1976 Tax Ct. Memo LEXIS 332 | Tax Ct. | 1976
MEMORANDUM OPINION
SCOTT,
1976 Tax Ct. Memo LEXIS 332">*334 Some of the issues raised by the pleadings have been disposed of by agreement of the parties, leaving for decision whether payments made by Harold L. DeWailly of $500 in each of the months November and December 1970 to Rosemary DeWailly, his former wife, are includable in her gross income for 1970 as alimony under the provisions of
All of the facts have been stipulated and are found accordingly.
Petitioner Harold L. DeWailly was a resident of New Orleans, Louisiana at the time his petition in this case was filed. He filed an individual Federal income tax return for the calendar year 1970 with the Internal Revenue Service Center at Austin, Texas.
Petitioner Rosemary DeWailly was a resident of Metairie, Louisiana at the time of the filing of her petition in this case. She filed an individual Federal income tax return for the calendar year 1970 with the Internal Revenue Service Center at Austin, Texas.
On May 19, 1970, Mrs. DeWailly filed a petition in the 24th Judicial1976 Tax Ct. Memo LEXIS 332">*335 District Court for the Parish of Jefferson, State of Louisiana, seeking a divorce from her husband. In conjunction with her petition for divorce she requested a judgment in her favor granting her custody of their daughter, Wanda Lynn, and alimony during the pendency of the suit. By consent and agreement of the parties a judgment was entered on May 26, 1970 pursuant to this request by the Louisiana Court granting Mrs. DeWailly custody of their daughter, establishing visitation privileges for Mr. DeWailly, and also providing for alimony for the support of their child. The Court, in its decree, ordered Mr. DeWailly to pay to Mrs. DeWailly "alimony for the support of their child at the rate of $500.00 per month, beginning June 1, 1970, and all costs of this rule." This judgment was to govern during the pendency of the divorce suit.
Thereafter, on June 17, 1970, a judgment of final divorce was entered by the 24th Judicial District Court, Parish of Jefferson, State of Louisiana, decreeing a divorce
The judgment contained provisions other than1976 Tax Ct. Memo LEXIS 332">*336 the granting of the divorce, one of which was, "It is further ordered, adjudged and decreed that the prior award of alimony in the sum of Five Hundred and no/100 Dollars ($500.00) per month to Rosemary Staehle DeWailly be reaffirmed." Another provision in the decree directed "that the community property acquired during the marriage be partitioned according to the Laws of the State of Louisiana."
Subsequent to this decree the parties through their respective attorneys entered into negotiation for the settlement of the community property.
Letters were exchanged with respect to the division of property between the attorney for Mrs. DeWailly and the attorney for Mr. DeWailly. In this correspondence reference is made to the "Alimony situation" and the period during which "alimony" is to be paid as an issue between the parties.
On October 12, 1970, a Compromise Agreement, Sale, Partition and Final Settlement of Community Property (Compromise Agreement) was entered into between the DeWaillys. The parties appeared before a Notary Public, the attorney for Mrs. DeWailly, and both signed this agreement, which contained, among others, the following recitations:
1.
2.
WHO DECLARED to me, Notary, as follows:
WHEREAS, on May 19, 1970, appearer, Mrs. Rosemary S. DeWailly filed suit against her husband, Harold L. DeWailly, wherein she prayed for a final divorce, permanent care, custody and control of their child, Wanda Lynn DeWailly; that she likewise prayed for alimony for the support of herself and child and likewise asked for a Partition of the community property; which suit is entitled "Mrs. Rosemary Staehle DeWailly, wife of Harold L. DeWailly vs. Harold L. DeWailly", being No. 126-992 of the docket of the 24th Judicial District Court, Parish of Jefferson, State of Louisiana; and
WHEREAS, on June 17, 1970, in the above numbered and styled proceeding, Judgment was rendered and signed in open Court wherein Mrs. Rosemary S. DeWailly was granted a decree of final divorce; that the said Mrs. Rosemary S. DeWailly was granted the care, custody and control of Wanda Lynn DeWailly; 1976 Tax Ct. Memo LEXIS 332">*338 that in said Judgment the said Harold L. DeWailly was condemned to pay alimony in the sum of $500.00 per month to Rosemary S. DeWailly which was for the support of herself and child; that in said Judgment it was further decreed that the community property acquired during the marriage be partitioned according to the laws of the State of Louisiana; and
WHEREAS, said Judgment of divorce and said Judgment for alimony have not been appealed from, and the same has now become final; and
* * *
After the agreement was executed by the parties, it was presented to the Judge of the 24th Judicial District Court, who had presided over the divorce proceedings with a "Joint Petition to Homologate Act of Partition, Compromise and Settlement of Community Property" to which a certified copy of the compromise agreement was attached and made a part. In this joint petition the parties petitioned "the court to homologate and confirm their compromise, partition and final settlement and enter herein a final and binding Judgment from which neither party may appeal." On October 20, 1970, the judgment was entered by the court. This judgment provided in part:
Upon the joint petition of Mrs. Rosemary1976 Tax Ct. Memo LEXIS 332">*339 S. DeWailly, divorced wife of Harold L. DeWailly, and Harold L. DeWailly, praying for approval and homologation of the partition of the community property, compromise agreement and settlement, the law and evidence being considered entitling the petitioners to the decrees prayed for, and for the reasons orally assigned:
IT IS ORDERED, ADJUDGED AND DECREED that the compromise, partition and settlement of the community of acquets and gains heretofore existing between the petitioners, and effected by Act before Harry Nowalsky, Notary Public in and for the Parish of Orleans, Louisiana, on October 12, 1970, an authentic copy of which act is filed in these proceedings, be and the same is hereby approved and homologated.
* * *
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment in favor of Mrs. Rosemary S. DeWailly and against Harold L. DeWailly, in the sum of Five Hundred and no/100 Dollars ($500.00) per month for the support of herself and child, Wanda Lynn DeWailly, payable on the first of each month.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the defendant, Harold L. DeWailly be and he is hereby condemned to make said payments of monthly alimony for a period1976 Tax Ct. Memo LEXIS 332">*340 of two years, beginning October 1, 1970 and ending September 31, 1972 [sic]; in the event the plaintiff, Mrs. Rosemary S. DeWailly should remarry during this period, said alimony shall be reduced by one-half and likewise in the event their child, Wanda Lynn DeWailly should leave school and go to work or marry during this period the alimony shall be reduced by one-half. Thus, if Mrs. Rosemary S. DeWailly remarries within the two year period and Wanda Lynn DeWailly leaves school and goes to work or marries, prior to September 31, 1972 [sic], all of the alimony is terminated.
Subsequent to the entry of the final decree of divorce, which was entered on June 17, 1970, Mr. DeWailly made payments to Mrs. DeWailly totaling $3,000 during 1970. The payments were made on the dates and in the amounts as follows:
Date | Amount |
July 1, 1970 | $ 500 |
August 1, 1970 | 500 |
September 1, 1970 | 500 |
October 1, 1970 | 500 |
November 1, 1970 | 500 |
December 1, 1970 | 500 |
Total | $3,000 |
The payments listed above that were made prior to November 1, 1970, represent child support payments made pursuant to the judgment of the final decree of divorce entered June 17, 1970. 3
1976 Tax Ct. Memo LEXIS 332">*341 On her 1970 tax return Mrs. DeWailly included $750 under the heading of miscellaneous income with the source designated as alimony received from Mr. DeWailly. In the statutory notice of deficiency sent to Mrs. DeWailly, respondent increased her gross income by $2,250 because "[it] is determined that payments totaling $2,250.00 received by you in the tax year 1970 from your former husband, Harold L. DeWailly, were not child support payments, but instead represented alimony. Accordingly, the payments are includable in your gross income under
On his 1970 tax return Mr. DeWailly deducted $3,000 as alimony paid to his former wife. In the statutory notice of deficiency sent to Mr. DeWailly, respondent disallowed this deduction because "[it] is determined that payments totaling $3,000.00 you made in the tax year 1970 to your former wife, Mrs. Rosemary S. DeWailly, were not alimony payments, but instead represented amounts payable for the support of your child. Accordingly, the payments are not includable in your former wife's gross income under
1976 Tax Ct. Memo LEXIS 332">*343 The terms of the judgment of May 26, 1970, reaffirmed in the decree of June 17, 1970, "fix" the entire $500 per month to be paid by Mr. DeWailly to Mrs. DeWailly as child support,
To resolve the issue here, it is necessary to determine whether the payments made by Mr. DeWailly to Mrs. DeWailly in November and December 1970, after the entry of the judgment on October 20, 1970, were made under that decree or were made under the decree of June 17, 1970, and if these payments were made under the judgment of October 20, 1970, was this judgment a "written instrument incident to" the divorce. The requirements of
Mr. DeWailly maintains that the payments made to Mrs. DeWailly in November and December of 1970 were made under the judgment of October 20, 1970, and that these payments are "periodic payments" within the meaning of
On brief Mrs. DeWailly has conceded that the judgment of October 20, 1970, and the Compromise Agreement were part of the divorce proceedings but argues that this judgment was not "incident to the divorce." The requirement of
Having decided that the Compromise Agreement and the judgment of October 20, 1970, are each a written instrument incident to the divorce, we must determine whether the payments made subsequent to October 1970 were paid under the legal obligation created by the October 20, 1970, judgment of the Louisiana Court having jurisdiction of the case. 8
1976 Tax Ct. Memo LEXIS 332">*347 Mrs. DeWailly argues that since the judgment of October 20, 1970, was rendered subsequent to the date of final divorce, at a time under Louisiana law when she could not have received alimony, the payments are to be governed under the original decree of divorce. She bases this argument on two grounds. The first ground is that it has not been shown that she was in "necessitous circumstances" which is a necessary element to the allowance of alimony upon a divorce under Louisiana law. The second ground is that the language change in the decree of October 20, 1970, as compared to the June 17, 1970, decree with respect to the monthly payments is a change in the substance of the divorce decree and for that reason the change is not allowed under Louisiana law.
Article 160 9 of the Louisiana Civil Code which is the governing article with respect to the grant of alimony in Louisiana does condition such grant on insufficient means of the wife for her support. The only evidence in this record as to means which Mrs. DeWailly had for support is her income tax return reporting wages earned during 1970 and showing her occupation as "secretary." What was required for her support as compared to1976 Tax Ct. Memo LEXIS 332">*348 her earnings is not shown. The fact that the wife is employed does not preclude an award of alimony. See
1976 Tax Ct. Memo LEXIS 332">*349 A further requirement under Art. 160 of the Louisiana Code is that the wife not be at fault. Whether Mrs. DeWailly had been at fault when she obtained the divorce the record does not disclose. However, the fact that the judgment provides for alimony for her support is presumptive that the requirement that she be without fault is met. The judgment is not subject to a collateral attack,
Mrs. DeWailly's other argument is that the difference of the language in the October 20, 1970, judgment from that in the June 17, 1970, divorce decree is a change in substance of the decree and as such is not allowed under Louisiana Statutes Ann. Code of Civil Procedure, article 1951.10 Under Louisiana law an award of alimony is always an interlocutory award and is subject to change in the court which rendered the judgment.
Mrs. DeWailly relies on the cases of
We conclude that the $1,000 paid to Mrs. DeWailly by Mr. DeWailly under the October 20, 1970, judgment is includable in Mrs. DeWailly's income under
Footnotes
1. Respondent has taken an inconsistent position with respect to his deficiency determination against petitioner Harold L. DeWailly and petitioner Rosemary DeWailly determining that the payments at issue are not deductible by the former and are taxable to the latter.↩
2. All statutory references are to the Internal Revenue Code of 1954, as amended.↩
3. The parties so stipulated and have also stipulated that Mr. DeWailly is entitled to an exemption of $675 for the support of their daughter under sec. 152(e) for 1970. This stipulation is in accord with our holding in
(1969), interpreting payments made under a Louisiana decree providing for "Alimony * * * for the support * * * of the minor children born of the marriage" not to be taxable to the wife underCleveland J. Harris, 51 T.C. 980">51 T.C. 980sec. 71(a) and deductible by the husband under sec. 215 but to be for child support undersec. 71(b)↩ .4.
SEC. 71 . ALIMONY AND SEPARATE MAINTENANCE PAYMENTS.(a) General Rule.--
(1) Decree of Divorce or Separate Maintenance.--If a wife is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, the wife's gross income includes periodic payments (whether or not made at regular intervals) received after such decree in discharge of (or attributable to property transferred, in trust or otherwise, in discharge of) a legal obligation which, because of the marital or family relationship, is imposed on or incurred by the husband under the decree or under a written instrument incident to such divorce or separation. ↩
5.
SEC. 71(b)↩ Payments to Support Minor Children.--Subsection (a) shall not apply to that part of any payment which the terms of the decree, instrument, or agreement fix, in terms of an amount of money or a part of the payment, as a sum which is payable for the support of minor children of the husband. For purposes of the preceding sentence, if any payment is less than the amount specified in the decree, instrument, or agreement, then so much of such payment as does not exceed the sum payable for support shall be considered a payment for such support.6. SEC. 215. ALIMONY, ETC., PAYMENTS.
(a) General Rule.--In the case of a husband described in
section 71 , there shall be allowed as a deduction amounts includible undersection 71 in the gross income of his wife, payment of which is made within the husband's taxable year. No deduction shall be allowed under the preceding sentence with respect to any payment if, by reason ofsection 71(d) or682↩ , the amount thereof is not includible in the husband's gross income.7. Although the judgment of October 20, 1970, was entered upon a petition for approval of an agreement of division of property, no party contends that the $500 monthly payments were a part of Mrs. DeWailly's interest in the community property and the agreement clearly shows they were not.↩
8. Mrs. DeWailly has cited us
(1961);Michel M. Segal, 36 T.C. 148">36 T.C. 148 (1971); andJosephine D. Cothran, 57 T.C. 296">57 T.C. 296 (1966). Those cases are not applicable to the situation before us as to the decree governing the payments. Each of those cases involved an attempt to retroactively alter the obligation between the spouses in regard to alimony payments. The case before us involves only a prospective application of the language change. For this reason those cases are not helpful in resolving the issue in the instant case as to whether the payments made in November and December 1970 were under the October 20, 1970, judgment.Gloria P. Johnson, 45 T.C. 530">45 T.C. 530↩9.
La. Civil Code Ann. Art. 160 (West 1972)Art. 160. Wife's alimony after divorce
Art. 160. When the wife has not been at fault, and she has not sufficient means for her support, the court may allow her, out of the property and earnings of the husband, alimony which shall not exceed one-third of his income when:
1. The wife obtains a divorce;
2. The husband obtains a divorce on the ground that he and his wife have been living separate and apart, or on the ground that there has been no reconciliation between the spouses after a judgment of separation from bed and board, for a specified period of time; or
3. The husband obtained a valid divorce from his wife in a court of another state or country which had no jurisdiction over her person.
This alimony shall be revoked if it becomes unnecessary, and terminates if the wife remarries.↩
10. Art. 1951. Amendment of judgment
A final judgment may be amended by the trial court at any time, with or without notice, on its own motion or on motion of any party:
(1) To alter the phraseology of the judgment, but not the substance; or
(2) To correct errors of calculation.↩