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17, 1985, the Family Court issued an "ORDER MODIFYING ORDER MADE
BY ANOTHER COURT (Support)", and an attached "FINDINGS OF FACT".
The findings of fact provided, in pertinent part, that:
4. There is one child [Renea] aged 7 for whose
support [James] is liable * * * .
* * * * * * *
10. The monthly needs of the child are: $408.28
The Order directed James to "pay $100 per week for support,
effective 12-17-85, and payments are to be made direct to
[Virginia]".
On their 1990 Federal income tax return, petitioners
deducted $5,200 as "alimony paid". This sum represented the
$100.00 a week James was ordered to pay to Virginia.
Respondent disallowed petitioners' $5,200 alimony deduction.
Respondent's position is that based upon the language of the
Judgment of Divorce and the subsequent order that modified the
Judgment, the payments made constitute nondeductible child
support payments. Respondent further contends that petitioners
have only substantiated $1,425 in payments to Virginia.
Petitioners argue that the payments are deductible as
alimony. James testified that it was his understanding at the
time of his divorce that his ex-wife "was to pay the tax" on the
money he paid to her. Petitioners further argue that James was
divorced on December 11, 1984, and, therefore, the pre-Tax Reform
Act of 1984 rules apply. Petitioners contend that the term
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