The mortgage on the marital residence was not yet fully paid during 2010. Luke lived with Resnik's ex-wife on the mortgaged premises on a permanent basis in 2010.2015 Tax Ct. Summary LEXIS 25">*28 Thus, Resnik's obligation to make "maintenance" payments under paragraph 11 of the divorce instrument remained in effect for the entire year of 2010. In accordance with the provisions in paragraph 11 of the divorce instrument, Resnik paid $14,166 to Wells Fargo during 2010. The parties have stipulated that Wells Fargo received these payments on behalf of Resnik's ex-wife.

The divorce instrument does not designate the "maintenance" payments that Resnik paid to Wells Fargo as either not includible in his ex-wife's gross income under section 71 or not deductible by Resnik under section 215. Resnik and his ex-wife were not members of the same household at any time during 2010. Resnik would not be liable for these "maintenance" payments (or any substitute) after the death of his ex-wife.

On April 15, 2011, Resnik electronically filed a Form 1040, "U.S. Individual Income Tax Return", for the 2010 tax year. On that return Resnik deducted $14,166 for alimony or separate maintenance.

On October 16, 2012, Resnik filed a Form 1040X, "Amended U.S. Individual Income Tax Return", for the 2010 tax year. As on his original return Resnik deducted $14,166 for alimony or separate maintenance.

On September2015 Tax Ct. Summary LEXIS 25">*29 25, 2013, the IRS issued the notice of deficiency to Resnik for the 2010 tax year.

Generally, the taxpayer bears the burden of proving, by a preponderance of the evidence, that the determinations in the notice of deficiency are erroneous. Tax Ct. R. Prac. & Proc. 142(a)(1); Welch v. Helvering, 290 U.S. 111">290 U.S. 111, 290 U.S. 111">115 (1933). In some cases the burden of proof with respect to relevant factual issues may shift to the IRS under section 7491(a). We need not decide whether the burden of proof shifts to the IRS because the relevant facts are stipulated and only a legal issue remains. See Estate of Morgens v. Commissioner, 133 T.C. 402">133 T.C. 402, 133 T.C. 402">409 (2009), aff'd, 678 F.3d 769">678 F.3d 769 (9th Cir. 2012).

Section 215(a) provides that an individual may generally deduct "alimony or separate maintenance payments" made during the taxable year. Section 215(b) provides that "alimony or separate maintenance payments" means any "alimony or separate maintenance payment" as defined in section 71(b) if the payment is "includible in the gross income of the recipient under section 71."

Section 71(a) provides that gross income includes "amounts received as alimony or separate maintenance payments." Section 71(b)(1) defines an "alimony or separate maintenance payment" as any payment in cash if: (1) the payment is received by, or on behalf of, a spouse³ under a divorce or separation instrument,2015 Tax Ct. Summary LEXIS 25">*30 (2) the divorce or separation instrument does not designate the payment as not includible in gross income (of the payee spouse) under section 71 and not allowable as a deduction (to the payor spouse) under section 215, (3) the payee spouse and the payor spouse are not members of the same household at the time the payment is made, and (4) the payor spouse is not liable for any payments for any period after the death of the payee spouse. However, even if a payment meets the criteria for an "alimony or separate maintenance payment" set out in section 71(b)(1), that part of any payment that the divorce instrument fixes as a sum payable for the support of children of the payor spouse is not subject to section 71(a) and is therefore not included in the gross income of the payee spouse. Sec. 71(a), (c)(1). Consequently, that part of any payment that the divorce instrument fixes as payable for the support of children of the payor spouse is not deductible as alimony or separate maintenance. See secs. 71(a), (c)(1) and (2), 215(a) and (b).

Under section 71(c)(2), if any amount specified in the divorce instrument "will2015 Tax Ct. Summary LEXIS 25">*31 be reduced" on the happening of a contingency specified in the instrument that relates to a child of the payor spouse, then an amount equal to the amount that "will be reduced" is treated as fixed as a sum payable for the support of the children of the payor spouse. A contingency relates to a child of the payor spouse if the contingency depends on any event relating to that child, regardless of whether the event is certain or likely to occur. Sec. 1.71-1T(c), Q&A-17, Temporary Income Tax Regs., 49 Fed. Reg. 34456 (Aug. 31, 1984). Events that relate to a child of the payor spouse include: the child's attaining a specified age or income level, dying, marrying, leaving school, leaving the payee spouse's household, or gaining employment. Sec. 71(c)(2); sec. 1.71-1T(c), Q&A-17, Temporary Income Tax Regs., supra.

The parties agree that Resnik's "maintenance" payments during 2010 meet the criteria for alimony or separate maintenance set out in section 71(b)(1). But according to the terms of the Resniks' divorce instrument, Resnik was required to make "maintenance" payments only until either: (1) the mortgage was paid in full or (2) the Resniks' oldest child, Luke, no longer lived with Resnik's ex-wife on the mortgaged premises on a permanent basis. Consequently, the amount of Resnik's "maintenance" payments "will be reduced"2015 Tax Ct. Summary LEXIS 25">*32 to zero in the event his oldest son, Luke, no longer lives with Resnik's ex-wife on a permanent basis. This event is a contingency relating to a child of the payor spouse. Seesec. 1.71-1T(c), Q&A-17, Temporary Income Tax Regs., supra. By reason of section 71(c)(2), the amount of "maintenance" payments made by Resnik during 2010 must be treated as fixed by the divorce instrument as payable for Luke's support. Accordingly, Resnik is not entitled to an alimony-or-separate-maintenance deduction for 2010.

Resnik argues that section 71(c)(2) does not recharacterize any amount as "payable for the support of children of the payor spouse" until the relevant "contingency" has actually occurred. As of 2010, the "contingency" of Luke's moving out of the mortgaged premises had not occurred, and no reduction in the amount of "maintenance" payments required of Resnik under the divorce instrument had occurred.

Resnik's argument contradicts the plain language of section 71(c)(2). Section 71(c)(2) works a recharacterization "if any amount specified in the instrument will be reduced" upon the "contingency". (Emphasis added.) If such a hypothetical reduction occurred, the effect of section 71(c)(2) is that "an amount equal to the amount of such reduction2015 Tax Ct. Summary LEXIS 25">*33 will be treated as an amount fixed as payable for the support of children of the payor spouse." So, for example, in Fosberg v. Commissioner, T.C. Memo. 1992-713, 64 T.C.M. 1527">64 T.C.M. 1527, 1528 (1992), a 1985 divorce judgment required the taxpayer to pay his ex-wife the sum of $150 per week until she died or remarried or until their youngest child reached the age of 18, whichever occurred first. During 1987, before their youngest child had reached the age of 18, the taxpayer paid his ex-wife $7,800 (or $150 per week for 52 weeks). Id. Section 71(c)(2)(A) was applicable to these $150-per-week payments because the payments "will be reduced to zero when petitioner's youngest child reaches the age of 18 years". Id., 64 T.C.M. 1527">64 T.C.M. (CCH) at 1529 (emphasis added).^{42015 Tax Ct. Summary LEXIS 25">*34}

Resnik concedes that he is liable for the accuracy-related penalty under section 6662(a) if he is not entitled to an alimony-or-separate-maintenance deduction for 2010. In accordance with this opinion, Resnik is liable for an accuracy-related penalty under section 6662(a) of $794.40.

In reaching our holdings, we have considered all arguments made, and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit.

To reflect the foregoing,

Decision will be entered for respondent.