                  T.C. Summary Opinion 2009-24



                     UNITED STATES TAX COURT



               SARA LYNN WILLIAMSON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 148-08S.                 Filed February 23, 2009.



     Sara Lynn Williamson, pro se.

     Deborah K. McKay, 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



     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2005,
the taxable year at issue. All monetary amounts are rounded to
the nearest dollar.
                                - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency of $6,025 in petitioner’s

Federal income tax for 2005.    The sole issue for decision is

whether the payment petitioner made to her ex-husband in 2005 met

the definition of “alimony” under the Internal Revenue Code.

Because we hold that the payment was not alimony, we 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, petitioner resided in

the State of Illinois.

     The marriage between petitioner and her ex-husband was

dissolved in 2005 pursuant to a Dissolution of Marriage

incorporating a Marital Settlement Agreement (MSA).

     The MSA’s Article VI, Maintenance, explained very simply and

very clearly that petitioner and her ex-husband each waived

maintenance from the other.

     The MSA’s Article VII, Property Settlement, provided for a

property settlement regarding, among other things, the marital

residence.   According to the MSA, petitioner was to refinance the

property, pay off its outstanding mortgages (as well as one-half
                                - 3 -

of the outstanding marital debts), and split any remaining

proceeds with her ex-husband.   Petitioner explained at trial that

she paid her ex-husband $26,181 in order to extinguish his

interest in the property.

     Petitioner deducted $26,181 as alimony on her 2005 Federal

income tax return.

     Respondent disallowed the claimed deduction because the

payment did not constitute alimony under section 71.   Mechanical

adjustments to petitioner’s Federal income tax followed, and

respondent determined a deficiency of $6,025.

                            Discussion2

     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 amount received as alimony or

separate maintenance payments 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--




     2
        The issue for decision is essentially legal in nature;
accordingly, we decide it without regard to the burden of proof.
                               - 4 -

               (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

                    (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.

     Aside from the fact that petitioner and her ex-husband each

expressly waived their right to maintenance from the other,

payments are deductible as alimony only if all four requirements

of section 71(b)(1) are met.   Both parties agree that

petitioner’s payment to her ex-husband satisfied the requirements

set out in section 71(b)(1)(A), (B), and (C).   The parties

disagree, however, whether the requirement to make the payment

would have terminated in the event of petitioner’s ex-husband’s
                                 - 5 -

death.   See sec. 71(b)(1)(D).   Because it is clear that

petitioner’s payment to her ex-husband would have been required

even in the event of his death, we agree with respondent that the

payment was not alimony.

     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 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.

Hoover v. Commissioner, 102 F.3d 842, 845-846 (6th Cir. 1996),

affg. T.C. Memo. 1995-183.   Accordingly, we look to Illinois

State law to resolve the issue.     Morgan v. Commissioner, 309 U.S.

78, 80-81 (1940); see also, e.g., Kean v. Commissioner, 407 F.3d

186, 191 (3d Cir. 2005), affg. T.C. Memo. 2003-163; 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 that “Although 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
                               - 6 -

State law), affd. 36 Fed. Appx. 400 (10th Cir. 2002).

     Interpreting a marital settlement agreement based in

Illinois law is a matter of contract construction; unless the

agreement is incomplete or ambiguous, the language of the

agreement itself controls.   See, e.g., Michaelson v. Michaelson,

834 N.E. 2d 539, 543-544 (Ill. App. Ct. 2005); Dundas v. Dundas,

823 N.E. 2d 239, 241 (Ill. App. Ct. 2005).   Here, the relevant

provision of the MSA pursuant to which petitioner paid her ex-

husband was Article VII, Property Settlement.   Petitioner’s

testimony at trial confirmed that the payment was made to

compensate him for his interest in the former marital residence.

There is absolutely no ambiguity here, and property settlements

are not “alimony”.   See, e.g., Riley v. Commissioner, 649 F.2d

768 (10th Cir. 1981), affg. T.C. Memo. 1979-237.

     Further, the MSA’s article XIV explains that the heirs and

assigns of each party are designated to take any necessary steps

to effect its provisions, making it clear that, at the very

least, the property settlement provisions were intended to

survive the death of either petitioner or her ex-husband.

Because the property settlement was intended to survive the death

of petitioner’s ex-husband, the payment made pursuant to it could

not have been alimony under section 71(b)(1)(D).

     For the reasons discussed above, we sustain respondent’s

determination that petitioner’s payment to her ex-husband in 2005
                              - 7 -

did not satisfy the statutory requirements of section 71, and,

accordingly,


                                      Decision will be entered

                              for respondent.
