Neeman v. Commissioner , 13 T.C. 397 ( 1949 )

Muriel Dodge Neeman (Formerly Muriel Dodge Conklin), Petitioner, v. Commissioner of Internal Revenue, Respondent

Neeman v. Commissioner

Docket No. 20068

United States Tax Court

13 T.C. 397; 1949 U.S. Tax Ct. LEXIS 79;

September 28, 1949, Promulgated

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Decision will be entered for the respondent.

1. Income -- Alimony -- Agreement Incident to Divorce. -- Where, incident to a divorce, parties amend an old agreement, not incident to a divorce, the whole agreement, as amended, is incident to a divorce within section 22 (k), I. R. C.

2. Income -- Alimony -- Agreement to Pay Taxes on Payments. -- An agreement by the husband to pay Federal taxes on payments to his wife is not binding upon Commissioner in applying section 22 (k).

3. Head of a Family. -- Wife held not "head of a family."

Morton C. Fitch, Esq., and Lawrence R. Condon, Esq., for the petitioner.

John J. Madden, Esq., for the respondent.

Murdock, Judge.

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MURDOCK

The Commissioner determined a deficiency of $ 8,507.58 in income tax of the petitioner for 1943. Two issues are raised by the pleadings; one is whether payments received by the petitioner in 1942 and 1943 from one of her former husbands are taxable income to her within section 22 (k), and the other is whether she is entitled to a personal exemption as head of a family for 1942.

FINDINGS OF FACT.

The petitioner and Horace E. Dodge were married on May 17, 1928. They entered into an agreement on August 4, 1933, which was not entered into incident to any divorce. It recited that the couple had two children, one born in 1930 and the other in 1932; the parties were living apart; and the agreement was to settle property rights and provide financially for the wife and children. It required the husband to make periodic payments to the wife of $ 24,000 annually until one of several specified events should occur.

The petitioner and Dodge entered into another agreement on October 23, 1939. It was incident to a divorce obtained by the petitioner from Dodge on October 26, 1939. The agreement of October 23, 1939, provided that "The original Agreement dated August 4, 1933, * * * remains unchanged and in full force and effect, except as follows." A change, material to the present proceeding, was an increase, from $ 24,000 annually to $ 30,000 annually, of the amount payable until the petitioner remarried and an increase, from $ 7,500 to $ 15,000 annually, of the amount payable by Dodge to her after she remarried. The agreement of October 23, 1939, contained the following provision: "These modifications shall only become effective upon approval thereof by the Circuit Court for the County of Wayne, in Chancery, and of the entry of a decree for divorce in re Dodge v. Dodge, No. 277,960 on or before November 15, 1939, and upon such decree entered by said Court in said cause becoming final and unappealable."

The final decree of divorce, entered October 26, 1939, approved, ratified and confirmed the agreement of August 4, 1933, as amended by the agreement of October 23, 1939, covering property rights, custody and support of the children and provisions for the wife.

The petitioner received $ 15,000 from Dodge in 1942 and 1943 in accordance with the above mentioned agreements and decree.

The petitioner also received $ 750 per month from Dodge during 1942 for the support, maintenance and education of their two children. She maintained a house, sent the children to school, and did everything else that was necessary for them during 1942, spending most of the money received from Dodge on their education and maintenance. The children were under her custody during all of 1942. The record does not show how much, if any, of her own money was spent by the petitioner during 1942 for the support or education of the two children.

The Commissioner, in determining the deficiency, included $ 15,000 in the petitioner's income for each of the years 1942 and 1943, with the explanation that it represented alimony taxable to her under section 22 (k). He also held that she was not the head of a family during 1942 within section 25 (b) (1) and reduced her personal exemption from $ 1,200 claimed to $ 500 allowed.

The stipulation of facts is incorporated herein by this reference.

OPINION.

The petitioner contends that the payments of $ 15,000 annually received by her from Dodge were not in discharge of a legal obligation which, because of the marital or family relationship, was imposed upon or incurred by the husband under the decree of divorce or under a written instrument incident to the divorce. See sec. 22 (k), I. R. C. She argues that they were received under the agreement of August 4, 1933, and that was not incident to the divorce. The facts show that she and Dodge entered into a new agreement just three days prior to their divorce, which agreement adopted in part the former agreement, but made new provisions for the payments here in question. The new agreement was incident to the divorce and was made a part of the decree by reference. Cf. Robert Wood Johnson, 10 T. C. 647. Section 22 (k) applies.

The petitioner also makes an argument based upon a provision in the agreement that Dodge would pay any Federal taxes which might be due on moneys received by the petitioner from him. That provision is not binding upon the Commissioner of Internal Revenue and can not prevent him from determining the amount of taxes due under the Internal Revenue Code from the taxpayer. Frank R. Casey, 12 T. C. 224; John H. Humbert, 24 B. T. A. 828. Cf. Old Colony Trust Co. v. Commissioner, 279 U.S. 716">279 U.S. 716; Phillips v. Commissioner, 283 U.S. 589">283 U.S. 589.

The petitioner in her brief attempts to raise the important question of whether the payments could be taxable income to the petitioner under the Sixteenth and Fifth Amendments to the Constitution. The Commissioner has made no reply to these arguments. However, a question of the constitutionality of a statute will not be considered by this Court where, as here, it has not been specifically pleaded. Frederick N. Dillon, 20 B. T. A. 690; Coca-Cola Bottling Co., 22 B. T. A. 686. Cf. Mary W. Pingree, 45 B. T. A. 32.

The petitioner claims that she comes within the definition of "head of a family" given in section 19.25-4 of Regulations 103. It recognizes as head of a family one "who actually supports and maintains in one household one or more individuals who are closely connected with him by blood relationship, relationship by marriage, or by adoption, and whose right to exercise family control and provide for these dependent individuals is based upon some moral or legal obligation." The petitioner has not proven facts to bring her within that definition. She has not shown that she actually supported the children substantially from her funds, as opposed to those furnished by Dodge for the express purpose, or that the children were "dependent individuals" within the meaning of the definition. Cf. Eleanor L. Mack, 37 B. T. A. 1101; Myrtle S. Carson, 47 B. T. A. 163.

Decision will be entered for the respondent.