MAINTENANCE PAYMENTS WERE ALIMONY.

                       UNITED STATES TAX COURT

[1] ARMEN, SPECIAL TRIAL JUDGE: Respondent determined a deficiency in petitioner's Federal income tax for the taxable year 1995 in the amount of $5,970. After a concession by respondent, ¹ the issue for decision is whether certain payments received by petitioner are includable in her gross income as alimony under section 71. ² We hold that they are. Background

[2] This case was submitted fully stipulated under Rule 122, and the facts stipulated are so found. Petitioner resided in Chicago, Illinois, at the time that her petition was filed with the Court.

[3] Petitioner and her ex-husband, James D. Heckaman (Mr. Heckaman), were separated on February 14, 1995. Petitioner and Mr. Heckaman filed for divorce in the Whitley Circuit Court of Whitley County, Indiana, (the Divorce Court) later that year. Petitioner has not resided in the same household as Mr. Heckaman since their separation. Petitioner was divorced in 1997.

[4] In August 1995, the Divorce Court issued its "Findings of Fact and Conclusions of Law for Preliminary Orders" (the provisional order) in the divorce proceeding involving petitioner and Mr. Heckaman. The provisional order provided as follows:

          Maintenance and Indebtedness. [Petitioner] is

[6] As required by the provisional order, Mr. Heckaman made a total payment of $39,365 to petitioner during the year in issue, as follows: (1) "Maintenance" payments in the amount of $36,000; (2) premiums for a life insurance policy owned by petitioner in the amount of $1,900; and (3) reimbursement for petitioner's fall semester educational expenses in the amount of $1,465.

[7] On her 1995 separate return, petitioner did not include in her gross income any amount as alimony or separate maintenance payments.

[8] In the notice of deficiency, respondent determined that petitioner was required to report as gross income, pursuant to section 71, the total payment of $39,365 that she received from Mr. Heckaman during 1995. Discussion

[9] Section 71(a) provides that gross income includes amounts received as alimony or separate maintenance payments. See also sec. 61(a)(8). Section 71(b)(1) defines alimony or separate maintenance payments as follows:

          (1) In General. -- The term "alimony or separate

[11] On the other hand, the parties dispute whether the requirement of section 71(b)(1)(D) has been satisfied. The history of section 71(b)(1)(D) establishes that it was enacted to distinguish alimony, deductible by the payor and includable in the payee's gross income, from payments in the nature of property settlements, which are nondeductible by the payor and excludable from the payee's gross income.

[12] In 1984, Congress revised section 71 in an attempt to minimize the differences in Federal tax consequences created by differences in State laws and to establish an objective and uniform Federal standard as to what constitutes alimony. See sec. 422(a) of the Deficit Reduction Act of 1984 (DRA 1984), Pub. L. 98-369, 98 Stat. 795. See also H. Rept. 98-432, Part 2, 1495, 1496 (1984), wherein the House Ways and Means Committee articulated the purpose of the 1984 amendment as follows:

     The Committee bill attempts to define alimony in a way

[14] The issue before us is whether the payments petitioner received pursuant to the provisional order were for her support, thus constituting alimony, or in the nature of a property settlement and therefore excludable from her gross income. Specifically, we must decide whether under the terms of the provisional order, Mr. Heckaman would have been liable for payment of the amounts in issue in the event of petitioner's death. Because the Divorce Court's provisional order fails to address termination of payments in the event of petitioner's death, we must refer to Indiana State law. See Morgan v. Commissioner, 309 U.S. 78, 80 (1940); Sampson v. Commissioner, 81 T.C. 614, 618 (1983), affd. per curiam without published opinion 829 F.2d 39 (6(th) Cir. 1987).

[15] We begin with the operative Indiana statute, Ind. Code sec. 31-1-11.5 to 7 (1995), pursuant to which the Divorce Court issued the provisional order. As pertinent here, Ind. Code sec. 31-1- 11.5 to 7(a) (1995), provides that in any pending divorce proceeding, either party may make a motion for, inter alia, temporary maintenance. In turn, Ind. Code sec. 31-1-11.5 to 7(d) (1995), provides that the "court may issue an order for temporary maintenance or support in such amounts and on such terms as may seem just and proper". Finally, Ind. Code sec. 31-1-11.5 to 7(f) (1995) provides as follows:

          The issuance of a provisional order shall be

          Unlike a final dissolution where all of the rights

[18] As respondent correctly points out, both of the foregoing cases have as their foundation the general rule that a divorce proceeding terminates when a party to such proceeding dies, but State Ex Rel Paxton v. Porter Superior Court, supra, simply creates a narrow exception to such rule. State Ex Rel Paxton v. Porter Superior Court, supra, drew a distinction between the underlying divorce proceeding and the award of fees; the case held that the award of attorneys fees is not related to the merits of the action and does not, "strictly speaking", form a part of the judgment or decree in the cause. The court then concluded that a taxpayer could be obligated for his or her spouse's attorney's fees even after the death of the spouse.

[19] A recent Indiana case, Johnson v. Johnson, supra, reiterated the general rule that all causes of action in a divorce proceeding in Indiana terminate on the death of one of the parties. Specifically, Johnson v. Johnson, supra, considered the Indiana Supreme Court's decision in Ex Rel Paxton v. Porter Superior Court, supra, and concluded that under Indiana law only three narrow exceptions exist to the general rule that all divorce proceedings terminate on the death of one of the parties. None of those exceptions are present in petitioner's case. It follows, therefore, that the provisional order here in issue would have ceased to have any effect in the event of petitioner's death and that Mr. Heckaman's obligation to make any payments pursuant to it would have necessarily terminated.

[20] Further, what is most pertinent to our inquiry is that under Indiana law a provisional order is simply for the purpose of maintenance and is distinct from a property settlement. Numerous Indiana cases have held that "maintenance" is for the purpose of supporting the receiving spouse. See Thatcher v. Thatcher, 496 N.E.2d 411 (Ind. Ct. App. 1986); Hicks v. Fielman, 421 N.E.2d 716, 721 (Ind. Ct. App. 1981); Wendorf v. Wendorf, 366 N.E.2d 703, 705 (Ind. Ct. App. 1977). "It follows that maintenance, the only other mechanism for transferring money, has no purpose other than the support of the receiving spouse". Hicks v. Fielman, supra at 721.

     Fitzgerald v. Travelers Ins. Co., supra at 162, states:

          We believe that the legislature did not intend for

[23] To reflect our disposition of the disputed issue, as well as respondent's concession,

[24] Decision will be entered under Rule 155.

² Except as otherwise indicated, all section references are to the Internal Revenue Code in effect for the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. All amounts are rounded to the nearest dollar.

³ As amended by the Deficit Reduction Act of 1984, Pub. L. 98- 369, 98 Stat. 795, sec. 71(b)(1)(D) provided as follows:

          (D) there is no liability to make any such payment