                      129 T.C. No. 12



                UNITED STATES TAX COURT



          NEIL JEROME PROCTOR, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 2813-06.              Filed October 10, 2007.



     P and his spouse (S) divorced in December 1993.
The divorce decree required P and S to share equally
their children’s uninsured medical and dental costs.
The divorce decree also required P, pursuant to the
Uniformed Services Former Spouses’ Protection Act, 10
U.S.C. sec. 1408 (2000), to pay S 25 percent of his
military retirement pay. The divorce decree did not
indicate whether the payments with respect to P’s
military retirement should be included in gross income
or deducted as alimony, or whether such payments were
to terminate upon the death of S.

     P paid S $6,074 in 2002 and deducted the entire
amount as alimony. R determined, in a notice of
deficiency, that the payments were not alimony and,
therefore, were not deductible.
                               - 2 -

          1. Held: P’s payments to S relating to his
     children’s dental bills are, pursuant to sec.
     71(c)(3),1 child support.

          2. Held, further, P’s payments to S relating to
     her share of his military retirement pay are alimony
     and, therefore, deductible pursuant to sec. 215.


     Neil Jerome Proctor, pro se.

     Pamela L. Mable, for respondent.



                              OPINION


     FOLEY, Judge:   The issues for decision are what portion of

certain lump-sum payments made pursuant to a divorce decree

qualifies as child support and what portion qualifies as alimony.

                            Background

     Petitioner and Liza Holdman (Ms. Holdman), who were married

in 1979, had two children, Dianne and Kimberly.   On December 10,

1993, the Superior Court of Pulaski County, Georgia (Superior

Court), entered a Final Judgment and Decree (divorce decree)

terminating petitioner and Ms. Holdman’s marriage.   The divorce

decree required petitioner to pay $675 per month in child

support, maintain medical and dental insurance for each child,

and share equally with Ms. Holdman any medical and dental costs



     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended.
                               - 3 -

not covered by insurance.   The divorce decree also required

petitioner, who was an active member of the U.S. Navy at the time

of the divorce, to pay Ms. Holdman, pursuant to the Uniformed

Services Former Spouses' Protection Act (USFSPA), 10 U.S.C. sec.

1408 (2000), 25 percent of his disposable retirement pay

(retirement payments).

     On June 30, 2000, petitioner retired from the U.S. Navy.     In

August of the same year, petitioner began receiving his

retirement pay, but he failed to make payments to Ms. Holdman as

set forth in the divorce decree.   On December 4, 2000, Ms.

Holdman initiated a contempt proceeding against petitioner for

his failure to comply with the divorce decree.   The Superior

Court, on June 26, 2001, ordered (the June 26 order) petitioner

to pay $1,463 relating to the children’s past dental bills.     The

June 26 order also required petitioner to pay $68 a month

relating to his portion of Kimberly’s then-current dental bills

and $321 per month representing Ms. Holdman’s share of

petitioner’s retirement pay.   Petitioner failed to comply with

the order.   In response, Ms. Holdman initiated three additional

contempt proceedings.

     On December 10, 2001, the Superior Court issued an order

(the December 10 order) that required petitioner to comply with

the June 26 order and decreased the retirement payments to $231
                                - 4 -

per month.   Pursuant to the December 10 order, petitioner paid

$2,774 on May 6, 2002, representing his first payment for his

children’s uninsured dental expenses and Ms. Holdman’s share of

his retirement pay.    Petitioner followed that payment, in 2002,

with six additional payments of $550 (i.e., totaling $3,300).        Of

the $6,074 paid by petitioner in 2002, $2,687 was for his

children’s uninsured dental expenses.

     In July 2003, petitioner filed a Federal income tax return

relating to 2002 and deducted, as alimony, $6,074.      In a

statutory notice of deficiency, dated November 9, 2005, and

relating to 2002, respondent disallowed petitioner’s alimony

deduction.   On February 7, 2006, while residing in Eastman,

Georgia, petitioner filed his petition with the Court.

                             Discussion

     Petitioner deducted, as alimony, the entire $6,074 paid to

Ms. Holdman in 2002.   We must determine what portion, if any, of

this amount was attributable to child support and what portion,

if any, was attributable to alimony.      Petitioner contends that

the entire amount is alimony and is, therefore, deductible.

Respondent contends that none of the amount is deductible because

part of it is child support, and the remaining portion, relating

to Ms. Holdman’s share of petitioner’s retirement pay, is a

division of marital property and does not qualify as alimony.
                                   - 5 -

I.     Child Support

       An individual may generally deduct payments made to a spouse

during the taxable year to the extent those payments are alimony

includable in the spouse’s gross income.       See sec. 215(a) and

(b).    Any payment which the terms of the divorce decree fix as a

sum payable for the support of children is not alimony.        See sec.

71(c)(1).    If any payment is less than the amount specified in

the divorce decree, to the extent the payment does not exceed the

amount required to be paid for child support, such amount shall

be considered support.       See sec. 71(c)(3).   Pursuant to the

divorce decree, petitioner was required to pay Ms. Holdman $8,000

by the end of 2002 with respect to his children’s uninsured

medical expenses and Ms. Holdman’s share of his retirement pay

(i.e., $2,687 relating to his children’s uninsured medical

expenses and $5,313 relating to Ms. Holdman’s share of his

retirement pay).       Petitioner started making payments in 2002.     In

that year, petitioner made lump-sum payments to Ms. Holdman

totaling $6,074 (i.e., $1,926 less than the amount required

pursuant to the divorce decree).       Accordingly, $2,687 of the

$6,074 paid by petitioner in 2002 is, pursuant to section

71(c)(3), child support and cannot be deducted as alimony.          See

Blyth v. Commissioner, 21 T.C. 275 (1953).        We must determine

whether the remaining $3,397 is alimony.
                                - 6 -

II.    Alimony

       Respondent contends that the retirement payments are part of

a property settlement and do not qualify as alimony.     An

individual may generally deduct payments made to a spouse during

the taxable year to the extent that those payments are alimony

includable in the spouse’s gross income.     See sec. 215(a) and

(b).    Section 71(a) requires amounts received as alimony to be

included in gross income.

       In order to qualify as alimony, payments must meet the

requirements of section 71(b)(1)(A) through (D).     Ms. Holdman

received the retirement payments pursuant to a divorce decree.

Thus, such payments meet the requirements of section 71(b)(1)(A).

In addition, petitioner and Ms. Holdman resided in separate

households at the time the payments were made.     Thus, such

payments also meet the requirements of section 71(b)(1)(C).

Respondent contends that the retirement payments do not, however,

meet the requirements of section 71(b)(1)(B) and (D).

       Section 71(b)(1)(B) requires that the divorce instrument

“not designate such payment as a payment which is not includible

in gross income under this section and not allowed as a deduction

under section 215”.    Respondent contends that this prong is not

met because the divorce decree refers to the payments as part of

a division of the marital property.     The classification of a
                               - 7 -

payment as part of the division of marital property does not,

however, preclude the payment from being alimony.    See Benedict

v. Commissioner, 82 T.C. 573, 577 (1984) (stating that “labels

attached to payments mandated by a decree of divorce or marriage

settlement agreement are not controlling”).    While the

designation need not mimic the statutory language of sections 71

and 215, the requirements of subparagraph (B) will generally be

met if there is no “clear, explicit and express direction” in the

divorce decree stating that the payment is not to be treated as

alimony.   See Estate of Goldman v. Commissioner, 112 T.C. 317,

323 (1999), affd. without published opinion sub nom. Schutter v.

Commissioner, 242 F.3d 390 (10th Cir. 2000).    The divorce decree

does not contain such language.   Accordingly, the retirement

payments meet the requirements of section 71(b)(1)(B).

     Section 71(b)(1)(D) provides that there must be no liability

for the payor to make such payments, or for the payor to make

substitute payments, after the death of the payee spouse.

Respondent contends that the retirement payments fail to meet the

requirements of section 71(b)(1)(D) because the divorce decree

does not state whether such payments will terminate upon the

death of Ms. Holdman.   In 1986, Congress amended section

71(b)(1)(D), specifically to remove the requirement that a

divorce instrument expressly state that the liability terminates
                              - 8 -

upon the death of the payee spouse.   See Tax Reform Act of 1986,

Pub. L. 99-514, sec. 1843(b), 100 Stat. 2853.    Consequently,

section 71(b)(1)(D) is satisfied if the liability ceases upon the

death of the payee spouse by operation of law.    Cf. Notice 87-9,

1987-1 C.B. 421.

     The divorce decree provides that the retirement payments

were ordered pursuant to the USFSPA, which states that

     Payments from the disposable retired pay of a member
     pursuant to this section shall terminate in accordance
     with the terms of the applicable court order, but not
     later than the date of the death of the member or the
     date of the death of the spouse or former spouse to
     whom payments are being made, whichever occurs first.

10 U.S.C. sec. 1408(d)(4) (2000).   Accordingly, the retirement

payments will terminate, by operation of law, on the date that

either petitioner or Ms. Holdman dies, whichever occurs first.2

Moreover, the USFSPA provides that “Notwithstanding any other

provision of law, this section does not create any right, title,


     2
       The USFSPA provides that a former spouse may serve upon
the Secretary of Uniformed Services the divorce decree ordering
payments pursuant to the USFSPA. After receipt of such service,
the payments are made directly to the member’s spouse. See 10
U.S.C. sec. 1408(d)(1). While Ms. Holdman did not serve the
Secretary with a copy of the divorce decree or receive payments
directly from the Secretary, the payments were ordered “as
authorized under the Uniformed Services Former Spouses’ Act”.
Prior to enactment of the USFSPA, former spouses had no right to
receive a portion of a member’s military retirement pay. See
McCarty v. McCarty, 453 U.S. 210 (1981). The USFSPA was enacted
to allow courts to award spouses and former spouses an interest
in a member’s military retirement pay. See S. Rept. 97-502
(1982).
                                 - 9 -

or interest which can be sold, assigned, transferred, or

otherwise disposed of (including by inheritance) by a spouse or

former spouse”.   10 U.S.C. sec. 1408(c)(2)(2000).    Petitioner has

no liability to make such retirement payments after the death of

Ms. Holdman.   Thus, the retirement payments meet the requirements

of section 71(b)(1)(D).

     The retirement payments meet the requirements of section

71(b)(1), and pursuant to section 215, petitioner is entitled to

a deduction of $3,387 for alimony payments.3

     Contentions we have not addressed are irrelevant, moot, or

meritless.

     To reflect the foregoing,

                                         An appropriate decision will

                                   be entered.




     3
       In Eatinger v. Commissioner, T.C. Memo. 1990-310, Witcher
v. Commissioner, T.C. Memo. 2002-292, and Pfister v.
Commissioner, 359 F.3d 352 (4th Cir. 2004), affg. T.C. Memo.
2002-198, the Court treated military retirement payments as
property taxable to the former spouse. In those cases, the Court
concluded that the payments were includable in the former
spouse’s gross income pursuant to sec. 61(a)(11), but did not
address whether the payments qualified as alimony, pursuant to
sec. 71. Conversely, in Baker v. Commissioner, T.C. Memo. 2000-
164, the Court agreed with respondent that the military
retirement payments received by a former spouse qualified as
alimony, pursuant to sec. 71.
