- 10 -
867-868 (1968), affd. 415 F.2d 310 (4th Cir. 1969). Payments
which are a property settlement are not taxable to the recipient
under section 71. Estate of Smith v. Commissioner, 208 F.2d 349,
351 (3d Cir. 1953), affg. in part and revg. in part a Memorandum
Opinion of this Court dated Nov. 28, 1952; Yoakum v.
Commissioner, 82 T.C. 128, 134 (1984); Thompson v. Commissioner,
50 T.C. 522, 525 (1968). A taxpayer may deduct amounts paid to
a former spouse if those payments are includable in the former
spouse's gross income under section 71. Sec. 215; Yoakum v.
Commissioner, supra.
If the payments in these cases are alimony, then
Dr. Ehrenworth may deduct the payments under section 215(a),
and Mrs. Spector must include the amounts in income under section
61(a)(8). However, if the payments are a property settlement,
Dr. Ehrenworth may not deduct them and Mrs. Spector need not
include them in income.
4(...continued)
or under a written instrument incident to such divorce
or separation.
Secs. 71 and 215 were amended by the Deficit Reduction Act
of 1984, Pub. L. 98-369, sec. 422(a) and (b), 98 Stat. 795.
The 1984 amendments apply to divorce or separation instruments
executed after Dec. 31, 1984, and instruments modified on or
after Jan. 1, 1985, if the modification provides that the 1984
amendments govern.
Mrs. Spector and Dr. Ehrenworth were divorced in 1980.
The record does not indicate that they amended the separation
agreement or the divorce decree to provide that the 1984
amendments govern. Thus, the 1984 amendments to secs. 71 and
215 do not apply here.
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