SCHILLING v. COMMISSIONER OF INTERNAL REVENUE
T.C. Memo. 2012-256
United States Tax Court.
Filed September 5, 2012.
Each of the first three reductions in the spousal support payments petitioner received from her ex-husband was made because one of the three youngest children either reached 18 or left for college, and, as explained, respondent has recognized those events as contingencies relating to the three children under section 72(c)(A).
The March 31, 2009, termination (after six years of payments) of all further support payments to petitioner occurred within six months of child C's 21st birthday, but the presumption applicable to the first situation described in the temporary regulations (that support payments would be treated as related to a contingency relating to a child under section 72(c)(B)) is "conclusively rebutted" here because of the rule stated in the last quoted sentence of the temporary regulations—namely, a complete cessation of support payments during the sixth postseparation year does not qualify as a contingency relating to a child.
Under the Commissioner's temporary regulations, no conclusive rebuttal rule appears to apply to negate the presumption applicable to the second situation described in the temporary regulations. However, as indicated above, the second situation involves multiple reductions in payments where each reduction occurs within a specified time in relation to a different child of the taxpayer. Thus, to be treated as child support under the second situation described in the temporary regulations, each of the four reductions in support payments made in this case would have to have been associated with a different child of petitioner (i.e., petitioner would have to have had four children whose specified birthdays occurred within the time window of the second situation). Petitioner had three children whose birthdays appear to fall within that window, but not a fourth "different" child. Therefore, the fourth (or March 31, 2009) reduction or termination of support payments does not qualify under the second situation described in the temporary regulations, and no presumption of child support treatment applies thereto.
We reject petitioner's efforts to classify under the temporary regulations the March 31, 2009, termination of spousal support as a fourth reduction clearly associated with a contingency relating to a child. On March 31, 2009, a complete cessation of support payments occurred, and on the evidence before us that cessation has not been clearly associated with a contingency relating to a child.2
Finally, the amended shared parenting plan between petitioner and her ex-husband provided that her ex-husband would pay her child support of "$0.00 per month, per child * * * [and that] the amount of $2,450 per month described in the parties separation agreement * * * [is] calculated to provide support for the minor children as well as * * * [petitioner]." Here, the monthly spousal support payments were for the support and maintenance of petitioner and the three minor children. Because neither the separation agreement, the divorce decree, nor the shared parenting plan specifically designated any portion of the spousal support payments for the support of the children, the entire amount of such payments is includible in petitioner's income as alimony, subject to respondent's adjustments discussed above. See sec. 1.71-1(e), Income Tax Regs.; see also Maes v. United States, No. CV-09-42-H-DWM, 2010 U.S. Dist. LEXIS 109205, at *9 (D. Mont. Oct. 13, 2010) ("If the payee can exercise complete discretion on how to spend the payment, and the parties did not clearly calculate part of the payment to constitute child support, then the entire payment is alimony and taxable to the payee.").
After the three adjustments for the child support portion of the spousal support payments she received in 2006, petitioner has not demonstrated that these payments should be treated as something other than alimony.
To reflect the foregoing,