- 31 -
below, we resolve this tension by rejecting the interpretation of
section 71(b)(1)(D) inherent in the worst case scenario approach
of Wells v. Commissioner, supra. Specifically, we reject the
notion that the applicability of section 71(b)(1)(D) to an
unallocated support obligation is to be determined by invariably
assuming that a third party would take custody of the children
upon the payee spouse’s death, thereby ensuring the existence of a
substitute payment obligation.26
25(...continued)
Commissioner, T.C. Memo. 1996-258.
Petitioner has brought to our attention that the conflict in
the authorities has not gone unnoticed. See Udrys, “California
Family Support: Tax Consequences after Wells v. Commissioner”,
41 Orange County Law. 36, 41 (1999). See also the comment of the
Court of Appeals in Lovejoy v. Commissioner, supra at 12ll:
There is no Colorado law squarely addressing the
treatment of unallocated payments upon the death of the
payee spouse. The only on-point cases cited by the
parties address California law and are conflicting.
Compare Heller v. Commissioner, 103 F.3d 138, 1996 WL
713049, at *3 (9th Cir. 1996) (unpublished) (holding
that the obligation to pay unallocated support would
automatically terminate upon the recipient’s death),
and Ambrose v. Commissioner, 71 T.C.M. (CCH) 2429 (Mar.
14, 1996) (same), with Wells v. Commissioner, 75 T.C.M.
(CCH) 1507 (Jan. 5, 1998) (holding that the obligation
does not terminate upon death). This split of
authority interpreting California law is no help to
Lovejoy’s attempt to show that Colorado law provides
for the termination of unallocated payments upon the
payee spouse’s death.
26 We observe that the unpublished opinion of Heller v.
Commissioner, supra, by the Court of Appeals for the Ninth
Circuit is not binding precedent in the Ninth Circuit (to which
an appeal in this case would lie). See 9th Cir. R. 36-3(a).
(continued...)
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011