The opinion
T.C. Memo. 1996-179
UNITED STATES TAX COURT
LARICK A. HILL AND FAWNI LITTLE,
A.K.A. FAWNI HILL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2004-94. Filed April 11, 1996.
Karen L. Hawkins, William E. Taggart, Jr. (specially
recognized), and Paul J. Barulich, for petitioners.
Bryce Kranzthor and Debra K. Estrem, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COLVIN, Judge: Respondent determined that petitioners are
liable for deficiencies in Federal income tax of $7,557 for 1990
and $14,314 for 1991, and penalties under section 6662 of $1,511
for 1990 and $2,863 for 1991.
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After concessions,1 we must decide whether payments by James
Little to Fawni Hill from August 1, 1990, to December 31, 1991,
were alimony as respondent contends, or child support or other
nonalimony payments as petitioners contend. We hold that the
payments were alimony.
References to petitioner are to Fawni Hill, formerly Fawni
Little. Section references are to the Internal Revenue Code in
effect for the years in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners lived in Woodside, California, when they filed
their petition.
Petitioner worked full time as an office manager from 1968
to 1973. She obtained a bachelor’s degree at age 32. After
college, she started a business not otherwise described in the
record. She later worked 2 years for a space-planning firm. In
1
Respondent concedes that petitioners are not liable for
penalties under sec. 6662(a) for 1990 and 1991.
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1988, petitioner earned $30,000. At the time of trial, she
worked as an interior designer.
B. Petitioner's Marriage to James Little
Petitioner married James Little on December 18, 1967. They
had two children: Lindsey, born on August 6, 1968; and
Christina, born on December 21, 1973.
James Little was chairman of the board and president of
Pacific Compensation Insurance Co. (Pacific Compensation) in
San Bruno, California, until November 9, 1991. He then became
president and chief executive officer of Fremont Indemnity Co.,
which acquired Pacific Compensation. James Little earned about
$230,000 in 1988 and less than $200,000 in 1989. He earned more
than $450,000 from Pacific Compensation and Fremont Indemnity Co.
in 1990. Fremont Indemnity Co. paid James Little about $399,000
in 1991.
C. Petitioner's Divorce From James Little, the Marital
Settlement Agreement, and the Judgment of Dissolution
In 1989, petitioner and James Little decided to end their
marriage. Petitioner and James Little and their lawyers
negotiated a marital support agreement. The negotiation took
about 6 months. Christina lived with petitioner at that time.
Petitioner and James Little agreed that they would have joint
legal custody of Christina and that petitioner would have primary
physical custody of her.
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On November 14, 1989, petitioner and James Little and their
lawyers signed a marital settlement agreement. The Superior
Court for the County of San Mateo, California, issued a judgment
of dissolution on November 22, 1989, divorcing petitioner and
James Little. The judgment of dissolution included the marital
settlement agreement.
The judgment of dissolution required James Little to pay
petitioner $5,253 per month in spousal support beginning
November 1, 1989, and continuing until petitioner or James Little
died, petitioner remarried or cohabited with an unrelated member
of the opposite sex for more than 30 consecutive days, or
January 1, 2009, whichever occurred first.
The marital settlement agreement required petitioner to sign
a $69,336 promissory note with a 9-percent annual interest rate
to James Little for her one-half of a line of credit with
Security Pacific Bank. Under the promissory note, petitioner
was required to pay James Little $1,329 per month with payments
credited first to interest and second to principal. The judgment
of dissolution gave joint custody of Christina to petitioner and
James Little, gave physical custody of Christina to petitioner,
and gave reasonable visitation rights to James Little. The
judgment of dissolution required James Little to pay child
support of $1,739 per month to petitioner from November 1, 1989,
until further order of the court, Christina’s death, her marriage
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or emancipation, her reaching age 19, or her reaching 18 and no
longer being a full-time high school student living with a
parent, whichever came first.
The marital settlement agreement prohibited James Little
from taking any offsets or credits against his child support
payments to petitioner. The judgment of dissolution provided
that if petitioner remarried before child support ended by
operation of law, child support would automatically increase to
$3,000 per month.
Christina was 15 years old and lived with petitioner on
November 22, 1989, when her parents divorced. James Little
remarried in January 1990. Christina lived with James Little
from mid-February to early April 1990.
Petitioner met Larick Hill in 1986. She first considered
marrying him late in 1989 or early in 1990. Under the marital
settlement agreement, James Little would no longer have to pay
petitioner the $5,253 per month in spousal support if she
remarried.
D. Negotiations To Change the Marital Settlement Agreement
In the spring or summer of 1990, petitioner and James Little
began to negotiate changes to the judgment of dissolution.
Petitioner and James Little discussed modifying the spousal
support provision in the marital settlement agreement. James
Little offered to remove a financial impediment to petitioner’s
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remarriage by proposing that spousal support payments continue
for a period of time after she remarried. Petitioner proposed
that James Little make the payments for 36 months. James Little
offered to extend the payments for 18 months. Petitioner asked
James Little to put his proposal in writing. On July 9, 1990,
James Little wrote the following in a letter to petitioner:
We have two outstanding issues. They are:
1. The appropriate adjustment to child support
payments effective August 1, 1990.
2. Proposed adjustments to the Marital Separation
Agreement should you remarry prior to
September 30, 1990.
Regarding item 1, to save both you and I legal expense,
I would be prepared to try an interim adjustment
between you and I as follows:
On the 5th of each month, beginning August 5,
1990, you will pay me $1,400.00, in the form
of a cashier’s check, as reimbursement for
child support expenses.
If we make an adjustment to the spousal support
agreement, as contemplated in item 2, we could also
formalize the child support changes in the documents we
file with the court. Please be advised that if this
temporary child support solution is unacceptable, I
will have to seek relief for the child support payments
through the judicial process. May I hear from you
regarding the child support issue by Saturday, July 14,
1990?
The following is my proposal covering adjustments to
the Marital Separation Agreement referenced as item 2:
A. Fawni acknowledges JEL has 90+% physical custody
of CNL.
B. JEL child support payments to FLL terminate.
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C. JEL waives child support payments from FLL.
D. If FLL remarries before September 30, 1990, on the
date of her marriage her debt to JEL is forgiven and
JEL will then pay $4,000.00 per month spousal support
through January 31, 1992 unless child support payments
by JEL for CNL are resumed for any reason.
E. If child support payments are resumed after FLL
has remarried, the $4,000 per month shall be reduced by
1.55 times the amount of child support.
F. JEL life insurance/annuity obligation to FLL to
cease upon FLL remarriage.
Petitioner and James Little lived a mile apart when James
Little sent his written proposal. On July 11, 1990, petitioner
responded to James Little’s letter as follows:
This is in response to your letter to me of yesterday
regarding child support and spousal support.
Item 1. Commencing August 1, 1990, child support can
be adjusted to reflect JEL having physical custody
(80%) under the following conditions:
A. FLL receives a letter from Christina stating
that she wishes to reside primarily with JEL until
age 18.
B. Child support payments to FLL to be based on
20% custody at JEL’s current compensation rate for
the same duration as specified in the MSA, due on
the 1st of each month, or promissory note to JEL
to be forgiven.
C. All legal expenses related to the above
transactions to be the sole responsibility of JEL,
including but not limited to reversing the above
should Christina wish to change her primary
residence prior to age 18.
D. JEL will assume 100% responsibility for
Christina’s educational expenses as well as
medical and dental expenses.
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OR
Item 2: With regard to a spousal support adjustment
if FLL remarries prior to 30 September 1990, the
following conditions are to be accepted:
A. Upon receipt of a letter from Christina
stating her desire to reside primarily with JEL,
FLL to acknowledge that JEL has physical custody
of Christina until such time as Christina reaches
18 or reverses her decision, whichever comes
first.
B. Child support to cease with the clear
understanding that JEL will be responsible for
100% of Christina’s educational expenses as well
as medical and dental expenses.
C. N/A
D. 1. N/A The debt is forgiven automatically
in the event of remarriage per MSA.
2. JEL to pay FLL adjusted spousal support
on the 1st of each month following FLL’s
remarriage in the amount of not less than $3,000
net to Fawni based on her tax bracket (33+9%) not
JEL’s. (28%) through May 31, 1992. JEL to provide
all legal expenses associated with this
modification to the MSA.
E. Should Christina desire to change her primary
residence prior to age 18, the amount of
spousal/child support will be determined by JEL’s
compensation at that time, but will not be less
than the amount of spousal support paid to FLL
following remarriage. JEL will be responsible for
all legal expenses associated with such change,
should it occur.
F. JEL’s life insurance obligation to FLL will
cease and he will provide Christina with a minimum
of $500,000 life insurance until age 25.
G. The necessary legal work to accomplish the
above is completed and accepted prior to 20 July
1990.
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Petitioner wrote the counterproposal without consulting with
her lawyer.
E. Modification of Judgment of Dissolution
Petitioner and James Little discussed a stipulation to
modify the marital settlement agreement after writing the
letters. Sheldon Lodmer, James Little’s divorce attorney, and
John Carter, James Little’s accountant and financial adviser,
drafted a stipulation to modify the marital settlement agreement.
Petitioner’s attorney reviewed it late in July 1990. Petitioner
told her attorney that she wanted to protect Christina’s standard
of living. Petitioner’s attorney told her that it was alright to
sign it. Petitioner had an accountant at the time, but did not
ask him to review the stipulation. Petitioner reviewed the
stipulation before she signed it.
On August 1, 1990, the Superior Court for the County of
San Mateo filed petitioner and James Little’s “Stipulation Re
Modification of Judgment of Dissolution of Marriage, Entered
November 22, 1989” (stipulation re modification of judgment of
dissolution), which provided:
1. All child support payments by Respondent,
pertaining to the minor, CHRISTINA NOEL LITTLE, born
December 21, 1973, as indicated in Paragraph III(A)
of the aforementioned Judgment, shall terminate on
August 1, 1990. Petitioner acknowledges that
Respondent has physical custody of said minor more
than 90% of the time.
2. In the event that Petitioner remarries prior
to August 30, 1990, the spousal support shall be
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reduced to $4,000 per month and shall continue through
January 31, 1992, at which time all spousal support
shall terminate and the Court shall not retain
jurisdiction to extend the same. Except as hereinafter
indicated, this spousal support order is non-
modifiable.
(A) The foregoing notwithstanding, in the
event that child support payments are resumed by
Respondent to Petitioner after Petitioner remarries,
the amount of spousal support paid by Respondent shall
be reduced by 1.55 times the amount of said child
support, up to a maximum reduction of $4,000.00 per
month.
3. The life insurance obligation of Respondent
referenced in Paragraph I(B) of the Judgment of
Dissolution of Marriage shall terminate upon
Petitioner’s remarriage.
At the time of the negotiations that led to the adoption
of the stipulation re modification of judgment of dissolution,
petitioner was interested in remarrying, especially when
Christina lived with her father. Petitioner did not believe
that Christina would live with James Little for a long time.
Petitioner and Larick A. Hill were married on August 10,
1990.
Christina returned to live with petitioner around October
1990, and remained there throughout the years in issue. James
Little moved to Southern California on January 5, 1991.
Christina visited him there about six times per year. She was
there 3 to 7 days per visit. Christina graduated from high
school in the spring of 1991. In the summer of 1991, after
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she graduated from high school, Christina worked as a
receptionist/typist. She earned more than $3,000.
Christina began attending college full time at the
University of Oregon in September 1991. Petitioner and James
Little each paid one-half of Christina's college tuition for
the 1991-92 school year.
Under the judgment of dissolution, James Little paid spousal
support to petitioner of $36,771 and child support of $12,173
from January 1, 1990, to July 31, 1990. Under the stipulation re
modification of judgment of dissolution, James Little paid
spousal support to petitioner of $20,000 from August 1 to
December 31, 1990, and $48,000 in 1991.
Petitioner reported that she received alimony of $28,000 in
1990.
OPINION
A. Contentions of the Parties
James Little made 17 $4,000 monthly payments from August 1,
1990, to January 31, 1992, as required by the stipulation re
modification of judgment of dissolution. We must decide whether
those amounts are alimony as respondent contends or child support
or other nonalimony payments as petitioners contend.
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B. Background
Alimony is taxable to the recipient and is deductible by
the payor. Secs. 71(a), 215(a). Alimony payments are not child
support payments. Sec. 71(c). Child support payments are
neither includable in income under section 71 nor deductible
under section 215. Child support is that part of a payment which
the divorce instrument fixes as payable for the support of the
children of the payor spouse. Sec. 71(c)(1). An amount is
treated as fixed under section 71(c)(1) if it will be reduced “on
the happening of a contingency specified in the [divorce]
instrument relating to a child (such as attaining a specified
age, marrying, dying, leaving school, or a similar contingency),”
sec. 71(c)(2)(A), or “at a time which can clearly be associated
with a contingency of a kind specified in subparagraph (A),” sec.
71(c)(2)(B).
The parties agree that this case should be decided by
applying section 72(c)(2)(B) and section 1.71-1T(c), Q&A-18,
Temporary Income Tax Regs., 49 Fed. Reg. 34457 (Aug. 31, 1984).2
2
Sec. 1.71-1T(c), Q&A-18, Temporary Income Tax Regs., 49
Fed. Reg. 34457 (Aug. 31, 1984), provides:
Q-18. When will a payment be treated as to be
reduced at a time which can clearly be associated with
the happening of a contingency relating to a child of
the payor?
A-18. There are two situations, described below,
(continued...)
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2
(...continued)
in which payments which would otherwise qualify as
alimony or separate maintenance payments will be
presumed to be reduced at a time clearly associated
with the happening of a contingency relating to a child
of the payor. In all other situations, reductions in
payments will not be treated as clearly associated with
the happening of a contingency relating to a child of
the payor.
The first situation referred to above is where
the payments are to be reduced not more than 6 months
before or after the date the child is to attain the
age of 18, 21, or local age of majority. The second
situation is where the payments are to be reduced on
two or more occasions which occur not more than one
year before or after a different child of the payor
spouse attains a certain age between the ages of 18
and 24, inclusive. The certain age referred to in
the preceding sentence must be the same for each such
child, but need not be a whole number of years.
The presumption in the two situations described
above that payments are to be reduced at a time clearly
associated with the happening of a contingency relating
to a child of the payor may be rebutted (either by the
Service or by taxpayers) by showing that the time at
which the payments are to be reduced was determined
independently of any contingencies relating to the
children of the payor. The presumption in the first
situation will be rebutted conclusively if the
reduction is a complete cessation of alimony or
separate maintenance payments during the sixth post-
separation year (described in A-21) or upon the
expiration of a 72-month period. The presumption may
also be rebutted in other circumstances, for example,
by showing that alimony payments are to be made for a
period customarily provided in the local jurisdiction,
(continued...)
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Payments which would otherwise qualify as alimony are presumed to
be child support if they are reduced within 6 months of the
child’s 18th or 21st birthday or legal age of majority. Sec.
1.71-1T(c), Q&A-18, Temporary Income Tax Regs., supra.
Respondent concedes that the payments at issue are presumed to be
child support under the temporary regulations because the
stipulation re modification of judgment of dissolution eliminated
alimony on January 31, 1992, which was within 6 months of
December 21, 1991, Christina's 18th birthday.
2
(...continued)
such as a period equal to one-half the duration of the
marriage.
Example: A and B are divorced on July 1, 1985,
when their children, C (born July 15, 1970) and D (born
September 23, 1972), are 14 and 12, respectively.
Under the divorce decree, A is to make alimony payments
to B of $2,000 per month. Such payments are to be
reduced to $1,500 per month on January 1, 1991 and to
$1,000 per month on January 1, 1995. On January 1,
1991, the date of the first reduction in payments, C
will be 20 years 5 months and 17 days old. On January
1, 1995, the date of the second reduction in payments,
D will be 22 years 3 months and 9 days old. Each of
the reductions in payments is to occur not more than
one year before or after a different child of A attains
the age of 21 years and 4 months. (Actually, the
reductions are to occur not more than one year before
or after C and D attain any of the ages 21 years 3
months and 9 days through 21 years 5 months and 17
days.) Accordingly, the reductions will be presumed to
clearly be associated with the happening of a
contingency relating to C and D. Unless this
presumption is rebutted, payments under the divorce
decree equal to the sum of the reductions ($1,000 per
month) will be treated as fixed for the support of the
children of A and therefore will not qualify as alimony
or separate maintenance payments.
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C. Whether Respondent Rebutted the Presumption Under Section
1.71-1T(c), Q&A-18, Temporary Income Tax Regs., That the
Payments Are Child Support
Petitioners contend that there was no evidence introduced at
trial to rebut the presumption.3 We disagree.
Section 1.71-1T(c), Q&A-18, Temporary Income Tax Regs.,
supra, provides that the taxpayer or the Commissioner may rebut
the presumption “by showing that the time at which the payments
are to be reduced was determined independently of any
contingencies relating to the children of the payor.” Respondent
has done so by showing that the parties chose January 31, 1992,
as part of eliminating a financial impediment to petitioner’s
remarriage and that it is purely coincidental that January 31,
1992, is within 6 months of Christina's 18th birthday.
Petitioner testified that the modification gave her a
financial incentive to remarry. The stipulation re modification
of judgment of dissolution does not refer to Christina's 18th
birthday, and, by its terms, it ends her child support. The
parties apparently did not discuss Christina's 18th birthday when
they negotiated the stipulation re modification of judgment of
dissolution. James Little testified as follows:
3
Petitioners also contend that respondent determined that
the payments at issue here are alimony because respondent allowed
James Little to deduct the amounts in issue in a year that is
closed by the statute of limitations.
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Q The date that was agreed upon for the
duration of the spousal support payments was
January 31st, 1992. How was that date agreed upon?
A My recollection is, like most items in this,
it was a negotiated settlement. And her -- Mrs. Hill's
original request was for thirty-six months. And there
was some dialogue back and forth which I don't remember
the specifics on, but we finally -- my position was to
split the difference, and that's what it's going to be.
Petitioner testified as follows:
Q Did you ever discuss with him why that
particular -- why he chose that particular date?
A It wasn't a date that he really chose. We
had discussed over the phone during these several
conversations sort of a timeframe. And thinking about
Christina become -- becoming eighteen, I wanted it to
at least cover that period of time. Christina was very
young. She was graduating from high school at age
seventeen. At that point I didn't know if she was
going to be going away to college her first year.
* * * * * * *
And I wanted to be -- to have a lifestyle for her
that she would be comfortable with, should I remarry.
* * * * * * *
I wasn't concerned about having compensation for
myself for eighteen months or five years or twenty
years. It was for Christina. It was for Christina's
expenses.
Petitioner testified that she told her divorce attorney that
she wanted to have funds to support Christina until she became
18.
Petitioner's and James Little's testimony shows that they
negotiated how long James Little would pay spousal support to
petitioner after she remarried. James Little did not say whether
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he considered Christina's 18th birthday. Petitioner said that
she considered Christina's 18th birthday. Neither petitioner nor
James Little testified that they discussed Christina's birthday
with each other. The stipulation re modification of judgment of
dissolution does not say that the parties considered Christina's
18th birthday. We conclude that the fact that January 31, 1992,
was within 6 months of Christina's 18th birthday was a
coincidence, and was not a contingency related to Christina.
Thus, the payments at issue are not presumed to be child support.
Our conclusion is consistent with the labels used by the
parties in the written agreement. The stipulation re
modification of judgment of dissolution states: "In the event
that Petitioner remarries prior to August 30, 1990, the spousal
support shall be reduced to $4,000 per month and shall continue
through January 31, 1992." The parties agreed to end child
support payments made by James Little.
The stipulation re modification of judgment of dissolution
states: "All child support payments by * * * [Little] shall
terminate on August 1, 1990." Petitioner was represented by
counsel who reviewed the document and said it was alright for
petitioner to sign it. Christina lived with James Little when he
and petitioner negotiated the stipulation re modification of
judgment of dissolution. The words petitioner and James Little
chose fit the substance of the arrangement that existed at the
time.
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Petitioners contend that the stipulation re modification of
judgment of dissolution is ambiguous. Petitioners point out
that the stipulation re modification of judgment of dissolution
contains a formula which, if child support is resumed later,
reduces spousal support by 1.55 times the amount of any child
support. This provision does not lead us to conclude that
payments made before child support resumes are child support.
The stipulation re modification of judgment of dissolution
clearly states that the payments at issue are spousal support and
that child support ended on August 1, 1990.
Petitioners contend that respondent must show that
petitioner and James Little chose the termination date based on a
specific event in Christina's or James Little's life other than
her 18th birthday. We disagree. Section 1.71-1T(c), Q&A-18,
Temporary Income Tax Regs., 49 Fed. Reg. 34457 (Aug. 31, 1984),
does not require that payments terminate based on a specific
event to overcome the presumption that payments which terminate
within 6 months of a child's 18th birthday are child support. It
provides that a party may overcome the presumption by showing
that the date the payments are to be reduced was chosen
independently of any contingencies relating to the children.
Respondent has done so by showing that it is merely a coincidence
that January 31, 1992, was within 6 months of Christina's 18th
birthday.
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Petitioners contend that respondent erroneously relied on
the fact that James Little had primary physical custody of
Christina when he and petitioner agreed to the stipulation re
modification of judgment of dissolution. Petitioners argue that
this was an error because the obligation to pay child support in
California does not always depend on who has primary physical
custody if the noncustodial spouse lacked resources to adequately
care for the child. See In re Marriage of Katz, 201 Cal. App. 3d
1029, 1038-1039 (1988). We disagree that we may not consider the
fact that James Little had primary physical custody of Christina.
In California, a parent generally meets his or her child support
obligation by maintaining custody of the child. In re Marriage
of Rasmussen, 155 Cal. App. 3d 805, 812 (1984). Petitioner has
not shown that she lacked resources to adequately care for
Christina similar to the example given by the court in In re
Marriage of Katz, supra. The fact that James Little had physical
custody is not dispositive, but we believe it is relevant to
deciding whether he and petitioner intended the payments at issue
to be child support.
Petitioners contend the stipulation re modification of
judgment of dissolution must be construed against James Little
because his advisers drafted it. Cal. Civil Code sec. 1654
(West 1985); 2 Restatement, Contracts 2d, sec. 206 (1981); 4
Williston, A Treatise on the Law of Contracts, sec. 621 (3d ed.
1961). We disagree. An agreement is construed against its
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drafters only to resolve ambiguities in the agreement.
Williston, supra. The stipulation re modification of judgment of
dissolution clearly states that the payments at issue are spousal
support and that child support ends.
Petitioners contend that we should not rely on the language
in the stipulation re modification of judgment of dissolution
because petitioner had much less educational and business
background than James Little. We disagree. Petitioner and her
attorney reviewed the stipulation re modification of judgment of
dissolution before they signed it. Petitioner has a bachelor’s
degree and business experience.
We conclude that respondent has rebutted the presumption
that the payments at issue are child support.
D. Whether the Payments at Issue Are Alimony
Petitioners contend that, even if respondent rebuts the
presumption that the payments at issue are child support, they
are not alimony under section 71(b). We disagree.
Petitioners bear the burden of proving that respondent's
determination that the payments at issue are alimony is
incorrect. Rule 142(a). Alimony is any payment in cash if:
(A) such payment is received by (or on behalf of) a
spouse under a divorce or separation instrument,
(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,
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(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.
Sec. 71(b)(1).
The payments at issue meet each of these requirements.
First, petitioner received payments under a divorce or separation
agreement. Second, the stipulation re modification of judgment
of dissolution does not state that petitioner need not include
the payments in gross income or that James Little may not deduct
the payments. Third, petitioner and James Little lived apart
when James Little made the payments at issue. Fourth, the
provision in the judgment of dissolution that payments were to
terminate when petitioner or James Little died was not modified
by the stipulation re modification of judgment of dissolution.
The stipulation re modification of judgment of dissolution
states: “the spousal support shall be reduced to $4,000 per
month and shall continue through January 31, 1992”. The
modification relates to the marital settlement agreement. The
judgment of dissolution provides that spousal support terminates
if petitioner or James Little dies. The stipulation re
modification of judgment of dissolution did not change this
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clause. Thus, the payments at issue meet all of the requirements
for alimony. Sec. 71(b)(1).
Petitioners contend that James Little was required to
continue the payments through January 31, 1992, even if
petitioner or James Little died before that date. We disagree.
The stipulation re modification of judgment of dissolution did
not modify the provision in the judgment of dissolution that
spousal support payments were to terminate when petitioner or
James Little died.
Petitioners assert that James Little's testimony shows that
the stipulation re modification of judgment of dissolution had
that effect. We disagree. James Little said:
Q * * * As part of your understanding of
the modification agreement, do you think that your
obligation to pay the $4,000 a month would have
terminated, had Mrs. Hill died prior to January 31st
of 1992? Do you still have the agreement?
A Uh-huh.
Q Do you need a copy?
A I would have assumed so. We probably would
have had to go back to court, but I would have assumed
it would have stopped.
Q But you're not saying that from anything
you find in the modification agreement; you're just
assuming?
A Yes.
Q What do you assume would have happened to
those $4,000 a month payments had Christina died before
January 31st, 1992?
A Nothing.
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Q Do you have any idea whether your estate
would have been obligated to continue the $4,000 a
month payments required by that modification had you
died prior to December 31st of 1992?
A I don’t recall specifically having talked
about that subject; no. And I’m not qualified to
speculate.
Q Well, I’m mostly asking whether you find it
in the agreement. I don’t want you to speculate.
A Oh. It’s not in the agreement.
This testimony does not establish or even suggest that his estate
would have been required to continue making payments until
January 31, 1992, if he had died before then.
Petitioners contend that, if respondent rebuts the
presumption, then the payments were neither alimony nor child
support. Petitioners give no reason that the amounts at issue
are not alimony except to restate their belief that the payments
at issue do not terminate when petitioner or James Little dies.
We conclude that the payments at issue are alimony for purposes
of sections 71(a) and 215(a).
Petitioners contend that the payments at issue are not
alimony because petitioner and James Little orally agreed to
modify the stipulation re modification of judgment of dissolution
in October 1990. We disagree.
Petitioners’ contention is inconsistent with their 1990 tax
return on which they reported that petitioner received $28,000 in
alimony. Under petitioners’ contention, petitioner would have
received $44,771 in alimony in 1990.
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Petitioner testified that James Little told her on the
telephone that they could treat the payments at issue as child
support. James Little denied that he said that. Petitioner and
James Little communicated in writing when dealing with important
financial matters. We think it is highly unlikely that they
would have orally agreed to this change. We conclude that
petitioner and James Little did not orally modify the stipulation
re modification of judgment of dissolution.
Petitioners contend that the $4,000 per month payments at
issue were child support payments because the child support
payment requirements in the judgment of dissolution were not
changed by the stipulation re modification of judgment of
dissolution. We disagree.
The stipulation re modification of judgment of dissolution
provided that child support payments by James Little pursuant to
paragraph III(A) of the judgment of dissolution would terminate
on August 1, 1990. Thus, the stipulation re modification of
judgment of dissolution changed James Little's child support
requirements by ending his obligation to pay child support to
petitioner of $1,739 per month.
To reflect concessions and the foregoing,
Decision will be
entered under Rule 155.