- 10 - Petitioner argues that she properly excluded the payments in issue from her gross income because they were intended by the parties to be a property settlement and not alimony. Prior to 1985, payments were characterized as alimony or as property settlement by considering all of the surrounding facts and circumstances. See Beard v. Commissioner, 77 T.C. 1275, 1284 (1981). During 1984, Congress enacted the Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec. 422, 99 Stat. 494, 795, effective for divorce and separation agreements entered into after December 31, 1984. The House Committee on Ways and Means, in its report on H.R. 4170, 98th Cong. 1st Sess., explained the reason for the enactment of DEFRA section 422 as follows: The committee believes that the present law definition of alimony is not sufficiently objective. * * * The committee believes that a uniform Federal standard should be set forth to determine what constitutes alimony for Federal tax purposes. This will make it easier for the Internal Revenue Service, the parties to a divorce, and the courts to apply the rules to the facts in any particular case and should lead to less litigation. The committee bill attempts to define alimony in a way that would conform to general notions of what type of payments constitute alimony as distinguished from property settlements * * * . H. Rept. 98-432 (Part 2), at 1495 (1984). The settlement agreement in the instant case was entered into after December 31, 1984. Consequently, the appropriate inquiry is not whether the payments made pursuant to the settlement agreement were alimony or property settlement based onPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011