                          T.C. Memo. 1998-9



                       UNITED STATES TAX COURT



                 ANTONIO T. CROTEAU, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 814-96.                       Filed January 12, 1998.



     Antonio T. Croteau, pro se.

     Joan S. Dennett, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION

     CHIECHI, Judge:   Respondent determined a deficiency of

$9,648 in, and an accuracy-related penalty of $1,930 on,

petitioner's Federal income tax for 1993.

     The issues for decision are:

     (1)   Are certain payments that petitioner Antonio T. Croteau

(Mr. Croteau) made during 1993 to or on behalf of Jeanne Anne
                                 - 2 -


Marie Croteau (Ms. Croteau) deductible for that year as alimony

or separate maintenance payments under section 215(a)?1   We hold

that they are not.

     (2)    Is petitioner liable for 1993 for the accuracy-related

penalty under section 6662(a)?    We hold that he is.

                          FINDINGS OF FACT

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

     Petitioner resided in Whitefish, Montana, at the time the

petition was filed.

     Petitioner married Ms. Croteau in May 1981.    They separated

in November 1992.

     On January 13, 1993, petitioner and Ms. Croteau executed a

marital settlement agreement (agreement) which petitioner had

prepared.    In preparing the agreement, petitioner used as a model

a marital settlement agreement that had been entered into by his

son and the former wife of his son.

     On January 15, 1993, Mr. Croteau filed a petition in the

Superior Court of California, county of Ventura, for dissolution

of his marriage to Ms. Croteau (petition for dissolution of

marriage).   The petition for dissolution of marriage was a

preprinted form on which Mr. Croteau provided certain information

requested by the form.   That preprinted form stated, inter alia:

1
   Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect for the year at issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
                                   - 3 -


"Petitioner requests confirmation as separate assets and obliga-

tions the items listed".       Mr. Croteau did not list any such items

in the petition for dissolution of marriage.

     The agreement was attached to and filed with the petition

for dissolution of marriage.       The agreement provided in pertinent

part as follows:

     I, Antonio Theodore Croteau husband and I, Jeanne Anne
     Marie Croteau wife agree as follows:

     I.   GENERALLY:       We are now husband and wife. * * *

               *       *       *     *     *     *     *

          C.   We now intend, by this agreement, to make a
     final and complete settlement of all our rights and
     obligations concerning division of property, and spous-
     al support.

               *       *       *     *     *     *     *

     III. SUPPORT PAYMENTS TO SPOUSE: In consideration of
     the other terms of this agreement, and whereas both
     spouses are fully self-supporting, both parties waive
     all right or claim which they may now have to receive
     support or maintenance from the other. No court shall
     have jurisdiction to award spousal support at any time
     regardless of any circumstances that may arise.

     IV. DIVISION OF COMMUNITY PROPERTY AND DEBTS: The
     parties warrant and declare under penalty of perjury
     that the assets and liabilities divided in this agree-
     ment constitute all their community and quasi-community
     assets and liabilities. In the event that the division
     is unequal, the parties knowingly and intelligently
     waive an equal distribution of the community property.

          A.   Husband is awarded and assigned the following
     assets as his share of the community property:

               *       *       *     *     *     *     *

          B.    Wife is awarded and assigned the following
                           - 4 -


assets as her share of the community property:

            1.   1990 Chevrolet Pick Up, license no.
                 3Z23039.
            2.   1986 Country Camper motorhome, license
                 no. 2EAE391.
            3.   1986 Suzuki Samurai, license no.
                 1SDJ835.
            4.   U-Save Trailer, license no. 1AH6844.
            5.   Log cabin on Highway 2 at McGregor Lake,
                 Montana.
            6.   Household possessions including jewelry
                 collection.
            7.   Husband shall forthwith remove his name
                 from registration and registration shall
                 be solely in wife's name.

      C.    Debts:

            1.   Husband Antonio Theodore Croteau agrees
                 to deliver the aforementioned vehicles
                 free and clear of any liens, he also
                 shall make payments on the McGregor Lake
                 cabin until it is fully paid for.

            2.   Husband agrees to maintain insurance on
                 the aforementioned vehicles until Janu-
                 ary 1st, 1994.

           *     *    *       *      *   *    *

V.    EQUALIZATION PAYMENT:

In the interest of fairness, and in consideration of the
manner in which the property was divided, husband shall pay
to wife the following sums as a division of the community
property. Husband agrees to pay $1000.00 per month begin-
ning on April 1st, 1993 and ending April lst, 1995. He also
shall pay wife $15,000.00 for moving expenses also due April
1st, 1993. Husband also agrees to pay health insurance for
wife and any auto repairs or maintenance on the aforemen-
tioned vehicles or other necessities from January 1st, 1993
through December 31, 1993, not to exceed $10,000.00 total.

VI.   RESERVATION OF JURISDICTION:

The parties agree that the court shall have jurisdic-
tion to make whatever orders may be necessary or desir-
                                 - 5 -


     able to carry out this agreement and to divide equally
     between the parties any community assets or liabilities
     omitted from division under this agreement.

     VII. ADVICE OF COUNSEL:

     The parties recognize that the termination of the
     marriage, division of marital property, and payment
     agreement will be determined by this instrument. We
     recognize that we each have a right to seek advice from
     independent counsel of our own choosing and that we
     knowingly and with due regard for the importance of
     same have elected to proceed with this agreement.

               *     *       *      *    *    *    *

     IX.   PRESENTATION TO COURT:

     This agreement shall be presented to the court in any
     divorce proceeding between the parties, it shall be
     incorporated in the Judgement therein, the parties
     shall be ordered to comply with all its provisions, and
     all warranties and remedies provided in this agreement
     shall be preserved.

     X.    DISCLOSURES:

     Each party has made a full and honest disclosure to the
     other of all current finances and assets, and each
     enters into this agreement in reliance thereon. Each
     warrants to the other and declares under penalty of
     perjury that the assets and liabilities divided in this
     agreement constitute all of their community assets and
     liabilities.

     XI.   BINDING EFFECT:

     This agreement, and each provision thereof, is ex-
     pressly made binding upon heirs, assigns, executors,
     administrators, representatives, and successors in
     interest of each party.

     During 1993, petitioner made payments by check to or on

behalf of Ms. Croteau that totaled $33,368.   Of that total

amount, $10,642 was paid pursuant to that portion of the agree-
                               - 6 -


ment entitled "DIVISION OF COMMUNITY PROPERTY AND DEBTS" and

approximately $22,250 was paid pursuant to that portion of the

agreement entitled "EQUALIZATION PAYMENT".

     Petitioner filed a U.S. Individual Income Tax Return (re-

turn) for 1993, in which he claimed a deduction for alimony in

the amount of $34,368.

     In the notice of deficiency (notice) issued to petitioner

with respect to his taxable year 1993, respondent determined that

petitioner is not entitled to the alimony deduction that he

claimed in his 1993 return and that he is liable for the

accuracy-related penalty under section 6662(a).2

                              OPINION

     Petitioner has the burden of proving error in respondent's

determinations.   Rule 142(a); Welch v. Helvering, 290 U.S. 111,

115 (1933).

Claimed Alimony Deduction

     Section 215(a) allows an individual to deduct alimony or

separate maintenance payments made by such individual during his

or her taxable year.   Section 215(b) defines the term "alimony or

separate maintenance payment" to mean any alimony or separate

maintenance payment as defined in section 71(b) that is

2
   Respondent's disallowance of the alimony deduction claimed by
petitioner in his 1993 return resulted in an increase in peti-
tioner's adjusted gross income. Consequently, respondent also
made adjustments in the notice totaling $688 to the itemized
deductions that petitioner claimed in his 1993 return.
                                - 7 -


includible in the gross income of the recipient under section 71.

Neither section 215 nor section 71 applies if the spouses file a

joint return.     Sec. 71(e).

     Section 71(b)(1) defines the term "alimony or separate main-

tenance payment" to mean any cash payment 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 sepa-
     rate 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.

     Petitioner contends that during 1993 he made payments

totaling $33,8923 to or on behalf of Ms. Croteau, which consti-

tute alimony or separate maintenance payments as defined in

section 215(b).    All but $1,000 of the total payments claimed by

petitioner were made by checks that are part of the record in

this case.   Petitioner contends that he made the remaining $1,000

payment in cash.    Except for his uncorroborated, self-serving

3
   Although petitioner claimed a total alimony deduction of
$34,368 in his 1993 return, he conceded at trial that he is not
entitled to $476 of that amount.
                               - 8 -


testimony on which we are unwilling to rely, there is no evidence

in the record to support petitioner's claim as to that $1,000

payment.   Consequently, in the event that the Court were to

decide that petitioner is entitled to deduct under section 215(a)

all or a portion of the payments that he made to or on behalf of

Ms. Croteau during 1993, the maximum amount of such a deduction

would be $32,892.

     We shall now address whether petitioner has established that

his liability to make the payments at issue terminated upon the

death of Ms. Croteau because resolution of that question will be

dispositive of the issue presented under section 215(a).   The

agreement is silent as to whether petitioner was liable to make

the payments at issue after the death of Ms. Croteau.   Conse-

quently, we must look to the effect of State law on that ques-

tion.   See Hoover v. Commissioner, 102 F.3d 842, 846-847 (6th

Cir. 1996), affg. T.C. Memo. 1995-183; Sampson v. Commissioner,

81 T.C. 614, 618 (1983), affd. without published opinion 829 F.2d

39 (6th Cir. 1987).

     Cal. Civ. Code sec. 4801(b) (West 1983), repealed by 1992

Cal. Stat. 162, sec. 3 (effective Jan. 1, 1994), provides:

          (b) Effect of Death or Remarriage. Except as
     otherwise agreed by the parties in writing, the obliga-
     tion of any party under any order or judgment for the
     support and maintenance of the other party shall termi-
     nate upon the death of either party or the remarriage
     of the other party.

If the payments at issue were for the support and maintenance of
                                 - 9 -


Ms. Croteau within the meaning of Cal. Civ. Code sec. 4801(b),

they would terminate at the death of Ms. Croteau, Cal. Civ. Code

sec. 4801(b), and would comply with the definitional requirement

for alimony or separate maintenance payments that is set forth in

section 71(b)(1)(D).   If the payments at issue were for the

division of community property, they would not terminate at the

death of Ms. Croteau, cf. Lipka v. Lipka, 386 P.2d 671, 674 (Cal.

1963); Cal. Civ. Code sec. 4801(b), and would not comply with

that definitional requirement.

      We find the terms of the agreement to be unequivocal in

providing (1) that petitioner and Ms. Croteau waived all right or

claim that they may have had to receive support or maintenance

from the other4 and (2) that all payments which petitioner was to

make to or on behalf of Ms. Croteau were for the division of

their community property.5   On the instant record, we find that

4
    The agreement stated in pertinent part:

    SUPPORT PAYMENTS TO SPOUSE. In consideration of the other
    terms of this agreement, and whereas both spouses are fully
    self-supporting, both parties waive all right or claim
    which they may now have to receive support or maintenance
    from the other. No court shall have jurisdiction to award
    spousal support at any time regardless of any circumstances
    that may arise.
5
   Indeed, petitioner conceded at trial that the payments at
issue were made either under the portion of the agreement enti-
tled "DIVISION OF COMMUNITY PROPERTY AND DEBTS" or the portion of
the agreement entitled "EQUALIZATION PAYMENT". The portion of
the agreement entitled "DIVISION OF COMMUNITY PROPERTY AND DEBTS"
provided in pertinent part:
                                                   (continued...)
                              - 10 -


the payments at issue were not for the support and maintenance of

Ms. Croteau within the meaning of Cal. Civ. Code sec. 4801(b),

but were for the division of the community property of petitioner

and Ms. Croteau.

      Petitioner attempts to disavow the agreement.   He claims

that he and Ms. Croteau intended that the payments at issue were

to be for the support of Ms. Croteau and that they did not intend

that such payments were to be for the division of their community

property.   On the record before us, we shall not allow petitioner

to disavow the agreement into which he and Ms. Croteau entered.6

5
 (...continued)
   The parties warrant and declare under penalty of perjury
   that the assets and liabilities divided in this agreement
   constitute all their community and quasi-community assets
   and liabilities. In the event that the division is un-
   equal, the parties knowingly and intelligently waive an
   equal distribution of the community property.

The portion of the agreement entitled "EQUALIZATION PAYMENT"
stated:

    In the interest of fairness, and in consideration of the
    manner in which the property was divided, husband shall pay
    to wife the following sums as a division of the community
    property. Husband agrees to pay $1000.00 per month begin-
    ning on April 1st, 1993 and ending on April 1st, 1995. He
    also shall pay wife $15,000.00 for moving expenses also due
    April 1st, 1993. Husband also agrees to pay health insur-
    ance for wife and any auto repairs or maintenance on the
    aforementioned vehicles or other necessities from January
    1st, 1993 through December 31, 1993, not to exceed
    $10,000.00 total.
6
   Under California law, the agreement is a contract which is
governed by the same principles applicable to contracts gener-
ally. See In re Marriage of Hasso, 280 Cal. Rptr. 919, 922 (Cal.
                                                   (continued...)
                              - 11 -


See Palo Alto Town & Country Village, Inc. v. Commissioner, 565

F.2d 1388, 1390 (9th Cir. 1977), remanding T.C. Memo. 1973-223;

Baxter v. Commissioner, 433 F.2d 757, 759 (9th Cir. 1970), affg.

T.C. Memo. 1969-87; Meredith Corp. v. Commissioner, 102 T.C. 406,

438 (1994).

     Based on our examination of the entire record before us, we

find (1)(a) that petitioner has failed to persuade us that the

payments at issue were for the support and maintenance of Ms.

Croteau within the meaning of Cal. Civ. Code sec. 4801(b) and

(b) that, consequently, Cal. Civ. Code sec. 4801(b), which

requires the obligation of a party under an order or judgment for

the support and maintenance of the other party to terminate upon

the death of either party, does not apply to those payments and

(2) that petitioner has failed to establish that the payments at

issue satisfy the definitional requirement for alimony or sepa-

rate maintenance payments that is set forth in section

71(b)(1)(D).   Accordingly, petitioner has failed to show that

6
 (...continued)
App. 1st 1991). Under California contract law, extrinsic evi-
dence concerning the facts and circumstances surrounding the
execution of a property settlement agreement is not admissible to
vary or alter that agreement if the terms of the contract are
susceptible of only one reasonable interpretation. See Cal. Civ.
Proc. Code sec. 1856 (West 1983); In re Marriage of Iberti, 64
Cal. Rptr. 2d 766, 768-769 (Cal. App. 2d 1997); see also Cal.
Civ. Code sec. 1638 (West 1985). We conclude that the terms of
the agreement are susceptible to only one reasonable interpreta-
tion. Consequently, we shall disregard the extrinsic evidence
offered by petitioner concerning the alleged terms of the agree-
ment, which conflict with the actual terms of the agreement.
                              - 12 -


those payments are alimony or separate maintenance payments

within the meaning of section 215(b).    Therefore, respondent's

determination disallowing the alimony deduction claimed by

petitioner for 1993 is sustained.

Section 6662(a)

     Section 6662(a) imposes an addition to tax equal to 20

percent of the underpayment of tax attributable to, inter alia,

negligence or disregard of rules or regulations under section

6662(b)(1).   For purposes of section 6662(a), the term "negli-

gence" includes any failure to make a reasonable attempt to

comply with the Internal Revenue Code, and "disregard" includes

any careless, reckless, or intentional disregard.    Sec. 6662(c).

Negligence has also been defined as a lack of due care or failure

to do what a reasonable person would do under the circumstances.

Leuhsler v. Commissioner, 963 F.2d 907, 910 (6th Cir. 1992),

affg. T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C.

686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990).

     The accuracy-related penalty under section 6662(a) does not

apply to any portion of an underpayment if it is shown that there

was reasonable cause for, and that the taxpayer acted in good

faith with respect to, such portion.    Sec. 6664(c)(1).   The

determination of whether a taxpayer acted with reasonable cause

and in good faith depends upon the pertinent facts and circum-

stances, including the taxpayer's efforts to assess his or her
                              - 13 -


proper tax liability and the knowledge and experience of the

taxpayer.   Sec. 1.6664-4(b)(1), Income Tax Regs.

     Petitioner makes no argument concerning respondent's deter-

mination under section 6662(a) except for his claim, which we

have rejected, that he and Ms. Croteau did not intend that the

terms of the agreement control the payments at issue.    Based on

our examination of the entire record before us, we find that

petitioner has failed to show that he acted with reasonable cause

and in good faith, or that he otherwise exercised due care or

made a reasonable attempt to comply with the Internal Revenue

Code, when he claimed the alimony deduction at issue.    Accord-

ingly, we sustain respondent's determination imposing the

accuracy-related penalty under section 6662(a) for 1993.

     To reflect the foregoing,



                                      Decision will be entered

                                 for respondent.
