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alimony and are thus not includable in Alexandra's gross income
or deductible by Burley and Mary. The parties do not dispute
that the requirements of section 71(b)(1)(C) and (D) have been
satisfied with respect to the amounts in issue.
Section 71(b)(1)
The initial requirement under this section is that the
payments must be in cash. Sec. 71(b)(1). Section 1.71-1T(b),
Q&A 5, Temporary Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31,
1984), explains that only cash payments, including checks and
money orders payable on demand, qualify as alimony or separate
maintenance payments. Transfers of services or property,
execution of a debt instrument by the payor, or the use of
property of the payor do not qualify. Id.
We are satisfied that the dealership's cash payments for the
lease, insurance, and maintenance of the automobile for
Alexandra's benefit and for the reimbursement of Alexandra's
medical insurance premiums are properly treated as cash payments
made by Burley during 1994. He included these amounts in income
as constructive dividends and is entitled to any allowable
deductions for the amounts paid.
Section 71(b)(1)(A)
We next examine whether the cash payments treated as made by
Burley satisfy section 71(b)(1)(A). Section 1.71-1T(b), Q&A6,
Temporary Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31, 1984),
provides that a payment of cash by the payor spouse to a third
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