Washington v. Commissioner

¶1This case was assigned to Special Trial Judge Randolph F. Caldwell, Jr., for trial pursuant to General Order No. 6, 69 T.C. XV (1978). The Court agrees with and adopts his report which is set out below.

¶2OPINION OF THE SPECIAL TRIAL JUDGE

¶3Respondent determined a deficiency in petitioner’s 1977 Federal income tax in the amount of $432. At issue is whether petitioner is entitled to a deduction under section 215(a)1 for the temporary support of his wife by making mortgage and utility payments during 1977 when both resided in the same house. The resolution of this issue depends upon whether petitioner and his wife were then "separated” within the meaning of that term as used in section 71(a)(3).

¶4FINDINGS OF FACT

¶5Some of the facts were stipulated. The stipulation of facts and the exhibits attached thereto are incorporated herein by reference.

¶6Petitioner resided in Detroit, Mich., at the time he filed his petition in this case.

¶7Petitioner and Jean Virginia Washington (Jean) were married on November 7, 1944, in Detroit, Mich. They resided in Michigan until the time of their divorce in 1978.

¶8In April 1977, petitioner filed an action for divorce from Jean in the Circuit Court of Wayne County, Mich, (the divorce court). The principal asset of the parties at the time of the divorce action was the marital home located at 3511 Oakman Boulevard, Detroit, Mich, (the residence), which was owned by petitioner and Jean jointly, either as joint tenants or as tenants by the entireties. There was a mortgage on the property in the amount of approximately $13,000.

¶9The issues with respect to property settlement and alimony to be paid by petitioner were litigated in the action in the divorce court.

¶10In July 1977, Jean filed a petition with the divorce court asking that the petitioner herein (i.e., Alexander Washington) be required to pay the mortgage note, utilities, maintenance, and other expenses with respect to the residence during the pendency of the divorce action.

¶11On July 18,1977, the divorce court entered an order to show cause which required petitioner to show cause why that court should not direct him to make payments on the mortgage note, and utilities, maintenance, and other expenses with respect to the residence, during the pendency of the divorce action.

¶12On August 1, 1977, the divorce court entered an order requiring petitioner to pay all mortgage payments on the residence as well as the gas, electric, and water bills. However, as to the telephone bills, petitioner and Jean, who had separate telephones, were each required to pay his or her own bill.

¶13Petitioner and Jean, during the period from August 1, 1977, until the time of their divorce in 1978, continued to reside in the residence.

¶14The residence was a 2%-story house consisting of a basement, first floor, and second floor. On the first floor, there were a center entrance, a center hallway, and a center staircase. On the right side of the center hallway, there were a living room and a den which together extended the full length of the house. On the left side of the center hallway, there were a kitchen, breakfast nook, dining room, and a lavatory. On the second floor, there were a master bedroom and sitting room with two master closets, on the right side. On the left side, there were two bedrooms and a bath. In the basement, there were a recreation room, a darkroom, and a laundry room in which there were a stove, a refrigerator, and a deep freeze. The residence contained 1,863 square feet of living space.

¶15Petitioner and Jean had not lived together as husband and wife since 1971. They occupied separate bedrooms, used separate bathrooms, prepared meals at different places (Jean in the first floor kitchen, petitioner on the facilities in the laundry room in the basement), did not eat together, and did not converse with each other.

¶16Between August 1 and December 31, 1977, petitioner paid the following utility bills with respect to the residence:

Gas.$188.00

Electric. 440.00

Water. 47.32

Total. 675.32

¶17With respect to the payments on the mortgage on the residence during the period from August 1 through December 31, 1977, petitioner paid a total amount of $1,578, as follows:

Principal. $226.04

Interest. 477.40

Escrow. 874.56

Total. 1,578.00

¶18Prior to August 1, 1977, petitioner had also paid the utilities and the mortgage payments.

¶19Petitioner claimed itemized deductions for real estate taxes and interest on the mortgage in the amount of $732.34 and $779.93. Petitioner also claimed a deduction for alimony of $2,185.18, included in which were the real estate taxes and interest separately deducted. Petitioner has conceded that he is not entitled to deduct the same amounts twice. Respondent disallowed the claimed alimony deduction.

¶20OPINION

¶21We must decide whether the amounts paid by petitioner for the utilities and the mortgage payments on the residence, as he was directed to do by the Michigan divorce court, are deductible by him under section 215(a).2 The answer depends upon whether the amounts would be includable in Jean’s gross income under section 71(a)(3).3 However, if petitioner and Jean were not "separated” when the payments were made, as respondent contends, then the amounts are not includable in Jean’s gross income and petitioner is not entitled to a deduction.

¶22What the word "separated” means for purposes of the alimony deduction is not entirely clear. In Sydnes v. Commissioner, 68 T.C. 170, 173-176 (1977), this Court reasoned that a husband and wife involved in divorce proceedings, but still living in the same house, were not "separated,” emphasizing the language contained in section 1.71-l(b)(3), Income Tax Regs., that they must be "separated and living apart.” After reviewing the pertinent legislative history, we said (68 T.C. at 175-176):

The statutory history of the 1954 changes emphasizes that the factual status of whether the parties are separated rather than their marital status under local law is the key in determining whether amounts paid under a court order are includable in the recipient’s gross income and deductible by the payor. See S. Rept. No. 1622, 83d Cong., 2d Sess. 10 (1954). We conclude that "separated” as used in the statute and "separated” as used in the regulations mean living in separate residences. Only when living in separate residences do the parties incur the duplicate living expenses normally incurred by divorced or separated couples. In the absence of such duplication, and in the absence of any legislative history cited to us which expressly elucidates what Congress intended, we find it hard to believe that a mere continuation of shared living expenses following estrangement was intended by Congress to generate a deduction when the identical expenses would have been unavailable to the husband as a deduction before the estrangement took place. Moreover, the Court should not be required to delve into the intimate question of whether husband and wife are in fact living apart while residing in the same house. We therefore conclude that petitioner and Lugene were not separated during the period from April 1 to July 9, 1971, and that petitioner is not entitled to a deduction under section 215 for the temporary support payments made to Lugene.

¶23But the Court of Appeals for the Eighth Circuit, in reversing the Tax Court on this issue (577 F.2d 60), held that the requirement that the parties be "separated and living apart” may be met as a factual matter, even though they occupy the same residence, provided they occupy separate quarters.4

¶24We respectfully disagree with the Court of Appeals for the Eighth Circuit. It is our view Congress intended that a husband and wife should not be treated as "separated and living apart” when both are living under the same roof. See H. Rept. 1337, 83d Cong., 2d Sess. 9-10 (1954); S. Rept. 1622, 83d Cong., 2d Sess. 10-11 (1954). Consequently, we will adhere to the rationale of our prior opinion in Sydnes.

¶25Since we hold that petitioner and Jean were not "separated”, during the period from August 1 through December 31, 1977, none of the amounts paid by petitioner would be includable in Jean’s gross income, and therefore, no deduction is allowable to petitioner under section 215(a).

¶26It .is unnecessary to decide what portion of the disputed payments would be deductible by petitioner if he and Jean had been "separated” within the meaning of section 71(a)(3).

¶27Decision will be entered for the respondent.

¶28Reviewed by the Court.