                          T.C. Memo. 1998-166



                        UNITED STATES TAX COURT

                 R. LAWRENCE SMITH, III, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent.


        Docket No. 27511-96.                      Filed May 6, 1998.


        Herman D. Baker, for petitioner.

        Larry D. Anderson, for respondent.


                          MEMORANDUM OPINION

        POWELL, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1

        Respondent determined a deficiency in petitioner's 1993

Federal income tax and an accuracy-related penalty under section

6662(a) in the respective amounts of $6,259 and $1,252.


        1
        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 -

Petitioner resided in Walnut Grove, Georgia, at the time the

petition was filed.



     The issues are whether petitioner is entitled to deduct

$25,000 paid to his former wife's attorneys and whether he is

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

     This case was submitted fully stipulated.   The facts may be

summarized as follows.   Petitioner and Connie Page Smith (herein

wife or former wife) were married in 1968 and divorced in 1993.

The settlement agreement that was incorporated by reference in

the final decree of divorce provided for a division of real

property and tangible and intangible personal property.   The

agreement further provided:

                                14.

          The Husband shall make payments of alimony to the Wife
     as follows:

          (a) The Husband shall pay $2,000.00 per month for a
     period of one year from the date of the signing of this
     Agreement;

          (b) After the expiration date of (a) above, the Husband
     shall pay $1,500.00 per month for a period of two (2) years;

          (c) After the expiration date of (b) above, the Husband
     shall pay $1,000.00 per month for a period of three (3)
     years.

          These alimony payments above stated shall continue each
     and every month until the expiration date stated above or
     until the Wife dies or remarries, or the Husband dies,
     whichever event occurs first. * * * The payments are
     intended to qualify as income to the Wife and deductible to
     the Husband for tax purposes, pursuant to section 71 and
     section 215 of the Internal Revenue Code of 1986 as amended.
                                      - 3 -

                  *        *      *       *      *     *      *

                                       29.

          The parties agree that the issue of Attorney fees is
     reserved at the time of the signing of this Agreement and
     shall be submitted to the Trial Judge. This issue shall be
     considered by the Trial Judge in the manner the Judge deems
     appropriate, either by Brief and/or Oral Argument.

The agreement was executed on May 21, 1993, and the final

judgment was entered June 29, 1993.           By order of the Superior

Court for the State of Georgia filed June 29, 1993, petitioner

was ordered to pay the wife's attorney's fees in the amount of

$25,000.   On July 1, 1993, the wife's attorneys submitted a

statement to petitioner for $25,000, which petitioner paid.

     On his 1993 Federal income tax return, petitioner deducted

the $25,000 as alimony.        Petitioner's return was prepared by a

certified public accountant.          Respondent disallowed the

deduction.

     Section 215(a) provides that there "shall be allowed as a

deduction an amount equal to the alimony or separate maintenance

payments paid".       Alimony or separate maintenance payments are

defined as "any alimony or separate maintenance payment (as

defined in section 71(b)) which is includible in the gross income

of the recipient under section 71."           Sec. 215(b).   Section 71(b)

provides, inter alia:

          (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,
                               - 4 -

                (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.


     The parties agree that petitioner satisfies the requirements

of subparagraphs (A) through (C).   They frame the issue in terms

of subparagraph (D)--whether petitioner's liability to make the

payments to his former wife's attorneys would have been

extinguished if, prior to payment, his former wife had died.

While it seems somewhat peculiar to discuss payment of fees made

to a former spouse's attorneys for services in terms of alimony

or separate maintenance payments,2 section 71(b) does not

differentiate as to the reasons for the payment.   Nonetheless, as

we shall see, the nature of the expense may have some bearing on

the resolution of the issue.

     Petitioner does not dispute that the Superior Court's order

that he pay $25,000 created an enforceable liability.   Petitioner

contends, however, that the focus of section 71(b)(1)(D) is


     2
         Cf. United States v. Gilmore, 372 U.S. 39 (1963).
                                - 5 -

whether "the payment was for a period which could not end after

[the spouse's] death", rather than whether the liability could

survive the death of the spouse.   We do not agree.   Section

71(b)(1)(D) states: "there is no liability to make any such

payment for any period after the death" of the spouse.    The

operative phrase is "no liability to make any such payment" after

the payee's death.   In short, the question is whether the

liability would survive the wife's death.   See Ribera v.

Commissioner, T.C. Memo. 1997-38, affd. without published opinion

__ F.3d __ (9th Cir 1998).   It may be that under Georgia law,

which controls here, the liability for support or alimony

payments would be extinguished by the payee's death, but the

liability here was for attorney's fees.   Petitioner points us to

no authority, and we have discovered none, that such a debt would

be extinguished by the wife's death.    Cf. Heffron v.

Commissioner, T.C. Memo. 1995-253, affd. without published

opinion sub nom. Murley v. Commissioner, 104 F.3d 361 (6th Cir.

1996).   We sustain respondent's disallowance of the deduction.

     Respondent also determined that petitioner was liable for an

accuracy-related penalty under section 6662(a) based on the

underpayment resulting from the claimed deduction.    Section

6664(c)(1) provides, however, that no penalty shall be imposed if

there was a reasonable cause for the underpayment and the

taxpayer acted in good faith.   Section 71(b) is a somewhat
                               - 6 -

complicated provision.   Under the circumstances, we find that the

provisions of section 6664(c)(1) apply.

                                            Decision will be entered

                                       for respondent with respect to

                                       the deficiency, and for

                                       petitioner with respect to the

                                       accuracy-related penalty under

                                       section 6662(a).
