- 4 -
which appear as paragraph A under the heading "Property
Distribution Provisions." Pursuant to the addendum, Colleen
agreed to convey all of her right, title, and interest in the
Pineville property to petitioner and petitioner agreed to pay
Colleen $40,000, paid in a lump sum of $20,000 with the balance
payable in 24 equal monthly installments without interest. In
order to secure these payments, petitioner was required to, and
did, execute a mortgage in favor of Colleen on the Pineville
property.
On his Federal income tax returns for the years 1989 and
1990, petitioner deducted the payments made pursuant to the
addendum, along with other payments, as alimony. None of the
claimed alimony deductions except those pursuant to the addendum
are at issue in this case. Respondent determined that the
amounts paid pursuant to the addendum were part of a property
settlement and not alimony payments.2
Further, petitioner deducted $28,245.71 as interest expense
on Schedule C of his Federal income tax return for the taxable
year 1989. Respondent disallowed $15,646 of the claimed interest
expense. Petitioner admitted at trial that he could not
substantiate that his business interest expense exceeded the
amount allowed by respondent.
2 Respondent has not questioned whether the amounts
deducted as alimony were actually paid.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011