2. The Wife shall have custody of their five minor children, provided, however, that if the Wife remarries, the Husband shall have the option of petitioning the Probate Court for the custody of the minor children. If custody is granted to the Husband, all payments hereunder shall cease.

Clause B of the agreement provided as follows:

1. To permit the Husband to visit with the children at all reasonable times and to allow the children to visit him at all reasonable times, such visits not to be made at a time or times when they would interfere with the normal activities of the children, such as school, and more specifically to allow the Husband to have the children stay with him as follows:

a. One weekend every month.

b. Two Sundays every month from 10:00 a. m. to 10:00 p. m.

c. One week during the Christmas holidays.

d. Two weeks during the summer vacation period.

e. One week during the Easter1958 U.S. Tax Ct. LEXIS 11">*21 holidays or at some other holiday season in the year.

Clause E of the agreement provided that it should be construed under the laws of Massachusetts, and clause F provided as follows:

F. The provisions of this agreement with respect to the support of the wife and children and the custody of the children shall be brought to the attention of the court at the time of hearing on the libel, and so much thereof shall be embodied in the decree of the court as it deems proper.

In addition to the above-quoted provisions, this agreement of November 10 also provided for settlement of all property rights of Mary and Arthur in all real and personal property owned by them. One of these provisions was for payment by Arthur to Mary of the sum of $ 10,000 as her share in the equity in the real estate at 182 Adams Street, Milton, Massachusetts, then being occupied by her as her residence, with the provision for increase in payments to Mary if the property were sold for more than $ 27,500, to be paid in several installments, the last of which was to be paid on or before December 1, 1951. The agreement also provided that Mary would consult with Arthur regarding medical treatment for the children 1958 U.S. Tax Ct. LEXIS 11">*22 and on all matters pertaining to selection of schools and educational facilities for the children.

Three days after the above agreement was signed, on November 13, 1950, the Probate Court entered a decree nisi granting a divorce to Mary, and providing as follows with respect to the custody and support of the children and Mary:

31 T.C. 596">*601 the care and custody of their minor children, namely: Anne C. Metcalf, Helen C. Metcalf, Mary L. Metcalf, Arthur G. B. Metcalf, Jr., and Hope S. Metcalf be and it hereby is awarded to the said libellant with the right to the libellee to see said children at reasonable times. The libellee is ordered to pay to the libellant for the support of the libellant and said minor children the sum of one hundred fifty dollars on Saturday, November 18, 1950, and the further sum of one hundred fifty dollars on each and every Saturday thereafter until the further order of the Court. The libellee is also to pay all medical and private school tuition and expenses of the children all until the further order of the Court.

The decree made no reference to the agreement of November 10. This decree became absolute on May 14, 1951.

On June 6, 1951, Mary filed a petition1958 U.S. Tax Ct. LEXIS 11">*23 for modification of said decree of November 13, 1950, seeking to have the amount of weekly payments for her support and that of her children increased. The phraseology used in this petition simply quoted from the prior decree of the court with respect to Arthur's obligations for payments to Mary and requested that the court modify said decree to provide for an increase in the weekly sum which Arthur should pay to Mary under said decree.

Pursuant to said petition, a decree was entered by the Probate Court on November 23, 1951, in which the decree of November 13, 1950, was altered and modified "by increasing the order for support of said Mary C. Metcalf and the minor children of the parties from one hundred fifty dollars per week to one hundred seventy-five dollars per week, commencing on Saturday, November 24, 1951," and also further modifying said decree of November 13, 1950, by substituting for the clause giving Arthur the right to see the children at reasonable times a clause giving him more specific rights in this respect, which clause was in the exact language contained in paragraph B-1 of the agreement of November 10, 1950, quoted above.

On January 5, 1954, Arthur filed a petition1958 U.S. Tax Ct. LEXIS 11">*24 with the Probate Court asking for custody of Anne, one of the five children. This petition recited the previous history of the action, stating that, under the terms of the decree of November 13, 1950, "custody and support of the minor children of the parties was granted to the respondent, Mary C. Metcalf," and stating that since the entry of the decree of November 23, 1951, circumstances had arisen which in petitioner's opinion required modification of the decree with respect to the custody of Anne C. Metcalf. The petition prayed that the decree of November 23, 1951, be modified or enlarged providing that custody of Anne be granted to Arthur, or in the alternative that the provisions for custody in the former decree be modified and enlarged by providing, with reference to Anne, that Arthur should "have the right to her companionship and to have her visit or live with him at such times and for such periods as may be agreed upon from time to time" by Arthur and 31 T.C. 596">*602 Mary. This petition did not request any change in the weekly amounts to be paid by Arthur to Mary.

Pursuant to said petition, a decree was entered by the Probate Court on April 21, 1954, granting custody of Anne 1958 U.S. Tax Ct. LEXIS 11">*25 to Arthur, with the right of Mary to visit and enjoy the companionship of Anne at any and all reasonable times as may be mutually agreed upon by Arthur and Mary. This decree made no adjustment in the amount to be paid by Arthur to Mary.

On October 14, 1954, Mary filed a petition in the Probate Court reciting the history of the proceeding and the various decrees made therein, and reciting further that, on September 26, 1954, she married Arthur D. Thomson. The prayer of the petition is that the court establish such amount as the court shall determine to be paid for the support of Helen C. Metcalf, Mary L. Metcalf, Arthur G. B. Metcalf, Jr., and Hope S. Metcalf from September 26, 1954.

Pursuant to the above petition, a decree was entered by the Probate Court on January 18, 1955, as follows:

It is decreed that the decree of this Court dated November 13, 1950 as modified by decrees of November 23, 1951 and April 21, 1954 be further modified by reducing the order of support from one hundred seventy-five dollars per week to one hundred twenty-five dollars per week for the support of Helen C. Metcalf, Mary L. Metcalf, Arthur G. B. Metcalf, Jr. and Hope S. Metcalf, minor children of the1958 U.S. Tax Ct. LEXIS 11">*26 parties, the first payment to be made on Saturday, January 22, 1955 and payable on each and every Saturday thereafter until the further order of the Court.

The agreement entered into between the parties, dated November 10, 1950, was not specifically incorporated by reference into any decree of the Probate Court, but such agreement was incident to the divorce.

The principal question for decision is whether certain periodic payments made by Arthur to Mary in the year 1951 are taxable to Mary under section 22 (k) and deductible by Arthur under section 23 (u) of the Internal Revenue Code of 1939.

We have before us the petitions for redetermination of tax of both the former husband and wife because, in order to protect the revenue, the Commissioner proposed to tax all the payments to Mary and allow Arthur to deduct only $ 1,300 thereof. However, on brief, the Commissioner argues that only $ 1,450 of the total of $ 7,950 paid in the year 1951 should be included in Mary's taxable income, and only $ 1,450 should be deductible by Arthur.

Arthur argues that the payments were made only under the various decrees of the Probate Court in the divorce proceeding and that a settlement agreement executed1958 U.S. Tax Ct. LEXIS 11">*27 3 days before the divorce decree nisi was entered, insofar as it dealt with alimony and support payments, was not only repudiated by the parties but also lost all legal significance when the Probate Court assumed jurisdiction of the subject matter. Inasmuch as the decrees in effect during the year 1951 did not designate 31 T.C. 596">*603 any specific amount of the weekly payments to Mary as being payable for the support of the minor children, he argues that all of it is taxable to Mary and deductible by him.

Mary's argument is that the payments she received in 1951 were received pursuant to the terms of the separation agreement which was incident to the divorce and that the agreement considered as a whole and the subsequent actions of the parties and the court clearly identifies the portion of the payments payable for the support of the minor children, being $ 25 per week for each of the five children, and under section 22 (k) only those amounts received in excess of the payments for support of the children, or $ 25 per week, are taxable to her. Respondent agrees with Mary's argument on brief, except as to amount.

Section 22 (k) ³1958 U.S. Tax Ct. LEXIS 11">*29 taxes to the divorced wife periodic payments received by1958 U.S. Tax Ct. LEXIS 11">*28 her from her divorced husband under a decree of divorce or separate maintenance or under a written instrument incident to such divorce or separation. The subsection does not apply to "that part of any such periodic payment which the terms of the decree or written instrument fix, in terms of an amount of money or a portion of the payment, as a sum which is payable for the support of minor children of such husband." Section 23 (u)⁴ allows the husband a deduction of the amount taxable to the divorced wife under section 22 (k).

The arguments and committee reports on these particular provisions of the law when they were adopted by Congress in 1942 do not shed too much light on the problem here involved. See H. Rept. No. 2333, 77th Cong., 2d Sess., pp. 71-74, and S. Rept. No. 1631, 77th Cong., 2d Sess., pp. 83-87, on the Revenue Bill of 1942 (H. R. 7378); 1 Seidman's Legislative History of Federal Income and Excess Profits Tax Laws, 1953-1939, pp. 1275-86. It is clear, however, that the sections were adopted to afford relief to husbands who were 31 T.C. 596">*604 required to pay large amounts1958 U.S. Tax Ct. LEXIS 11">*30 of alimony and, under existing law, were left with little or nothing for themselves after paying high taxes on the alimony. It is also apparent that the only amounts to which such relief was directed were payments made in the nature of alimony for the support of the wife. The husband was not to be relieved of paying tax on amounts paid for the support of minor children. Mandel v. Commissioner, 185 F.2d 50 (C. A. 7), affirming a Memorandum Opinion of this Court dated May 6, 1949. The discussion with reference to the latter provision, however, was in the language appearing in Regulations 118, section 39.22 (k) -- that section 22 (k) was not to apply to that part of the periodic payments "which, by the terms of the decree or the written instrument" is "specifically designated" as a sum payable for the support of minor children.

This Court has on numerous occasions held that in any adequate consideration of this problem the agreement or decree as a whole must be considered and the mere fact that the agreement or decree provides only a single payment for support of both the wife and children is not the controlling factor where it is evident from 1958 U.S. Tax Ct. LEXIS 11">*31 other provisions that a specific sum or part of the payments is payable for the support of the children. Robert W. Budd, 7 T.C. 413, affd. 177 F.2d 198 (C. A. 6); Warren Leslie, Jr., 10 T.C. 807; Truman W. Morsman, 27 T.C. 520; Russell W. Boettiger, 31 T.C. 477. This interpretation has been approved by various appellate courts. Budd v. Commissioner, supra; Mandel v. Commissioner, supra;Weil v. Commissioner, 240 F.2d 584 (C. A. 2), reversing 22 T.C. 612 and 23 T.C. 630 on other grounds, certiorari denied 353 U.S. 958">353 U.S. 958.

This Court has also held that each of these cases must be decided on its own facts, and it is obvious that this must be so because few, if any, of the support provisions involved are exactly alike. We have also held that the answer must be found in the terminology of the decree or written instrument itself. Truman W. Morsman, supra.1958 U.S. Tax Ct. LEXIS 11">*32 If the writing itself does not fix an amount as payable for the support of the children the entire amount of the payments must be included in the taxable income of the wife and correspondingly is deductible by the husband. However, if it can be ascertained from either a valid and effective written instrument executed incident to the divorce, or the decree of the court, that a specific amount of the payments to the wife are earmarked for support of the children, that is sufficient. We do not think the decree must incorporate all the pertinent language of the agreement in it to meet this test if it is clear that the agreement survives the decree and it contains the necessary provisions.

31 T.C. 596">*605 In the instant case all parties agree that an agreement such as the one here involved is valid and enforcible under Massachusetts law, Bailey v. Dillon, 186 Mass. 244">186 Mass. 244, 71 N.E. 538 (1904); that while such an agreement cannot deprive the Probate Court of its jurisdiction over matters such as alimony, support, and custody of minor children, Wilson v. Caswell, 272 Mass. 297">272 Mass. 297, 172 N.E. 251 (1930);1958 U.S. Tax Ct. LEXIS 11">*33 neither does the Probate Court have power to alter the terms of the contract, Schillander v. Schillander, 307 Mass. 96">307 Mass. 96, 29 N.E.2d 686 (1940); that the entry of a divorce decree does not necessarily render such an agreement null and void, Freeman v. Sieve, 323 Mass. 652">323 Mass. 652, 84 N.E.2d 16 (1949); and whether an agreement is to survive the decree of divorce is governed by the intent of the parties to the contract determined from the terms of the contract, 323 Mass. 652">Freeman v. Sieve, supra.

We think it is clear that the agreement here involved was intended to and did survive the divorce decree. It is unlikely that the parties would enter into such a detailed agreement as to property rights, custody of children, and support of wife and children just 3 days before the decree nisi was entered without insisting that the agreement or all the terms thereof be adopted or included in the decree, unless it was intended that the agreement remain in full force and effect. The decree nisi was not inconsistent with the agreement in any material respect and directed1958 U.S. Tax Ct. LEXIS 11">*34 payment of the same weekly amounts specified in the agreement. A subsequent decree of the court incorporated the identical language of the agreement with respect to the husband's rights to visit with the children. The wife must have been acting under the agreement when, after her remarriage, she voluntarily brought this fact before the court for a reduction in weekly payments, because no previous order of the court had so directed. The husband did not request a reduction in support payments when he obtained custody of one of the children, presumably because the agreement did not provide for such reduction in the event custody of only one child was given to the husband. The fact that the court increased the weekly payments by $ 25 in 1951 and gave custody of one of the children to the husband did not nullify the provisions of the agreement with respect to the payments therein agreed upon. The agreement itself contained no termination provision.

We are of the opinion that the agreement was intended to and did survive the divorce, that the various decrees of the court implemented and at times supplemented the agreement, and that we must look to the agreement as well as the various1958 U.S. Tax Ct. LEXIS 11">*35 court proceedings to determine whether an amount or portions of the payments were specifically designated or earmarked for the support of the children.

The agreement provided that the wife should have custody of the five minor children and that the husband should pay to the wife for 31 T.C. 596">*606 her support and that of the five children the sum of $ 150 per week, plus additional amounts, as incurred, for medical and tuition expenses of the children, all subject to the following conditions:

(a) Upon the death of the wife all payments were to cease.

(b) Upon remarriage of the wife the payments were to be decreased by $ 25 per week.

(c) As each child reached the age of 21 years, or died, or married, or became self-supporting, the payments were to be decreased by $ 25 per week.

The agreement also provided that if the wife remarried, the husband had the right to petition the court for custody of all the children and, if granted, all payments were to cease.

We think the above provisions of the agreement and the agreement as a whole earmarked $ 25 per week of the total of $ 150 per week required to be paid by the husband to the wife as payments for the support of each minor child and $ 25 as1958 U.S. Tax Ct. LEXIS 11">*36 support for the wife. While the entire $ 150 was to be paid to the wife in a single sum, she was required to use it for the support of herself and the children, and in any year that one of the contingencies occurred she would receive $ 25 less for each child and consequently would not have that $ 25 available for her own use.

The actions of the parties and of the court support this conclusion. Arthur claimed a deduction of only $ 25 per week on his income tax return for 1951 for payments made up to the date of the court decree of November 23, 1951, increasing the total payments to $ 175 per week, and indicated that these payments were made under the agreement of November 10, 1950. Arthur also claimed the children as dependents on his 1951 return. Mary included only one-sixth of the total payments received by her in her income for 1951 and did not claim the children as dependents on her return. When Mary remarried, the court decree entered January 18, 1955, "modified" the decrees of November 13, 1950, November 23, 1951, and April 21, 1954, by "reducing the order of support from one hundred seventy-five dollars per week to one hundred twenty-five dollars per week for the support1958 U.S. Tax Ct. LEXIS 11">*37 of" the minor children.

There is no explanation in the record of why the weekly payments were increased from $ 150 to $ 175 by the decree of November 23, 1951, and in the absence of such explanation we must conclude that the additional $ 25 per week was alimony or support for Mary. This is consistent with the decrease of $ 50 per week in the amount to be paid provided by the decree of January 18, 1955, after Mary had remarried.

The United States Court of Appeals for the Second Circuit recently reversed this Court on the issue here involved in Weil v. Commissioner, supra, and in Hirshon's Estate v. Commissioner, 250 F.2d 497 (C. A. 31 T.C. 596">*607 2), reversing 27 T.C. 558, as did the United States Court of Appeals for the Sixth Circuit in Deitsch v. Commissioner, 249 F.2d 534 (C. A. 6), reversing 26 T.C. 751. While some language in the Weil and Deitsch opinions suggests that when, under the terms of the decree or agreement, all payments are to be made to the wife for the support of herself and children, the terms thereof1958 U.S. Tax Ct. LEXIS 11">*38 must clearly indicate that a specified part of the payments are for the support of the children and can be used for that purpose only to avoid being taxed to the wife, we do not understand those decisions as requiring that the payments be separated to avoid taxation to the wife. We believe those cases are distinguishable on the facts and when it is clear that a fixed part of the single weekly payment to the wife is intended for the support of the children, as here, such amounts are not taxable to the wife and are not deductible by the husband.

We conclude that of the payments totaling $ 7,950, made by Arthur to Mary during the year 1951, the total of $ 6,500 was paid for the support of the children under the terms of the agreement and the decrees of the court dated November 13, 1950, and November 23, 1951. The remainder of such payments, in the total amount of $ 1,450, was paid as alimony for the support of Mary. The additional $ 25 per week paid by Arthur to Mary, pursuant to the court decree of November 23, 1951, was paid as alimony for the support of Mary. Consequently, Mary is taxable on $ 1,450 of the amount she received from Arthur during the year 1951 and that Arthur is1958 U.S. Tax Ct. LEXIS 11">*39 entitled to deduct only $ 1,450 of the payments he made to Mary during the year 1951.

Arthur having paid at least $ 6,500 for the support of the children, he is entitled to an exemption of $ 600 for each of the five minor children for the year 1951, it being evident from the stipulation that the parties are in agreement that the payments of $ 25 per week constituted more than one-half of the support of each child during that year.

Decisions will be entered under Rule 50.