                        T.C. Memo. 2003-221



                      UNITED STATES TAX COURT



                MARLIN G. SPRINGER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13228-00.             Filed July 23, 2003.


     Burnell E. Steinmeyer, Jr., and Larry R. Baumann, for

petitioner.

     Albert B. Kerkhove and Henry N. Carriger, for respondent.



                        MEMORANDUM OPINION


     GOEKE, Judge:   Respondent determined a deficiency in

petitioner’s 1996 Federal income tax of $20,394.   The sole issue

for decision is whether a payment of $50,000 petitioner made to
                                - 2 -

his ex-wife in 1996 is deductible as alimony under section

215(a).1

Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.    The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioner resided in

Danbury, Nebraska, at the time he filed his petition.

     Petitioner and Pamela Lynn Springer (Ms. Springer) were

married on November 27, 1970, in Lebanon, Nebraska.2    On January

10, 1995, pursuant to a “Decree of Dissolution” (the divorce

decree), the marriage between petitioner and Ms. Springer was

dissolved in the District Court of Red Willow County, Nebraska.

Petitioner and Ms. Springer also entered into a “Property

Settlement and Custody Agreement” (the marital settlement),

effective January 10, 1995, which was incorporated into the

divorce decree.3


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
     2
      The record in this case does not provide any information
regarding the status of Ms. Springer’s 1996 taxable year and
whether she reported the payment in dispute as income.
     3
      The divorce decree stated that “the Property Settlement
Agreement entered into between the parties is hereby approved,
and the property and debts of the parties are divided and
allocated as set forth therein.” For convenience, subsequent
references to the marital settlement and the divorce decree
                                                   (continued...)
                              - 3 -

     The marital settlement was divided into 28 articles.    In the

preamble, petitioner and Ms. Springer stated that they wished to

enter into a voluntary agreement to determine their respective

property rights and all other matters relating to the dissolution

of their marriage, including matters relating to child custody

and support, spousal support/alimony, division of property,

payment of debts, payments of attorney’s fees, and other matters

incident to the dissolution proceedings.   The marital settlement

reflected that petitioner and Ms. Springer were both represented

by legal counsel throughout the entire proceeding and entered

into the settlement “upon mature consideration and after ample

opportunity to seek the advice of separate counsel”.

     Article 6, entitled “ALIMONY”, required petitioner to pay

“alimony for the support and maintenance” of Ms. Springer.    The

article stated:

          The husband shall pay, through the Clerk of the
     District Court of Red Willow County, Nebraska, non-
     modifiable alimony for the support and maintenance of
     the wife in the sum of One Thousand Five Hundred
     Dollars ($1,500.00) per month, commencing upon the
     first day of February, 1995, and continuing to be due
     and payable on the first day of each month thereafter
     for One Hundred Twenty (120) months, or until the death
     of either party or the remarriage of recipient, if any
     such event occurs prior to said date.

          In addition to the foregoing alimony, the husband
     shall pay, through the Clerk of the District Court of
     Red Willow County, Nebraska, non-modifiable alimony for


     3
      (...continued)
collectively are to the divorce documents.
                               - 4 -

     the support and maintenance of the wife in the sum of
     Fifty Thousand Dollars ($50,000.00) per year for a
     period of five (5) years, commencing on February 1,
     1996, and continuing to be payable on February 1, 1997,
     on February 1, 1998, on February 1, 1999 and on
     February 1, 2000. This portion of the alimony to be
     paid by the husband shall not terminate upon either the
     death of the husband or the remarriage of the wife.
     These alimony payments are due on the first day of
     February each year as set forth above and if not paid
     shall bear interest at the then current judgment rate
     as prescribed by the Nebraska Supreme Court.

     Other articles of the marital settlement discussed property

rights and other marriage dissolution matters.   Article 5

required petitioner to make monthly child support payments.

Article 7 provided for the division of certain real estate

between petitioner and Ms. Springer.   Articles 8 through 13

addressed the division of motor vehicles, bank accounts, business

interests, retirement benefits, household items and personal

effects, and life insurance, investments, and retirement plans.

Article 14 stated that petitioner would be entitled to claim

dependency exemptions for his and Ms. Springer’s children.     Under

article 15, petitioner assumed responsibility for various debts

and liabilities incurred by him and Ms. Springer during the

course of their marriage.   Finally, article 16, entitled

“ADDITIONAL PROPERTY DIVISION”, stated:

          The wife shall be awarded an additional
     $143,000.00, payable on or before February 1, 1995, and
     $50,000.00 plus 6% interest from date of decree to be
     paid on February 1, 2001, as additional property to
     equalize property distribution. Husband shall have the
     right to pay the interest annually or totally with the
     2001 payment.
                               - 5 -

     The marital settlement stated that it was binding on the

parties and their respective legal representatives, successors,

and assigns immediately following the dissolution of the

marriage.   Article 25 of the marital settlement provided that “No

modification of this Agreement shall be binding upon either of

the parties unless reduced to writing and subscribed to by both

parties unless ordered by the court.”   Article 26, entitled

“CAPTIONS”, stated that “Paragraph titles or captions contained

herein are inserted as a matter of convenience and for reference

and in no way define, limit, extend or describe the scope of this

Agreement or any provision hereof.”

     The divorce decree stated that the marital settlement

agreement was approved.   The divorce decree contained the

following provision ordering petitioner to make payments to Ms.

Springer:

          IT IS FURTHER ORDERED that respondent shall pay,
     through the Clerk of the District Court of Red Willow
     County, Nebraska, non-modifiable alimony for the
     support and maintenance of the petitioner in the sum of
     One Thousand Five Hundred Dollars ($1,500.00) per
     month, commencing upon the first day of February, 1995,
     and continuing to be due and payable on the first day
     of each month thereafter for One Hundred Twenty (120)
     months, or until the death of either party or the
     remarriage of recipient, if any such event occurs prior
     to said date. In addition to the foregoing alimony,
     the respondent shall pay, through the Clerk of the
     District Court of Red Willow County, Nebraska, non-
     modifiable alimony for the support and maintenance of
     the petitioner in the sum of Fifty Thousand Dollars
     ($50,000.00) per year for a period of five (5) years,
     commencing on February 1, 1996, and continuing to be
     payable on February 1, 1997, on February 1, 1998, on
                                 - 6 -

     February 1, 1999 and on February 1, 2000. This portion
     of the alimony to be paid by the respondent shall not
     terminate upon either the death of the respondent or
     the remarriage of the petitioner. These alimony
     payments are due on the first day of February each year
     as set forth above and if not paid shall bear interest
     at the then current judgment rate as prescribed by the
     Nebraska Supreme Court. All alimony ordered herein
     shall be a judgment from the date of decree until paid
     in full or released.

The divorce decree also generally incorporated the agreements

contained in the other articles of the marital settlement.

     Petitioner made the $50,000 payment to Ms. Springer in 1996

in satisfaction of article 6 of the marital settlement and as

ordered in the divorce decree.

     Petitioner timely filed Form 1040, U.S. Individual Income

Tax Return, for 1996.   On the Form 1040, petitioner claimed a

deduction for alimony paid of $68,000.4   On or about June 6,

2000, respondent commenced his examination of petitioner’s 1996

return.   On September 22, 2000, respondent issued a notice of

deficiency to petitioner for the taxable year 1996.   In the

notice, respondent disallowed $50,000 of the claimed deduction

for alimony paid on the ground that “Lump-sum cash or property




     4
      Of this amount, $50,000 was attributable to the annual
payment, and it appears that the remaining $18,000 was
attributable to the monthly payments of $1,500 (12 months x
$1,500 = $18,000).
                                - 7 -

settlements are not deductible as alimony.”5   Petitioner timely

filed a petition to this Court seeking a redetermination.

Discussion

     The parties dispute the proper characterization of

petitioner’s $50,000 payment to Ms. Springer in 1996.   Respondent

determined that the $50,000 payment was not deductible by

petitioner because it was in the nature of a property settlement

payment.   Petitioner claims the payment is deductible as alimony

under section 215(a).   The parties’ respective positions are

based on contrary interpretations of the divorce documents and

applicable Nebraska law.

     Generally, the Commissioner’s determination bears a

presumption of correctness, and the burden of proof rests with

the taxpayer.   Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).    The fact that a case is submitted fully stipulated does

not alter the burden of proof, or the requirements otherwise

applicable with respect to adducing proof, or the effect of

failure of proof.   Rule 122(b); Kitch v. Commissioner, 104 T.C.

1, 5 (1995), affd. 103 F.3d 104 (10th Cir. 1996).




     5
      Respondent also decreased petitioner’s total itemized
deductions by $1,500. This was a computational adjustment based
on the increase in petitioner’s adjusted gross income that
resulted from respondent’s disallowance of $50,000 of the claimed
deduction for alimony paid. No other adjustments were made to
petitioner’s 1996 return.
                               - 8 -

     In certain circumstances, if the taxpayer introduces

credible evidence with respect to any factual issue relevant to

ascertaining the proper tax liability, section 7491 places the

burden of proof on the Commissioner.    Sec. 7491(a).    Section

7491(a) applies only if an individual taxpayer complies with

substantiation requirements, maintains required records, and

cooperates fully with reasonable requests by the Commissioner for

witnesses, information, documents, meetings, and interviews.

Sec. 7491(a)(2).   Credible evidence has been described as “‘the

quality of evidence which, after critical analysis, the court

would find sufficient upon which to base a decision on the issue

if no contrary evidence were submitted’”.    Higbee v.

Commissioner, 116 T.C. 438, 442 (2001) (quoting H. Conf. Rept.

105-599, at 240 (1998), 1998-3 C.B. 755, 994).    Section 7491 is

effective with respect to court proceedings arising in connection

with examinations commencing after July 22, 1998.    Internal

Revenue Service Restructuring and Reform Act of 1998, Pub. L.

105-206, sec. 3001(c), 112 Stat. 727.

     The parties stipulated that the examination of petitioner’s

1996 Federal income tax return commenced after the effective date

of section 7491, and petitioner has established that he made the

$50,000 payment to Ms. Springer in 1996 pursuant to the

provisions in the marital settlement and the divorce decree

requiring the payment of “alimony for the support and
                                - 9 -

maintenance” of Ms. Springer.   Although the parties have not

addressed petitioner’s compliance, there is no indication that

petitioner has failed to comply with substantiation requirements,

did not maintain required records, or failed to cooperate with

reasonable requests by respondent for witnesses, information,

documents, meetings, and interviews.    However, the parties’

respective positions are based on their contrary interpretations

of the divorce documents and Nebraska law.    Our resolution of the

issue presented is ultimately based on our interpretations of the

divorce documents and Nebraska law; therefore, which party bears

the burden of proof is not dispositive to our holding.6

     Petitioner claims that the $50,000 payment constitutes

alimony; respondent contends that the payment was in the nature

of a property settlement payment.   Generally, property

settlements incident to a divorce are not taxable events and do

not give rise to deductions or recognizable income.    Sec. 1041;

Estate of Goldman v. Commissioner, 112 T.C. 317, 322 (1999),

affd. without published opinion sub nom. Schutter v.

Commissioner, 242 F.3d 390 (10th Cir. 2000).    Conversely, amounts

received as alimony or separate maintenance payments are taxable

to the recipient and deductible by the payor in the year paid.




     6
      This Court’s interpretation of State law is generally a
question of law and is reviewed de novo. Hoover v. Commissioner,
102 F.3d 842, 844 (6th Cir. 1996), affg. T.C. Memo. 1995-183.
                              - 10 -

Secs. 61(a)(8), 71(a), 215(a).7   The phrase “alimony or separate

maintenance payment” is defined in section 71(b)(1) as any cash

payment satisfying the following four requirements:

               (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.

Respondent concedes that petitioner’s $50,000 payment to Ms.

Springer in 1996 satisfies subparagraphs (A), (B), and (C) of

section 71(b)(1).   The issue in dispute is whether the payment

satisfies subparagraph (D).

     If the terms of the divorce documents or Nebraska law would

have required the annual payments of $50,000 to terminate on the



     7
      Sec. 215(a) provides a general rule that “In the case of an
individual, there shall be allowed as a deduction an amount equal
to the alimony or separate maintenance payments paid during such
individual’s taxable year.”
                               - 11 -

death of Ms. Springer, then these payments are alimony under

section 71 and deductible from petitioner’s gross income under

section 215(a).    See Lovejoy v. Commissioner, 293 F.3d 1208, 1210

(10th Cir. 2002), affg. Miller v. Commissioner, T.C. Memo. 1999-

273.    The parties dispute (1) whether the divorce documents would

have required termination of the annual payments on the death of

Ms. Springer, and (2) whether the liability to make the annual

payments would have terminated under Nebraska law.    Additionally,

respondent argues that the annual payments were intended to be

“alimony in gross” under Nebraska law and that this implies that

petitioner cannot deduct the $50,000 payment.

       Current section 71 is the product of the Deficit Reduction

Act of 1984, Pub. L. 98-369, sec. 422, 98 Stat. 795, and the Tax

Reform Act of 1986, Pub. L. 99-514, sec. 1843(b), 100 Stat. 2853.

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

affg. T.C. Memo. 1995-183, the Court of Appeals for the Sixth

Circuit explained that by the 1984 revision, “Congress

specifically intended to eliminate the subjective inquiries into

intent and the nature of payments that had plagued the courts in

favor of a simpler, more objective test.”    The statute as enacted

in 1984 required that the divorce or separation instrument itself

state that the liability to make payments would terminate on the

payee’s death.    The 1986 amendment eliminated the requirement

that the termination provision be stated in the instrument itself
                                - 12 -

and permitted reference beyond divorce instruments to State law

to determine whether State law specifically provided that the

payments in question would terminate on the payee’s death.      In

analyzing this change, the Court of Appeals for the Sixth Circuit

explained:

          Although the 1986 amendment injected state law
     into the § 71(b)(1) inquiry, the purpose behind the
     1984 revision still stands. A court determining
     whether payments qualify as alimony as defined in § 71
     will turn to state law only to determine whether state
     law, by requiring that the payments terminate upon the
     payee’s death, ensures that the payments satisfy §
     71(b)(1)(D). Congress clearly did not intend courts to
     engage in the very sort of subjective inquiry that had
     prompted the 1984 revision. * * * [Id. at 846.]

     In analyzing questions regarding termination of payments on

the death of the payee, the statutory mandate of section 71 would

have us first look at the language in the divorce instrument to

determine whether liability survives the death of the payee and,

if the instrument is not clear, then determine whether such

liability terminates at death by operation of State law.       Id. at

845-846.     In this case, we hold that although the marital

settlement attached to the divorce decree is not as clearly

worded as it might be, the liability in question would have

terminated at death pursuant to the divorce documents.

Furthermore, we hold that the liability would have terminated at

death pursuant to Nebraska law if the marital settlement is

deemed to have failed to address the issue of termination.
                              - 13 -

I.   Terms of the Divorce Documents

     Petitioner argues that the divorce documents provided for

termination of the annual payments on the death of Ms. Springer.

Petitioner notes that the documents specifically state that the

monthly payments of $1,500 would terminate on the death of either

party or the remarriage of Ms. Springer, whereas the annual

payments would not terminate on the death of petitioner or the

remarriage of Ms. Springer.   Petitioner contends that the only

reasonable interpretation of the two provisions is that the

annual payments would also terminate on the death of Ms.

Springer.

     Respondent contends that the annual payment of $50,000 is

not deductible as alimony by petitioner because the divorce

documents do not specifically state that the annual payments

would terminate on the death of Ms. Springer.   Respondent claims

that the annual payment provision should be analyzed separately

from other payments and property transfers included in the

marital settlement.   Respondent argues that the $50,000 payment

made in 1996 is not deductible if only the language relating to

the annual payments is considered.

     Generally, different types of payments made pursuant to a

divorce decree are not treated as part of a single stream of

payments, but rather each type of payment is analyzed separately

to determine its proper characterization.   Oman v. Commissioner,
                               - 14 -

767 F.2d 290, 293 (6th Cir. 1985), affg. T.C. Memo. 1984-357;

Bernstein v. Commissioner, 622 F.2d 442, 445-446 (9th Cir. 1980),

affg. T.C. Memo. 1978-84; Bartsch v. Commissioner, 18 T.C. 65,

68-69 (1952), affd. per curiam 203 F.2d 715 (2d Cir. 1953).

Respondent, relying on the general rule above,8 argues that we

“should not lump the payments together to arrive at a

‘consolidated’ classification”, and that the two paragraphs

should be interpreted as if they have separate termination

provisions.

     Respondent misapplies the general rule in the context of

this case.    The cases applying the general rule that different

types of payments are not to be treated as a single stream of

payments generally dealt with taxpayers attempting to treat

periodic payments and installment payments as a single stream of

periodic payments.    Under previous versions of sections 71 and

215, periodic payments made pursuant to a decree of divorce or


     8
      Other cases applying the general rule include White v.
Commissioner, 770 F.2d 685 (7th Cir. 1985), revg. 82 T.C. 222
(1984); Houston v. Commissioner, 442 F.2d 40 (7th Cir. 1971),
affg. Schwab v. Commissioner, 52 T.C. 815 (1969); Fidler v.
Commissioner, 231 F.2d 138 (9th Cir. 1956), affg. as modified 20
T.C. 1081 (1953); Estate of Smith v. Commissioner, 208 F.2d 349
(3d Cir. 1953), affg. in part and revg. in part a Memorandum
Opinion of this Court; Martin v. Commissioner, 73 T.C. 255
(1979); Hunt v. Commissioner, 22 T.C. 561 (1954); Glasgow v.
Commissioner, 21 T.C. 211 (1953); Norton v. Commissioner, 16 T.C.
1216 (1951), affd. 192 F.2d 960 (8th Cir. 1951); Burkle v.
Commissioner, T.C. Memo. 1986-394; Miller v. Commissioner, T.C.
Memo. 1981-15; Coker v. United States, 327 F. Supp. 169 (D. Neb.
1971), affd. 456 F.2d 676 (8th Cir. 1972); Tate v. United States,
207 F. Supp. 426 (E.D. Tenn. 1962).
                                - 15 -

separate maintenance were deductible by the payor.     Installment

payments discharging the obligation to pay a principal sum

generally were not periodic payments and thus were not deductible

by the payor.     An exception existed where installment payments

were deemed periodic payments if the payments either (1) lasted

or might have lasted more than 10 years from the date of the

divorce decree, or (2) were contingent upon the death of either

party, the payee’s remarriage, or a change in the economic status

of either party.9

     In the cases respondent relies on, taxpayers attempted to

qualify for the exceptions under prior law by arguing that

installment payments and periodic payments were part of an

overall plan for support and were to be viewed as a single stream

of payments.    These cases involved attempts by taxpayers to

“camouflage” installment payments by means of combining them with

periodic payments.     Bernstein v. Commissioner, supra at 445.     The

payment provisions in the cases under prior law contained

contradictory terms or lacked any indication that they were

intended to be read in conjunction with each other.     These

factual scenarios are readily distinguishable from the instant

situation.     Current law does not involve the issue of whether

payments are periodic or installment payments, and petitioner is


     9
      See Yoakum v. Commissioner, 82 T.C. 128, 136 (1984); former
sec. 71(c)(1); former sec. 1.71-1(d)(3)(i) and (ii), Income Tax
Regs.
                             - 16 -

not attempting to combine the payment periods contained in the

two provisions to meet a periodicity requirement.10    This case

presents a question of interpreting the provisions of the

agreement regarding the effect of the payee’s death, not an issue

regarding consolidation of the stream of payments.

     We find the cases respondent cites, and other cases applying

the general rule prohibiting the merger of different types of

payments, distinguishable from the instant case because those

cases did not deal with a situation where the language in one

payment provision of a divorce document made reference to another

provision or indicated that the payment provision should be read

in conjunction with another part of the document.     The present

issue is whether it is appropriate to review the preceding

paragraph to understand the language in question.     A well-

established principle of contract law is that a writing is

interpreted as a whole, and any writings which are part of the

same transaction should be viewed together.   2 Restatement,




     10
      We are unaware of any cases since the 1984 revision and
1986 amendment to sec. 71 applying the general rule prohibiting
merger of different types of payments. Although this does not
necessarily mean that the general rule prohibiting merger of
different types of payments does not apply because of the change
in law, the factual circumstances in which the general rule was
applied are not as prevalent under current law. In any event,
the facts and circumstances of this case are distinguishable from
prior cases applying the general rule.
                              - 17 -

Contracts 2d, sec. 202 (1997).11   Additionally, an interpretation

that gives a reasonable meaning to all parts of a writing is

preferred to one that leaves portions of the writing meaningless.

Rink v. Commissioner, 47 F.3d 168, 171 (6th Cir. 1995), affg. 100

T.C. 319 (1993); Poison Creek Ranches #1, Ltd. v. Commissioner,

T.C. Memo. 1996-504; Washoe Ranches #1, Ltd. v. Commissioner,

T.C. Memo. 1996-495.   With these principles in mind, we proceed

to examine the divorce documents to determine whether they

provide that there was no liability to make the annual payments

for any period after the death of Ms. Springer.

     Article 6 of the marital settlement is entitled “ALIMONY”

and contains two paragraphs dealing with recurring payments to

Ms. Springer.   Although the caption of article 6 is not

dispositive, the use of parallel language and the positioning of

the paragraphs together in this article is significant.    It is

also noteworthy that article 6 is separate and distinct from the

articles providing for the division of property.   The first

paragraph specifically states that these payments will continue



     11
      Nebraska caselaw provides similar rules regarding the
interpretation of contractual agreements. “‘A contract must be
interpreted as a whole and, if possible, effect must be given to
every part thereof.’” Husen v. Husen, 487 N.W.2d 269, 272 (Neb.
1992) (quoting Crowley v. McCoy, 449 N.W.2d 221, 244 (Neb. 1989))
(analyzing relationship between two payment provisions contained
in property settlement and divorce decree to determine effect of
the payee’s remarriage on the payor’s liability to make alimony
payments); see also Ruble v. Reich, 611 N.W.2d 844, 850 (Neb.
2000) (“We view a contract as a whole in order to construe it.”).
                                - 18 -

to be due and payable for a period of 120 months, “or until the

death of either party or the remarriage of recipient”.    The

second paragraph specifically provides that “This portion of the

alimony” shall not terminate on the death of petitioner or the

remarriage of Ms. Springer.12   Under the first paragraph, the

alimony payments will terminate on the death of either party or

the remarriage of Ms. Springer.    Unlike the monthly payments

provided for in the first paragraph, the annual payments were not

to terminate on either the death of petitioner or the remarriage

of Ms. Springer.   “Reading the agreement from a reasonable,

commonsense perspective”, Estate of Goldman v. Commissioner, 112

T.C. at 323, and interpreting the writing as a whole, we believe

that the initial listing of three events causing termination

followed by the parallel paragraph specifically excluding only

two of those events from termination implies that the occurrence

of the third event would continue to cause termination of the

payments.

     Other language used by petitioner and Ms. Springer indicates

that the annual payments would have terminated on the death of

Ms. Springer.   The marital settlement uses the same phrase in

describing the purpose of both the monthly and annual payments:

“alimony for the support and maintenance of the wife”.    This


     12
      We note that in the divorce decree of the Nebraska court,
the monthly and annual payment provisions are contained in the
same paragraph.
                               - 19 -

phrase indicates that the payments were intended to support Ms.

Springer, as contrasted with the payments provided by article 16

to support her estate or to equalize the property distribution

between her and petitioner.   Interpreting the divorce documents

to mean that the annual payments would not have terminated on the

death of Ms. Springer would lead to the result that if she had

died, then petitioner (or his estate) would have had to make

payments for Ms. Springer’s “support and maintenance” after her

death.    It is illogical and contrary to the accepted use of these

terms in such documents for “support” and “maintenance” to be

required by a decedent.13   Furthermore, acceptance of

respondent’s position would effectively rewrite the second

paragraph to state that the annual payments would not terminate

on the death of petitioner or Ms. Springer, or on the remarriage

of Ms. Springer.

     Contrary to respondent’s contentions, our analysis of the

issue presented does not result in “lumping the payments”

together or making a “consolidated classification” in violation

of the general rule prohibiting the merger of different types of

payments into a single stream of payments.   Rather, our

interpretation is consistent with well-established principles of



     13
      This case is distinguishable from Cunningham v.
Commissioner, T.C. Memo. 1994-474, because the term of the annual
payments in this case is consistent with a period to support the
postdivorce transition of the payee spouse.
                                 - 20 -

contract law that writings should be interpreted as a whole and

the interpretation should give a reasonable meaning to all parts

of the writing.      Accordingly, we find that the divorce documents

provide that the annual payments were to terminate on the death

of Ms. Springer; thus, the $50,000 payment made by petitioner to

Ms. Springer in 1996 is deductible as alimony under section

215(a).

II.   Nebraska Law

      Even if the terms of the divorce documents did not provide

for termination on the death of Ms. Springer, petitioner would

still prevail as long as the annual payments would have

terminated under Nebraska law.14     On brief, the parties addressed

whether Nebraska statutory law provides for the termination of

the annual payments under the facts of this case.     The relevant

statute, Neb. Rev. Stat. section 42-365 (1998), provides:

           When dissolution of a marriage is decreed, the
      court may order payment of such alimony by one party to
      the other and division of property as may be
      reasonable, having regard for the circumstances of the
      parties, duration of the marriage, a history of the
      contributions to the marriage by each party, including
      contributions to the care and education of the
      children, and interruption of personal careers or
      educational opportunities, and the ability of the
      supported party to engage in gainful employment without
      interfering with the interests of any minor children in
      the custody of such party. Reasonable security for
      payment may be required by the court. Unless amounts


      14
      For purposes of this discussion, we assume that the
divorce documents did not provide for termination of the annual
payments on the death of Ms. Springer.
                                - 21 -

     have accrued prior to the date of service of process on
     a petition to modify, orders for alimony may be
     modified or revoked for good cause shown, but when
     alimony is not allowed in the original decree
     dissolving a marriage, such decree may not be modified
     to award alimony. Except as otherwise agreed by the
     parties in writing or by order of the court, alimony
     orders shall terminate upon the death of either party
     or the remarriage of the recipient. [Emphasis added.]

The pertinent issue in the instant case is whether petitioner and

Ms. Springer “otherwise agreed” in the marital settlement (or the

court ordered in the divorce decree) that the annual payments

would not terminate on the death of Ms. Springer.

     Respondent, citing Watters v. Foreman, 284 N.W.2d 850 (Neb.

1979), argues that Neb. Rev. Stat. section 42-365 does not apply

because the annual payment provision in article 6 of the marital

settlement was not silent as to all termination procedures.       The

issue in Watters was whether the remarriage of the wife resulted

in the termination of alimony by operation of Neb. Rev. Stat.

section 42-365.    Under the decree, the husband was required to

pay the wife $1,000 per month for a period of 10 years and 1

month.   Id. at 852.   The decree stated that the payments were to

cease on the death of the wife but not on the death of the

husband.   Id.    The decree was silent regarding the husband’s

liability to make the payments if the wife remarried.     Id.

     The Supreme Court of Nebraska had to decide whether the

parties had “otherwise agreed” within the meaning of the statute

and, therefore, the remarriage did not terminate the husband’s
                              - 22 -

liability to make the monthly alimony payments.   The court

initially noted that the value of the marital estate appeared to

be in excess of $200,000, but that the wife was receiving only

the monthly payments totaling $18,500, a 1973 Cadillac, some

household goods, and payment of $5,000 of her attorney’s fees.

Id.   The court then examined the language of the divorce decree

and held:

      Where the parties by their agreement in writing, or the
      court by its decree, provide that a specific amount of
      alimony shall be paid for a specific period of time,
      and shall terminate only upon the occurring of a
      specific event set out in the agreement or decree and
      otherwise shall not be subject to amendment or
      revision, the payment of such alimony shall terminate
      only upon the happening of the event set out in the
      agreement or decree. * * * [Id. at 854.]

Thus, the fact that the husband and wife provided for a

termination event and the agreement was not modifiable resulted

in the nonapplicability of Neb. Rev. Stat. section 42-365.

      Later, in Kingery v. Kingery, 320 N.W.2d 441 (Neb. 1982),

the issue was whether a nonmodifiable provision requiring that

payments be made until “paid in full” precluded application of

Neb. Rev. Stat. section 42-365 because the parties had “otherwise

agreed” within the meaning of the statute.   The decree of

dissolution was silent regarding the effect of death or

remarriage, and the husband argued that on his ex-wife’s

remarriage Neb. Rev. Stat. section 42-365 operated to relieve him
                              - 23 -

of liability for the remaining payments to her.    Id. at 441-442.

The court noted:

     The words “terminate upon the death of either party or
     the remarriage of the recipient,” clearly show that
     this portion of the statute needs no order of court to
     effect termination. The alimony terminates by
     operation of law when the condition occurs. * * * [Id.
     at 443.]

Thus, the court recognized that if Neb. Rev. Stat. section 42-365

applies, liability to make payments terminates without a court

order or modification of the divorce document.    The court

ultimately held that the order of the court that the alimony be

“paid in full” did not evidence an intention that the alimony

order should not terminate on remarriage.   Id. at 444.

     In Pettid v. Commissioner, T.C. Memo. 1999-126, we applied

Neb. Rev. Stat. section 42-365 in a situation where the divorce

instruments were silent regarding whether payments would

terminate on the death of either party or the remarriage of the

payee spouse.   We distinguished the situation in Watters v.

Foreman, supra, on the ground that the divorce decree in that

case “expressly dealt with termination and provided that

termination would occur upon the death of the payee spouse.”

Because the divorce instrument in Pettid was silent about

termination and the effect that the death of either party or the

remarriage of the payee spouse would have on the payor’s

liability to make the payments, we held that the parties had not

“otherwise agreed” in writing regarding the effect of the death
                                - 24 -

or remarriage of the payee spouse on the payor spouse’s liability

to make the payments.

     Additionally, we addressed the Commissioner’s argument that

a provision in the instrument stating that the agreement was

binding on the parties and their heirs, assigns, and personal

representatives indicated that the payor spouse or his estate

might be liable to make payments to the payee spouse after her

death.    We declined to read the binding agreement provision so

broadly “as to require the payments to continue after * * * [the

payee spouse’s] death or to constitute an agreement of the

parties that the alimony order will not terminate on * * * [the

payee spouse’s] death, as otherwise required by Neb. Rev. Stat.

section 42-365.”15

     Finally, we examined the Supreme Court of Nebraska’s holding

in Kingery v. Kingery, supra.    We noted that under the holding of

that case, if Neb. Rev. Stat. section 42-365 applies, a payor’s

liability to pay alimony terminates automatically on the death of

the payee.    Like the court in that case, we disagreed with the

position that the statutory direction can be defeated by a

general contractual provision prohibiting modification of the

agreement.



     15
      The marital agreement in this case contains a similar
“binding agreement” provision. Respondent has not argued in this
case that this provision indicates or implies that the annual
payments were intended to survive the death of Ms. Springer.
                              - 25 -

     In the instant case, the second paragraph of article 6 of

the marital settlement states that the liability to make the

annual payments to Ms. Springer will not terminate on either the

death of petitioner or the remarriage of Ms. Springer.   Unlike

the situation in Watters v. Foreman, 284 N.W.2d 850 (Neb. 1979),

the parties did not specifically state that the annual payments

would terminate on death or remarriage.   Instead, the parties

chose to specifically exclude the death of petitioner or the

remarriage of Ms. Springer as events causing termination.     In

Watters v. Foreman, supra, the parties stated one situation in

which the payments would terminate and one situation in which

they would not.   The court found that the parties’ statement that

the payments would terminate on the wife’s death effectively

limited the termination events to that specific occurrence and

precluded application of Neb. Rev. Stat. section 42-365 to

statutorily terminate the payments on the wife’s remarriage.

     Respondent’s position regarding the application of Watters

in this case would lead to an incongruous result.   Here, the

parties did not provide a termination event.   Rather, they

specifically excluded from termination two of the three events

previously listed as causing termination in the prior related

paragraph.   The specific exclusion of two of the three events

from termination, in this context, without reference to the third

event, indicates that the third terminating event is still
                               - 26 -

viable.   Applying Watters would in effect add language to the

agreement providing that Ms. Springer’s death would not cause

termination even though the structure of the agreement indicates

the opposite.   If there is any doubt about the intent of the

divorce documents, there is clearly no basis to have Neb. Rev.

Stat. section 42-365 operate to provide a result that is directly

opposite to that implied in the agreement and contrary to the

result the Nebraska statute would provide in the absence of an

agreement of the parties on this point.

     Finally, review of the entire marital settlement indicates

that petitioner and Ms. Springer attempted to provide a

reasonable division of the marital estate.   Other provisions of

the marital settlement and the divorce decree specifically

provided for child support payments and the division of assets

and liabilities (e.g., motor vehicles, real estate, bank

accounts, business and investment items, retirement benefits and

plans, personal property, and life insurance items) between

petitioner and Ms. Springer.   Additionally, article 16 of the

marital settlement specifically provided for lump-sum payments to

be made by petitioner to Ms. Springer “as additional property to

equalize property distribution.”   We are not concerned in this

case, as it appears the court was in Watters v. Foreman, supra,

that one spouse received considerably less than a fair and

equitable division of the marital estate, and that payments
                                - 27 -

labeled as alimony for support and maintenance were more in the

nature of property settlement payments.    For the reasons

discussed above, we hold that petitioner and Ms. Springer did not

“otherwise agree” within the meaning of Neb. Rev. Stat. section

42-365.

III.    Alimony in Gross

       Respondent argues that the requirements that the annual

payments were not to terminate on the death of petitioner or the

remarriage of Ms. Springer were inserted into the marital

settlement to characterize the annual payments as “alimony in

gross” under Nebraska law.     Respondent implies that this is the

reason the annual payment provision lacks a specific reference

regarding the effect of Ms. Springer’s death, not that the two

payment provisions were intended to be read in conjunction and

terminate the liability to make the annual payments after the

death of Ms. Springer.     Respondent relies on Ball v. Ball, 159

N.W.2d 297 (Neb. 1968), to support his position.

       In Ball v. Ball, supra at 300, the Supreme Court of Nebraska

discussed the difference between “alimony” and “alimony in

gross”.    The court stated:

            The distinction between “alimony” and “alimony in
       gross” may be gathered from the accepted definitions of
       the two terms. “Alimony”, which signifies literally
       nourishment or sustenance, is an allowance for support
       and maintenance, or, as has been said, a substitute for
       marital support. It is the allowance which a husband
       may be compelled to pay to his wife or former wife for
       her maintenance when she is living apart from him or
                              - 28 -

     has been divorced. “Alimony in gross, or lump-sum
     alimony,” is fundamentally the award of a definite sum
     of money; and if the sum is payable in instalments the
     payments run for a definite length of time. The sum is
     payable in full, regardless of future events such as
     the death of the husband or the remarriage of the wife.
     Gross alimony becomes a vested right from the date of
     the rendition of the judgment, and the manner of its
     payment in no wise affects its nature or effect. The
     fact that the award is payable in installments is not
     determinative of the question whether it is gross
     alimony or periodic alimony. On the other hand,
     alimony in general, or installment alimony,
     contemplates periodic payments of a definite sum for
     the indefinite future, and terminates on the death of
     either party or the remarriage of the wife. * * * The
     phrase “alimony in gross” or “gross alimony” is always
     for a definite amount of money, the payment is always
     for a definite length of time, and it is always a
     charge on the estate of the husband and is not
     modifiable. It, therefore, appears that a decree
     providing for “alimony in gross,” constituting a final
     judgment not subject to modification, must incorporate
     each and every one of the following propositions to
     meet the recognized requirements for this type of
     judgment, to wit: (1) The award must be for a definite
     sum or for installments payable over a definite period
     of time; (2) it must be payable in full regardless of
     the death or remarriage of the judgment creditor; and
     (3) it cannot terminate on the death of the judgment
     debtor. [Citations omitted.]

Relying on this passage, respondent argues on brief that the

specific exclusion from termination of the death of petitioner

and the remarriage of Ms. Springer was intended to qualify the

annual payments as alimony in gross.

     The Ball case predated the adoption of Neb. Rev. Stat.

section 42-365.   Murrell v. Murrell, 440 N.W.2d 237, 239 (Neb.

1989).   The Supreme Court of Nebraska has recognized that the

statute applies to all orders for alimony, and no distinction is
                              - 29 -

made between alimony and alimony in gross.     Kingery v. Kingery,

320 N.W.2d at 443; Euler v. Euler, 295 N.W.2d 397, 399 (Neb.

1980).   Thus, the liability to make payments which might

otherwise be characterized as alimony in gross under Nebraska law

will still terminate on the death of either party or the

remarriage of the payee spouse except as otherwise agreed by the

parties or ordered by the court.

     Respondent agrees with the above principles; however, he

asks the Court to “recognize that the annual alimony termination

provisions at issue here are consistent with the trade or local

usage for payments of alimony in gross.”     Although respondent’s

position is not entirely clear, he appears to argue that

petitioner and Ms. Springer intended the annual payments to be

alimony in gross and that this intention implies that the annual

payments would not have terminated on the death of Ms. Springer.

Respondent claims that the annual payment in issue is properly

characterized as alimony in gross because it was part of a series

of payments for a definite period of time, the annual payments

were not modifiable, and the parties provided that the annual

payments would not terminate on the death of petitioner or the

remarriage of Ms. Springer.

     The fact that petitioner was required to make annual

payments for a period of 5 years is not determinative of the

question of whether the payments constitute alimony or alimony in
                                - 30 -

gross.    See Ball v. Ball, supra at 300.   The language of the

divorce documents does not reflect that the payments were

intended to be part of a definite sum payable and, as discussed

previously, we believe that the liability to make the payments

was subject to the contingency of the death of Ms. Springer.      Nor

do we believe that the fact that the annual payments were not

modifiable means that the payments were alimony in gross.

Indeed, in Kingery v. Kingery, supra, the nonmodifiable

provisions did not prevent application of Neb. Rev. Stat. section

42-365.    Finally, in Ball v. Ball, supra at 300, the court stated

that alimony in gross must incorporate “each and every one” of

the requirements that the award be for a definite sum (or for

installments payable over a definite period of time), be payable

in full regardless of the death or remarriage of the payee

spouse, and not terminate on the death of the payor spouse.       The

divorce documents in this case lack the specific requirement that

the annual payments be payable in full regardless of the death of

the payee spouse, Ms. Springer.

     We also note that the passage in Ball v. Ball, supra at 300,

relied on by respondent expressly describes alimony (as

distinguished from alimony in gross) as “an allowance for support

and maintenance”.   As discussed earlier, the divorce documents

stated that the annual payments were for the “support and

maintenance” of Ms. Springer.    The use of this phrase in the
                              - 31 -

annual payment provision is at odds with respondent’s contention

that the parties intended for the annual payments to qualify as

alimony in gross and not to terminate on the death of Ms.

Springer.

      Respondent’s contention regarding trade or local usage is

inconsistent with the definition provided in Ball v. Ball, supra,

and with Kingery v. Kingery, supra, and Euler v. Euler supra.

Other than respondent’s unsupported allegations on brief, there

is nothing in the record to suggest that the marital settlement

was drafted with the intention of characterizing the annual

payments as alimony in gross and providing that the payments were

not to terminate on the death of Ms. Springer.   To the contrary,

the particular facts of this case indicate that the annual

payments were an allowance for support and maintenance, not part

of a property settlement binding on petitioner after the death of

Ms. Springer.

IV.   Conclusion

      After careful consideration of the parties’ respective

arguments, and after reviewing the divorce documents and relevant

case law, we conclude that the terms of the divorce documents do

provide that there would have been no liability to make the

annual payments for any period after the death of Ms. Springer.

Assuming that the divorce documents did not provide for

termination of the annual payments on the death of Ms. Springer,
                              - 32 -

we find that the payments would have terminated under Nebraska

law.   Accordingly, we hold petitioner’s $50,000 payment to Ms.

Springer in 1996 is deductible as alimony under section 215(a).


                                         Decision will be entered

                                    for petitioner.
