-10-
71(c)(2) permits installment payments of a principal sum obligation
to be treated as periodic payments if the period for payments
extends more than 10 years beyond the date of the decree or
agreement. See Warnack v. Commissioner, 71 T.C. 541 (1979). That
is the case herein.6 All other requirements of section 71(a)(1)
having been met, the decisive question is whether the payments were
made "because of the marital or family relationship". For the
reasons set forth below, we believe they were.
The statutory phrase "payments * * * [imposed] because of the
marital or family relationship" requires that the payments be in
the nature of support rather than property settlement. Beard v.
Commissioner, 77 T.C. 1275, 1283 (1981); Martin v. Commissioner, 73
T.C. 255, 265 n.2 (1979); sec. 1.71-1(b)(4), Income Tax Regs.
Payments that are part of a property settlement are capital in
nature and, therefore, are not deemed alimony subject to the
provisions of section 71. Gammill v. Commissioner, 73 T.C. 921
(1980), affd. 710 F.2d 607 (10th Cir. 1982).
In evaluating whether a particular payment constitutes support
or property settlement, the labels assigned to the payments are not
determinative. Id.; Hesse v. Commissioner, 60 T.C. 685, 691 (1974),
affd. without published opinion 511 F.2d 1393 (3d Cir. 1975). In
deciding the character of an award in a divorce or separation
6 The principal sum of the payments petitioner received
was $500,000. Petitioner was therefore treated by respondent as
if she had received alimony of no more than $50,000, or 10
percent of the principal sum, during each of the years at issue.
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