                          T.C. Summary Opinion 2012-64



                         UNITED STATES TAX COURT



             EMMANUEL CHARLES KOUSKOUTIS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 496-11S.                          Filed July 9, 2012.



      Emmanuel Charles Kouskoutis, pro se.

      Jeffrey A. Schlei, for respondent.



                              SUMMARY OPINION


      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
                                            -2-

was filed.1 Pursuant to section 7463(b), the decision to be entered is not reviewable

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

case.

        Respondent determined a deficiency in petitioner’s 2008 Federal income tax

of $12,534 and an accuracy-related penalty under section 6662(a) of $2,507.2 The

deficiency stems from the disallowance of a deduction for alimony paid. After a

concession by respondent, the sole issue for decision is whether petitioner is entitled

to deduct $44,700 as alimony paid to his former spouse in 2008.3

                                        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.

Petitioner resided in the State of California when the petition was filed.

        In June 1992 petitioner married his former spouse, and he had two children

with her during their marriage.




        1
         Unless otherwise indicated, all subsequent 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
            All dollar amounts are rounded to the nearest dollar.
        3
            Respondent concedes the accuracy-related penalty under sec. 6662(a).
                                         -3-

      In January 2008 petitioner and his former spouse separated. Petitioner

remained in the family home, and his former spouse moved into a separate

residence. Petitioner and his former spouse maintained separate residences

throughout the year in issue.

      On January 12, 2008, the District Court for Arapahoe County, Colorado,

(State court) issued Temporary Orders (nunc pro tunc November 13, 2007), in

petitioner’s divorce case. The Temporary Orders incorporated stipulations from

petitioner and his former spouse. Paragraph 8 of the Temporary Orders provided:

             8. Once * * * [petitioner’s former spouse] moves from the
      marital residence, * * * [petitioner] shall pay * * * [petitioner’s former
      spouse] unallocated family support in the amount of $3725.00 per
      month * * * . * * * [Petitioner’s former spouse] shall not be required to
      report such payments as income on her tax return. [Emphasis added.].

The Temporary Orders did not specify what portion of the “unallocated family

support” payments constituted child support for their two minor children.

      The State court subsequently issued Permanent Orders (nunc pro tunc May 1,

2009), and ordered, inter alia, the dissolution of petitioner’s marriage to his former

spouse.
                                          -4-

      On his 2008 Federal income tax return petitioner claimed an alimony

deduction of $44,700 for payments he made to his former spouse in 2008 pursuant

to the Temporary Orders.

      In a notice of deficiency respondent determined that the $44,700 paid by

petitioner was not alimony and, therefore, disallowed the claimed deduction in full.

                                      Discussion4

      Section 71(a) provides the general rule that alimony or separate maintenance

payments received are included in the recipient’s gross income. Section 215(a)

provides the complementary general rule that alimony or separate maintenance

payments are tax deductible by the payor in the taxable year paid.

      Section 215(b) defines the term “alimony or separate maintenance payment”

by reference to section 71(b), the relevant provision of which provides:

            SEC. 71(b). Alimony or Separate Maintenance Payments Defined.--
      For purposes of this section--

                  (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
         The issue for decision under these facts is essentially legal in nature;
therefore, we decide this case without regard to the burden of proof.
                                        -5-

                          (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.

      Unallocated family support payments are deductible as alimony or separate

maintenance only if all four of the above conjunctive requirements of section

71(b)(1) are met. See Miller v. Commissioner, T.C. Memo. 1999-273, aff’d sub

nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002); see also Johnson

v. Commissioner, T.C. Memo. 2006-116.

      Both parties agree that the unallocated family support payments made by

petitioner to his former spouse in 2008 (disputed payments) satisfy the requirements

set out in subparagraphs (A), (C), and (D) of section 71(b)(1). The parties disagree,

however, as to whether the requirement of section 71(b)(1)(B) has been met. In

other words, the parties disagree as to whether the Temporary Orders contain what

is commonly referred to as a nonalimony designation.
                                         -6-

      Under subparagraph (B) of section 71(b)(1), a payment is treated as

nonalimony if the divorce or separation instrument designates the payment as such.

The divorce or separation instrument need not mimic the language of section

71(b)(1)(B) for a nonalimony designation to exist. Estate of Goldman v.

Commissioner, 112 T.C. 317, 323 (1999), aff’d without published opinion sub nom.

Schutter v. Commissioner, 242 F.3d 390 (10th Cir. 2000). Rather, a nonalimony

designation exists if “the substance of such a designation is reflected in the

instrument.” Id.

      The term “designate” as used in section 71(b)(1)(B) means “to make known

directly”. Richardson v. Commissioner, 125 F.3d 551, 556 (7th Cir. 1997), aff’g

T.C. Memo. 1995-554. In that regard, “[f]or a legal instrument to make known

directly that a spouse’s payments are not to be treated as income * * * the

instrument must contain a clear, explicit and express direction to that effect.” Id. In

Richardson v. Commissioner, T.C. Memo. 1995-554, we held that “[b]ecause the *

* * [divorce] court did not expressly designate the court-ordered payments as

payments which were not includable in * * * [the taxpayer’s] income, the

requirements of sections 71 and 215” were met and the taxpayer’s payments

constituted alimony.
                                         -7-

      In the instant case, however, paragraph 8 of the Temporary Orders contains a

clear, explicit, and express direction that the disputed payments are not to be

includible in the income of petitioner’s former spouse. Although the language does

not precisely mimic the language of section 71(b)(1)(B), we hold that the substance

of a nonalimony designation is reflected in the Temporary Orders. Consequently,

the disputed payments do not meet all four of the conjunctive requirements provided

by section 71(b)(1) and thus do not constitute alimony or separate maintenance

payments deductible under section 215(a).5




      5
        Petitioner alleges that his former spouse used some of the disputed
payments she received to pay her personal expenses (e.g., car payments, house
payments, credit card payments, etc.) and requests that we divide the disputed
payments into alimony and child support using State child support guidelines. We
understand petitioner’s argument; however, the Court must apply the law as written.
A payment can be treated as alimony only when the objective test under sec.
71(b)(1) is satisfied regardless of what the recipient does with the payment once
received.
                                          -8-

                                      Conclusion

      We have considered all of the arguments advanced by petitioner, and, to the

extent not expressly addressed, we conclude that those arguments do not support a

result contrary to our decision herein.

      To give effect to our disposition of the disputed issue as well as respondent’s

concession,


                                                      Decision will be entered

                                                for respondent as to the deficiency in

                                                tax and for petitioner as to the

                                                accuracy-related penalty under

                                                section 6662(a).
