                  T.C. Summary Opinion 2007-137



                      UNITED STATES TAX COURT



  MICHELE K. GARNER AND ROGER ALLEN GARNER, JR., Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6291-06S.                Filed August 6, 2007.


     Michele K. Garner and Roger Allen Garner, Jr., pro sese.

     Sara J. Barkley, for respondent.



     ARMEN, 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.1    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.


     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2003.
                                - 2 -

     Respondent determined a deficiency in petitioners’ Federal

income tax for 2003 of $2,400 on the basis of the disallowance of

an alimony deduction for payments made to petitioner husband’s

ex-wife.    The sole question presented in this case is whether

those payments met the definition of “alimony” under the Internal

Revenue Code.    As we are required to hold that the payments at

issue were not alimony, we must sustain respondent’s

determination.

                             Background

     Some of the facts have been stipulated, and they are so

found.    We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     At the time the petition was filed, Michele K. Garner and

Roger Allen Garner, Jr. (Mr. Garner), jointly referred to herein

as petitioners, resided in Colorado.      They moved there from

Georgia in 2004.

     Mr. Garner and Lisa B. Garner (ex-wife) were married in

Georgia in December 1983.    They were divorced there in November

2002.    The section of the marital Settlement Agreement labeled

“ALIMONY” provides that Mr. Garner will pay his ex-wife “$800 per

month as alimony” for 10 years.    That section of the Settlement

Agreement goes on to use the phrase “lump sum alimony” without

further explanation or qualification.      The Settlement Agreement
                              - 3 -

also provides for the division of real and marital property, as

well as child support and child custody.

     Mr. Garner credibly testified that he did not have legal

representation through the completion of the divorce proceedings,

and that his ex-wife’s attorney assured him that his monthly

payments would be tax deductible.   Petitioners also credibly

testified that, at the last minute, the ex-wife’s attorney added

the words “lump sum” into the final draft of the Settlement

Agreement; although suspicious of the change, petitioners could

not, without independent representation, foresee its impact.

     Pursuant to the Settlement Agreement, Mr. Garner paid his

ex-wife $9,600 in 2003, and petitioners claimed a deduction in

that amount on their tax return.2   Respondent denied the

deduction and determined a deficiency of $2,400 on the ground

that the payments made in 2003 did not meet the definition of

alimony under the Internal Revenue Code.




     2
        The fact that this amount was paid through an Income
Deduction Order (wage garnishment) has no impact on the current
proceedings. We note, however, that there appears to be a
discrepancy between the number of payments required under the
terms of the Settlement Agreement and those being enforced via
the wage garnishment.
                              - 4 -

                           Discussion3

     Section 71(a) provides the general rule that alimony

payments are included in the gross income of the payee spouse;

section 215(a) provides the complementary general rule that

alimony payments are tax deductible by the payor spouse in “an

amount equal to the alimony or separate maintenance payments paid

during such individual’s taxable year.”

     The term “alimony” means any alimony as defined in section

71, the relevant provision of which explains:

          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 * * * 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


     3
        As the issue for decision is essentially legal in nature,
we decide the instant case without regard to the burden of proof.
                                - 5 -


                      (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.

     Both parties agree that Mr. Garner’s payments to his ex-wife

satisfied the requirements set out in section 71(b)(1)(A), (B),

and (C).   The parties do not agree, however, whether the

requirement to make payments would have terminated in the event

of the ex-wife’s death.   See sec. 71(b)(1)(D).

     Although section 71(b)(1)(D) originally required that a

divorce or separation instrument affirmatively state that

liability for payments terminate upon the death of the payee

spouse in order for the payments to be considered alimony, the

statute was retroactively amended in 1986 so that such payments

now qualify as alimony as long as termination of such liability

would occur upon the death of the payee spouse by operation of

State law.4   Hoover v. Commissioner, 102 F.3d 842, 845-846 (6th

Cir. 1996), affg. T.C. Memo. 1995-183.   If the payor is liable

for any qualifying payment after the recipient’s death, none of

the related payments required will be deductible as alimony by

the payor.    See Kean v. Commissioner, 407 F.3d 186, 191 (3d Cir.



     4
        Other amendments to sec. 71 also removed rules applicable
to deducting payments when the period for payments is more than
10 years. See Deficit Reduction Act of 1984, Pub. L. 98-369 sec.
422(a), 98 Stat. 795.
                                - 6 -

2005), affg. T.C. Memo. 2003-163.    Here, as the Settlement

Agreement itself does not provide any conditions for the

termination of Mr. Garner’s payments to his ex-wife, we look to

Georgia State law to resolve the issue.    Morgan v. Commissioner,

309 U.S. 78, 80-81 (1940); see also, e.g., Kean v. Commissioner,

supra; Sampson v. Commissioner, 81 T.C. 614, 618 (1983), affd.

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

Commissioner, T.C. Memo. 2000-373 (stating “[a]lthough Federal

law controls in determining [the taxpayer’s] income tax liability

* * *, State law is necessarily implicated in the inquiry

inasmuch as the nature of [the payor’s] liability for the

payment” was based in State law), affd. 36 Fed. Appx. 400 (10th

Cir. 2002).

     Under Georgia law, alimony is defined as an allowance out of

one party’s estate, made for the support of the other party when

living separately.    Ga. Code Ann. sec. 19-6-1(a) (LexisNexis

2004).   It may be either temporary or permanent.     Id.   Permanent

alimony is further characterized as either “periodic” alimony or

“lump sum” alimony.    Winokur v. Winokur, 365 S.E.2d 94, 95 (Ga.

1988).   Lump sum alimony may be paid in installments.      See id.

The difference between the two under Georgia law is that the

obligation to pay periodic alimony terminates at the death of

either party, yet the obligation to pay lump sum alimony in

installments over a period of time does not.    Id.
                               - 7 -

     The Georgia Supreme Court has explained that the obligation

to pay lump sum alimony does not terminate upon the death of

either party because lump sum alimony is in the nature of a

property settlement, regardless of whether it is designated as

alimony. Id.   The fact that there may be an actual property

settlement apart from any payments is irrelevant.   See Hopkinson

v. Commissioner, T.C. Memo. 1999-154 (stating that the inquiry is

not whether the payments were alimony or a property settlement

based on the facts and circumstances of the case but only whether

the requirements of section 71 are met).

     The Georgia Supreme Court has also established the following

test to be used in determining whether particular payments are

lump sum alimony payable in installments, as opposed to periodic

alimony:   “If the words of the documents creating the obligation

state the exact amount of each payment and the exact number of

payments to be made without other limitations, conditions or

statements of intent, the obligation is one for lump sum alimony

payable in installments.”   Winokur v. Winokur, supra at 96; see

also Hopkinson v. Commissioner, supra.

     Unfortunately for petitioners, the combination of the ex-

wife’s attorney’s addition of the words “lump sum” and the fact

that the episodic payments are for an exact amount and for a

fixed period of time (i.e., $800 per month for 10 years) changed

the nature of the payments from periodic alimony to something
                                - 8 -

entirely different:    Lump sum alimony which is not, despite what

petitioners may have been assured, deductible from petitioners’

income as alimony.    Thus, we hold that the $9,600 paid to Mr.

Garner’s ex-wife in 2003 pursuant to the Settlement Agreement

does not qualify to be deducted as alimony paid by petitioners

under section 215.    Sec. 71(b)(1)(D); see Mukherjee v.

Commissioner, T.C. Memo. 2004-98.

     Petitioners have asked us to reform the Settlement Agreement

to more properly reflect the Federal tax intentions of the

parties, particularly given the circumstances under which the

Settlement Agreement was entered into.    As a court of limited

jurisdiction, we are unable to do so.    See, e.g., Commissioner v.

McCoy, 484 U.S. 3, 7 (1987); Hays Corp. v. Commissioner, 40 T.C.

436, 442-443 (1963), affd. 331 F.2d 422 (7th Cir. 1964); see also

Woods v. Commissioner, 92 T.C. 776, 784-787 (1989); Hopkinson v.

Commissioner, supra.    We do note, however, that the Georgia State

courts may have jurisdiction over changes to the Settlement

Agreement and would be the proper forum for such disputes.

     In sum, we found petitioners to be very straightforward and

honest, as well as well prepared for trial.    Unfortunately, the

Internal Revenue Code is very specific in its requirements, and

Mr. Garner’s payments to his ex-wife in 2003 did not meet the

requirement outlined in section 71(b)(1)(D) by virtue of Georgia

State law.   Accordingly, we must hold that, in the instant case,
                              - 9 -

Mr. Garner’s payments made to his ex-wife in 2003 did not satisfy

all of the conditions set forth in section 71 and are thus not

properly deductible as alimony for the taxable year in issue.

     To reflect our disposition of the disputed issue,



                                        Decision will be entered

                                   for respondent.
