STATE OF WISCONSIN
TAX APPEALS COMMISSION
12825 West Beloit Road
New Berlin, WI 53146
|DOCKET NO. 01-I-119|
JESSICA F. STUDEY BRONSON
404 West Mackie Street
Beaver Dam, WI 53916-1640,
DOCKET NO. 01-I-128
WISCONSIN DEPARTMENT OF REVENUE
P.O. Box 8907
Madison, WI 53708-8907,
|DECISION AND ORDER|
DON M. MILLIS, COMMISSION CHAIRPERSON:
These matters came before the Commission for trial on May 21, 2002, in Madison. None of the parties submitted post-hearing briefs. Each petitioner appears pro se. Respondent is represented by Attorney Veronica Folstad.
Based on the evidence received at trial and the entire record in these matters, the Commission hereby finds, concludes, and orders as follows:
FINDINGS OF FACT
1. Petitioners Joseph Bronson and Jessica F. Studey Bronson were divorced on March 27, 1995, by the Dodge County Circuit Court. Subsequent to the granting of the divorce, the Circuit Court rendered a decision on May 25, 1995, with respect to child support, property division, and maintenance.
2. The Circuit Court determined that the value of the net marital estate was $13,620.84. Of this amount, $13,159.84 (or 96.6% of the net marital estate) was awarded to Ms. Bronson.
3. Among the items awarded to Ms. Bronson was petitioners' marital residence (the "residence"), which the Circuit Court determined had a fair market value of $46,000 but a net value of $5,884.34 because of a first mortgage loan and other liens. Mr. Bronson subsequently executed a quitclaim deed conveying his interest in the residence to Ms. Bronson.
4. The Circuit Court awarded primary placement of petitioners' two minor children to Ms. Bronson and ordered Mr. Bronson to pay child support to Ms. Bronson in the amount of $161 per week.
5. The Circuit Court did not award any maintenance, but held the issue open for a period of four years.
6. In the Spring of 1997, Ms. Bronson sold the residence.
7. On both his 1996 and 1997 Wisconsin income tax returns, Mr. Bronson claimed $8,533 as a deduction for alimony paid to Ms. Bronson.
8. Mr. Bronson derived the amount of the alimony deduction by using the following rationale:
A. Mr. Bronson believed that Ms. Bronson sold the residence for $68,275, netting a gross profit of $34,275 over the $34,000 Mr. Bronson paid for the residence in 1990;
B. Mr. Bronson believed that he should be entitled to a deduction equal to 50% of the profit apparently realized by Ms. Bronson (i.e., $34,275 ¸ 2 = $17,137.50) when she sold the residence;
C. Mr. Bronson decided to claim approximately one-half of "his profit" (i.e., $8,533) over 2 years so that he could enjoy the deduction over a longer period.
9. Ms. Bronson did not include in her income any alimony payments from Mr. Bronson.
10. Under the date of November 20, 2000, respondent issued assessments in the alternative against each petitioner. The assessment against Mr. Bronson denied the claimed deduction for alimony. The assessment against Ms. Bronson added to her income the amounts claimed by Mr. Bronson as alimony in 1996 and 1997.
11. Each petitioner filed timely petitions for redetermination with respondent. Each petition for redetermination was denied by respondent. Each petitioner then filed a petition for review with the Commission.
CONCLUSION OF LAW
There is no basis in state law or the Internal Revenue Code to justify Mr. Bronson's claimed alimony deduction for "his" share of Ms. Bronson's profit on the sale of the residence that was awarded to Ms. Bronson.
Deductions are matters of legislative grace, and the taxpayer claiming the deduction must bring himself or herself clearly within the terms of the deduction. Department of Revenue v. Greiling, 112 Wis. 2d 602, 605 (1983); Ramrod, Inc. v. Dep't of Revenue, 64 Wis. 2d 499, 504 (1974). The issue, therefore, is whether Mr. Bronson has shown that he is entitled to any deduction based on the sale of the residence.
Mr. Bronson concedes that the deduction he seeks may not necessarily be characterized as a deduction for alimony. He admitted as much on his 1996 income tax return, when he included a note seeking more information on documentation needed and asking if he needed to file an amended return. The bottom line for Mr. Bronson is that, under his circumstances, he believes he is entitled to a refund of 50% of the profit(1) realized by Ms. Bronson on the sale of the residence.
While there may be many people in Mr. Bronson's position who would applaud his efforts, the simple fact is that there is no provision in the Internal Revenue Code or in Wisconsin law that even comes close to granting a deduction to someone in Mr. Bronson's circumstances. This is clearly not alimony or separate maintenance because no such payments were made by Mr. Bronson to Ms. Bronson.(2) See, I.R.C. § 71.
Mr. Bronson also argues that Wisconsin law requires property in a divorce to be divided equally and that, since Ms. Bronson received nearly 97% of the value of the net marital estate, he is entitled to a deduction for his lost equity in the residence.(3) It appears that Mr. Bronson's real argument is with the Dodge County Circuit Court. If he disagreed so strongly with the Court's decision, he should have appealed it. The tax code simply does not provide a remedy for people aggrieved by the actions of courts in divorce actions.
Respondent's action on the petition for redetermination in Docket No. 01-I-119 is affirmed;
Respondent's action on the petition for redetermination in Docket No. 01-I-28 is reversed.
Dated at Madison, Wisconsin, this 7th day of June, 2002.
WISCONSIN TAX APPEALS COMMISSION
Don M. Millis, Commission Chairperson
Thomas M. Boykoff, Commissioner
Richard F. Raemisch, Commissioner
ATTACHMENT: "NOTICE OF APPEAL INFORMATION"
July 10, 2002 Petition for rehearing in Docket No. 01-I-119 denied pursuant to s. 227.49(3).
1 The Commission makes no finding on the amount of profit realized by Ms. Bronson on the sale of the residence because it is not material to the outcome of this matter and because the record contains conflicting and insufficient evidence on the sales price of the residence.
3 While section 767.255(3) of the Wisconsin Statutes presumes that property is to be divided equally in divorce actions, this statute authorizes courts to alter the distribution of property based on a number of factors.