13 T.C. 1092">*1093 This proceeding involves a deficiency determined by respondent against petitioners in the amount of $ 8,307.03 in income and victory tax for the calendar year 1943. Of that deficiency only $ 4,770.71 is in controversy. The computation of the deficiency involves income of both 1942 and 1943, pursuant1949 U.S. Tax Ct. LEXIS 2">*3 to the provisions of the Current Tax Payment Act of 1943.

Petitioners assign error in respondent's disallowance of deductions of $ 4,217.98 in 1942 and $ 4,813.14 in 1943, representing payments in those respective years made by Floyd W. Jefferson to his divorced wife, Violet W. Jefferson, for her support and maintenance.

FINDINGS OF FACT.

Petitioners, Floyd W. Jefferson and his present wife, Marjorie B. Jefferson, reside in New York, New York. Their joint income tax return for 1943 was filed with the collector of internal revenue for the third district of New York.

Floyd W. Jefferson, hereinafter referred to as the petitioner, was married to Violet W. Jefferson, hereinafter sometimes referred to as Violet, on June 14, 1904. Beginning about 1938, Violet was confined to various private sanitariums and continued in ill health to the date of the hearing on this proceeding. In 1941 petitioner and Violet discussed a divorce and afterward in connection therewith petitioner wrote her on April 30, 1941, as follows:

April 30, 1941.

My dear Violet:

It is very generous of you to consent to my getting a divorce.

Naturally if your health permitted I would suggest that you go to Nevada and 1949 U.S. Tax Ct. LEXIS 2">*4 get the divorce on the grounds that we have not lived together for more than three years, but as you cannot make the trip the plan upon which we have agreed is all that can be done.

I am glad that we have been able to talk this over without rancour and that both of our children agree that it is for the best.

It is hardly necessary for me to assure you of my devotion to you and of the obligation which I feel toward you.

It is my duty and pleasure to continue to provide for you. If you are well enough I shall provide a home for you, and if you are not well enough I will see that you have every care and comfort wherever you may choose to live.

Billy Byrd will draw the necessary papers.

We have made the Summit Trust Company custodian of your stocks and I will continue to pay, as long as you live, the premiums of certain insurance policies on which you are irrevocably the beneficiary.

So far as I can see these provisions will insure your comfortable maintenance and it is my wish and prayer that you may recover your health in which event 13 T.C. 1092">*1094 I will do all in my power to surround you with luxury and restore you to a mode of living which you have enjoyed for many years.

With true appreciation1949 U.S. Tax Ct. LEXIS 2">*5 and deepest devotion --

Yours,

[Sig.]

FWJ C

Petitioner and Violet, in anticipation of the discussed divorce, executed a written agreement in New York on May 15, 1941, by the terms of which, after a recitation that the parties had lived separate and apart for more than three years last past and desired to make a final settlement of their property rights, petitioner agreed: That certain stocks, valued at approximately $ 40,000, previously transferred by petitioner to Violet's name, should remain her sole and separate property; that Violet's designation as irrevocable beneficiary in certain fully paid term insurance policies on his life, the policies aggregating $ 48,000 and the terms thereof expiring between 1947 and 1952, should remain irrevocable during the life of Violet; and that any estate or gift taxes on the proceeds of these policies would be paid from his general estate. It was further agreed that Violet would accept these stated provisions of the agreement in full satisfaction of her claims for maintenance and support during their joint lives and that she waived any right that she might have to take against the will of petitioner. The agreement was to survive the divorce1949 U.S. Tax Ct. LEXIS 2">*6 of the parties and the remarriage of either party.

Shortly after the signing of the written agreement Violet complained to petitioner that the agreement failed to provide for her maintenance. As a result of that complaint, petitioner wrote her on May 20, 1941, as follows:

May 20, 1941.

Dear Violet,

I am relieved that on our trip to Princeton you voiced your complaint that the signed property agreement does not provide annual income for you. Naturally, I regret that this matter agitated and disturbed you, but you may be sure that this omission is something which I did not suggest or propose to Billy Byrd. It is simply an oversight as I certainly did not intend by this agreement to take advantage of you. I am really glad that your attention was called to this and that you took it up frankly with me, because as a result we are able to supplement the property agreement so that you will have positive assurance of ample income annually, in accordance with my sincerest intentions. I want to satisfy you fully on this matter as I am anxious, as you know, to obviate any delay or contest in the proceedings for our divorce.

Accordingly, I now confirm, as I promised you on our trip that1949 U.S. Tax Ct. LEXIS 2">*7 I would, that if the divorce is granted, I am bound to pay, in December of each year thereafter, to you or, if you should find it more convenient or agreeable, to Jeff, as a sort of agent or trustee for you, a sum sufficient, according to the full measure of the standard of living to which you have ben accustomed, to cover all amounts required 13 T.C. 1092">*1095 for your suitable maintenance, support and comfort during each year. In your present condition of health, six thousand dollars a year would seem to be sufficient; but should a larger amount be required by reason of improvement in your condition or for any other reason, my agreement covers the increase.

In addition, as Jeff has no doubt already informed you, I have reached a definite understanding with him whereby he has assumed an obligation that, in the event that you should outlive me, he is thereafter to do likewise for the remainder of your life.

As this modification of the signed agreement assures you of an annual income sufficient to cover fully all amounts required for your suitable maintenance, support and comfort each year during your entire lifetime, your mind should now be quite at ease.

I shall leave shortly in order 1949 U.S. Tax Ct. LEXIS 2">*8 to bring the distasteful proceedings for our divorce to an early conclusion. When I return, I shall, of course, see you from time to time, and meanwhile, I hope you will find it comfortable and agreeable in your new location.

Affectionately,

[Sig.]

FWJ C

The terms of the letter with regard to the payments to be made by petitioner to his wife were accepted by her and thereafter on July 23, 1941, petitioner obtained a Nevada divorce from Violet, who appeared through her attorney. The decree adjudged:

That the plaintiff be, and he hereby is, granted a decree of divorce from the defendant, final and absolute in form, force and effect, the laws of the State of Nevada providing no interlocutory period, nor conditions nor restrictions on remarriage; that the bonds of matrimony now and heretofore existing between the plaintiff, F. W. Jefferson, and the defendant, Violet W. Jefferson, be, and the same are, hereby dissolved, and the parties freed from the obligations thereof and restored to the status of unmarried persons; that the written agreement made and entered into by the plaintiff and the defendant herein, dated May 15, 1941, settling the property rights of the plaintiff and the defendant, 1949 U.S. Tax Ct. LEXIS 2">*9 a true, full and correct copy of which said written agreement has been admitted in evidence in this action, and marked and designated as "Plaintiff's Exhibit A" herein, be, and the same hereby is, by this Court ratified, adopted and approved in all respects, and with the same force and effect as if said agreement were annexed hereto and set out in full in haec verba as a part hereof; and said agreement is hereby declared to be fair, just and equitable to the plaintiff and to the defendant; and the plaintiff and the defendant are both ordered and directed to comply with all of the terms and conditions of said agreement.

The Nevada divorce decree when it incorporated the separation agreement of May 15, 1941, failed to include the provisions of petitioner's letter of May 20, 1941, with regard to the annual periodic payments to Violet for her support and maintenance and made no reference thereto.

In 1942 petitioner paid Violet $ 4,217 and in 1943, $ 4,813.14 for her support and maintenance. Violet did not report the amounts of those payments as income for those years.

13 T.C. 1092">*1096 On March 12, 1947, Violet wrote petitioner the following letter:

March 12th, 1947.

Dear Floyd:

When in 19411949 U.S. Tax Ct. LEXIS 2">*10 we discussed the question of divorce you agreed verbally and confirmed by letter that you would support me and provide at all times an adequate wardrobe to all of which I was abundantly entitled.

You have, since that time, fully complied with your obligation and I am sorry that the revenue department has taken exception to your claim for allowance of separate maintenance.

Sincerely,

[Signed] Violet W. Jefferson.

Mr. Floyd W. Jefferson

90 Worth Street

New York 13, N. Y.

On May 15, 1947, the Nevada divorce decree was modified nunc pro tunc to provide that:

* * * that in addition to the provisions of this decree the plaintiff pay to the defendant the sum of Six Thousand (6000) Dollars per annum in equal monthly payments of Five Hundred (500) Dollars, beginning on the first day of January 1942.

OPINION.

Petitioner seeks deductions under section 23 (u) of the Internal Revenue Code¹1949 U.S. Tax Ct. LEXIS 2">*11 for payments to his former wife for her support in the years 1942 and 1943. Deductions are permitted the husband under section 23 (u) if by the correlative provisions of section 22 (k) ² the payments so made are includible in the wife's gross income.

At the outset, it may be stated that petitioner makes no contention that disposition of the issue herein is affected by the nunc pro tunc modification on May 15, 1947, of the original divorce decree, presumably because sustaining such contention, if made, would be precluded 13 T.C. 1092">*1097 by our holdings in Robert L. Daine, 9 T.C. 47;1949 U.S. Tax Ct. LEXIS 2">*12 affd., 168 Fed. (2d) 449; and Peter Van Vlaanderen, 10 T.C. 706; affd., 175 Fed. (2d) 389.

Inasmuch as the original decree of July 23, 1941, the only decree we need consider, did not incorporate therein or make reference to any of the provisions of the letter of May 20, 1941; and inasmuch as, while a decree is always required, the decree need not incorporate or refer to alimony or maintenance provisions made by a prior or coincident agreement in order for such an agreement to come within the purview of section 22 (k), Tuckie G. Hesse, 7 T.C. 700; Robert Wood Johnson, 10 T.C. 647; and George T. Brady, 10 T.C. 1192; and inasmuch as petitioner relies upon the provisions of the letter of May 20, 1941, to sustain his claimed deductions, the issue is narrowed to the question of what was the effect of that letter, providing for periodic payments to petitioner's wife for her suitable maintenance and support, in applying section 22 (k), supra.

Petitioner contends: (a) That the letter constituted a "written 1949 U.S. Tax Ct. LEXIS 2">*13 instrument"; (b) that such letter was "incident to" the divorce; (c) that the letter, either of itself alone or as a modification and supplement to the original agreement of May 15, 1941, constituted "a legal obligation" of petitioner to make the periodic payments "imposed upon or incurred by" him in discharge of his marital obligation to support and maintain his divorced wife subsequent to the divorce decree -- all within the purview of section 22 (k), supra; and that as a consequence he is entitled to the claimed deductions of the amounts paid his wife under section 23 (u), supra.

Respondent's position is: (a) That the letter of May 20 providing for the periodic payments was not a "written instrument incident to such divorce," within the meaning of section 22 (k), supra; (b) that the payments to the wife were gratuitous; and (c) that at any rate there was no legal obligation of the petitioner to make the payments.

We first consider petitioner's contention (a), that the letter of May 20 constituted a "written instrument" within the intendment of section 22 (k), supra.

The evidence justifies the inference that the letter of May 20 embodied the terms of a prior oral 1949 U.S. Tax Ct. LEXIS 2">*14 agreement or understanding between petitioner and his wife with reference to periodic payments to be made for the wife's support and maintenance, and that the letter confirmed that oral agreement or understanding. While it is not shown that there was a written acceptance of the terms of the letter by Violet, it is shown that these terms were otherwise accepted by her and prior to the entry of the divorce decree. Petitioner contends that when Violet thus accepted those terms a rule of law set out in certain cited authorities became applicable and that thereunder the terms of the letter with reference to the support and maintenance of 13 T.C. 1092">*1098 the wife became a written contract between them and, therefore, a "written instrument" within the intendment of section 22 (k). The most pertinent authorities cited by petitioner are: National Bank of Commerce of Houston v. Moody, 90 S. W. (2d) 279, wherein it is stated, at page 282: "The authorities are also unanimous in holding that a telegram or any agreement reduced to writing and signed by one of the parties and accepted by the other is a written contract between the parties"; and Ferguson v. Parker, 176 S. W. (2d) 768,1949 U.S. Tax Ct. LEXIS 2">*15 wherein it is stated, at page 770: "The doctrine is well settled that an instrument purporting to set forth the mutual obligations of the parties * * * signed and performed by one of the parties and acquiesced in by the other, is to be regarded as a written contract. See 17 C. J. S., Contracts, p. 409, § 59 * * *." We agree with the contention of petitioner that the terms of the letter of May 20 with reference to the support and maintenance of Violet constituted a "written instrument" within the intendment of section 22 (k), supra.

As regards petitioner's contention (b) above, it is clear from all the facts and circumstances, without an enumeration of all of them, that the provisions of the letter of May 20 for the support and maintenance of his then wife were "incident to" the divorce. The letter itself so shows on its face, where it states: "* * * I now confirm, as I promised you on our trip that I would, that if the divorce is granted, I am bound to pay * * *" the periodic amounts of at least $ 6,000 per annum or a larger amount if it should for any reason be required.

As regards petitioner's contention (c), sometime within five days subsequent to the execution of the agreement1949 U.S. Tax Ct. LEXIS 2">*16 of May 15, petitioner's wife complained that the agreement made no provision for her support and maintenance by petitioner. The basis for her complaint was well founded, for the reason that the agreement provided only that she was to retain approximately $ 40,000 of stocks which were already her sole and separate property; that she should remain, as she then was, the irrevocable beneficiary in paid-up term policies expiring between 1947 and 1952 on the life of petitioner in the total amount of $ 48,000; and that petitioner's estate would pay estate or gift taxes, if any, on the proceeds of the policies. By neither of these provisions purporting to convey a consideration to his wife did the petitioner make any actual contribution for the support and maintenance for her after the divorce. The wife already owned the stock and was the irrevocable beneficiary in the insurance policies, and the petitioner's estate was primarily obligated to pay such estate or gift taxes as might become due on the proceeds of the policies. In response to the complaint and while he was still obligated under his marital relation to provide for the support and maintenance of his soon to be divorced wife, 1949 U.S. Tax Ct. LEXIS 2">*17 petitioner 13 T.C. 1092">*1099 wrote the letter of May 20, in which he agreed to pay his wife after the divorce the minimum sum of $ 6,000 per annum. We think that under section 22 (k), supra, the letter of itself, or as a modification of the original agreement of May 15, 1941, constituted a "legal obligation" of petitioner to make periodic payments to his wife which were "imposed upon or incurred by" him in discharge of his marital obligation to pay for the support and maintenance of his then wife after the divorce, and that as a consequence he is entitled, under section 23 (u), to the claimed deductions. We conclude that the respondent erred in disallowing the deductions.

Decision will be entered under Rule 50.