Kelly and Mayer Y. Silber, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Respondent determined a deficiency of

$4,087 in petitioner’s 2006 Federal income tax.   After a

concession by respondent,1 the sole issue for decision is whether


     1
        Respondent concedes that petitioner is not liable for an
accuracy-related penalty under sec. 6662(a). Unless otherwise
indicated, all section references are to the Internal Revenue
                                                   (continued...)
                              - 2 -

payments of $21,700.82 petitioner made to his ex-wife in 2006 are

deductible as alimony under section 215(a).

                        FINDINGS OF FACT

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

The stipulations of facts and the attached exhibits are

incorporated herein by this reference.    Petitioner resided in

Illinois at the time the petition was filed.

     Petitioner was formerly married to Elaine Moore (Ms. Moore).

On September 16, 1996, the Superior Court of Porter County,

Indiana (State court) entered an agreed dissolution decree (the

decree) dissolving their marriage.    Paragraph 15 of the decree

states:

          As and for maintenance, Husband shall pay and save Wife
     harmless from the mortgage, taxes and insurance on the
     marital home as they now exist. Husband shall receive the
     deductions for said payments. This obligation is not
     modifiable, except as herein after stated. Husband’s
     payment of these obligations shall not be taxable to Wife.
     Husband shall save Wife harmless from all tax obligations as
     a result of paying these obligations. If Wife sells the
     marital home, she shall pay off the then existing mortgage,
     and Husband shall pay Wife the mortgage pay-off figure
     at eight (8) percent over the same time period of the
     mortgage which is paid off (i.e., so his obligation is
     complete by the end of November, 2010).




     1
      (...continued)
Code in effect for the year in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
                               - 3 -

     In April 2002 Ms. Moore sold the marital home2 and paid off

the existing mortgage of $73,779.72.    Pursuant to the decree,

petitioner became obligated to reimburse Ms. Moore the $73,779.72

she used to pay off the mortgage.

     In early 2006 petitioner filed an appeal with the Indiana

Court of Appeals concerning his reimbursement obligation.3    In

April 2006 petitioner and Ms. Moore entered into a settlement

agreement in which petitioner’s maintenance obligation would

terminate upon his paying Ms. Moore $20,000.

     In 2006 petitioner made payments to Ms. Moore of $21,700.824

and deducted these amounts as alimony on his Form 1040, U.S.

Individual Income Tax Return, for 2006.   Respondent subsequently

determined that petitioner’s payments were not deductible as

alimony.

                              OPINION

     Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving his entitlement to the

claimed deduction.   Rule 142(a); INDOPCO, Inc. v. Commissioner,




     2
        Under the decree, Ms. Moore received full ownership of
the marital home.
     3
         The grounds of the appeal are unclear from the record.
     4
        Petitioner made the following payments to Ms. Moore
during 2006: $800.41 on Jan. 29, $450.41 on Feb. 28, $450 on
Mar. 14, and $20,000 on Apr. 20.
                                 - 4 -

503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292

U.S. 435, 440 (1934).

     Section 215(a) permits a deduction for the payment of

alimony during a taxable year.     Section 215(b) defines “alimony”

as alimony which is includable in the gross income of the

recipient under section 71.   Section 71(b)(1) defines alimony as

any cash payment meeting the four criteria provided in

subparagraphs (A) through (D) of that section.5    Accordingly, if



     5
         Sec. 71(b)(1) 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 make any
                payment (in cash or property) as a substitute for
                such payments after the death of the payee spouse.
                                - 5 -

any portion of the payments made by petitioner fails to meet any

one of the four enumerated criteria, that portion is not alimony

and petitioner cannot deduct it.

       Respondent agrees that the requirements of subparagraphs (A)

and (C) have been satisfied.    He argues, however, that

petitioner’s payments to Ms. Moore do not satisfy subparagraphs

(B) and (D).    Respondent maintains that subparagraph (B) is not

satisfied because paragraph 15 of the decree states that the

payments are not income to Ms. Moore and that subparagraph (D) is

not satisfied because the payments do not terminate on the death

of Ms. Moore.    Petitioner argues that the language in paragraph

15 excluding the payments from Ms. Moore’s income does not apply

to the payments made after the marital home was sold and that the

payments terminate on Ms. Moore’s death by operation of Indiana

law.

       Under section 71(b)(1)(D), in order to deduct a payment as

alimony the payor must have no liability to continue making

payments after the recipient’s death; otherwise the payor may not

deduct any required related payments.    See Johanson v.

Commissioner, 541 F.3d 973, 976-977 (9th Cir. 2008), affg. T.C.

Memo. 2006-105; Kean v. Commissioner, 407 F.3d 186, 191 (3d Cir.

2005), affg. T.C. Memo. 2003-163.    If the divorce instrument is

silent as to the existence of a postdeath obligation, the

requirements of section 71(b)(1)(D) may still be satisfied if the
                                 - 6 -

payments terminate upon the payee spouse’s death by operation of

State law.     Johanson v. Commissioner, supra at 977.   If State law

is ambiguous in this regard, however, a “federal court will not

engage in complex, subjective inquiries under state law; rather,

the court will read the divorce instrument and make its own

determination based on the language of the document.”      Hoover v.

Commissioner, 102 F.3d 842, 846 (6th Cir. 1996), affg. T.C. Memo.

1995-183.

     The divorce decree is silent as to whether petitioner’s

obligation to reimburse Ms. Moore terminates in the event of Ms.

Moore’s death.    Thus, we consider whether the obligation to make

payments terminates upon Ms. Moore’s death by operation of

Indiana law.

     Indiana statutory law is silent as to whether the obligation

to make maintenance payments terminates on the death of the payee

spouse.   The parties point us to no caselaw, and we have

discovered none, that expressly states whether the obligation of
                                   - 7 -

maintenance terminates upon the death of the payee spouse.6

Therefore, we conclude that Indiana law is ambiguous.

       Finally, faced with a silent divorce decree and no State law

resolution of the question, we independently review the decree to

make our own determination as to the satisfaction of the section

71(b)(1)(D) requirement.       See Hoover v. Commissioner, supra at

846.       We do not read the decree as requiring the termination of

payments in the event of Ms. Moore’s death.       Under the decree,

petitioner’s obligation is terminated only by satisfaction of the

mortgage or reimbursement to Ms. Moore of the mortgage payoff

amount.       In fact petitioner stated that the termination of the



       6
        Petitioner relies on Haville v. Haville, 825 N.E.2d 375,
379 (Ind. 2005) (Shepard, C.J., concurring), to support his
argument that the obligation to pay maintenance terminates by
operation of Indiana law. In Haville the concurring opinion
states that “Even during the days of alimony, the rule was that
periodic alimony payments made to support a former spouse (as
opposed to alimony provided in lieu of a share of property)
terminated upon the death of the * * * [payee spouse].” Id.
(citing 1949 Ind. Acts ch. 120, s. 3, p. 313, and White v. White,
338 N.E.2d 749 (Ind. Ct. App. 1975)). While this statement
appears to be favorable to petitioner, his reliance on this
concurring opinion is misplaced. The issue in Haville was
whether maintenance may be ordered to continue after the death of
the payor spouse; the majority never addressed the effect of the
death of the payee spouse on maintenance. Id. at 376.
Furthermore, the authority relied on by the concurring opinion
does not state that the obligation to pay maintenance terminates
on death of the payee spouse. Rather, the statute and the
opinion cited in the concurrence state that a court may provide
for the discontinuance or reduction of periodic payments of
alimony upon death or remarriage of the payee spouse. See White
v. White, supra at 752. No Indiana statute or opinion says that
the payor’s obligation to pay alimony terminates upon the death
of the payee spouse.
                                 - 8 -

payments was tied to the mortgage payoff period and not a

particular need of Ms. Moore.    We have no reason to conclude that

petitioner’s obligation to reimburse the amount of the mortgage

payoff would have terminated on Ms. Moore’s death.         Hence, the

payments do not satisfy the requirements of section 71(b)(1)(D),

and petitioner is not entitled to deduct as alimony the

$21,700.82 of payments to his wife in 2006.7

     To reflect the foregoing,

                                              Decision will be entered

                                         under Rule 155.




     7
        Because petitioner fails to show that the payments comply
with subpar. (D), we need not determine whether they satisfied
subpar. (B).
