Catherine H. Poole, f.k.a. Catherine H. Dames - Page 9

               Section 71(a)(1) sets forth the requirements for inclusion in          
          gross income of payments received pursuant to a decree of divorce           
          or separate maintenance.  In sum, the payments are includable in            
          income if: (1) The payments are periodic; (2) the payments arise            
          because of a marital or family relationship; (3) the payments are           
          made pursuant to a decree of divorce or separate maintenance or             
          pursuant to a written instrument incident thereto; and (4) the              
          payor is under a legal obligation to make the payments.                     
               With respect to the instant case, the requirements that                
          payments be made pursuant to a decree of divorce and that the payor         
          be under a legal obligation to make the payments are not in issue.          
          The divorce decree of the Duval County Circuit Court, which                 
          incorporated the dissolution stipulation of petitioner and Dr.              
          Ibach, satisfies these requirements.  Nor is any problem presented          
          regarding the classification of the payments as periodic.  Under            
          the general rules of section 71(c)(1), installment payments                 
          discharging a principal sum obligation, as opposed to continuing            
          payments of an indefinite duration, are not treated as periodic             
          payments.  See also sec. 1.71-1(d)(1), Income Tax Regs.  Section            
          71(c)(2) provides a statutory exception to the general rule of              
          section 71(c)(1).  Subject to a percentage limitation,5 section             

               5    The limitation of sec. 71(c)(2) is that "the                      
          installment payments shall be treated as periodic payments for              
          purposes of subsection (a), but (in the case of any one taxable             
          year of the wife) only to the extent of 10 percent of the                   
          principal sum."                                                             

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