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Ellis v. Commissioner, T.C. Memo. 1973-152. In the present case,
Ms. Marten was the primary beneficiary and the named owner of the
$750,000 policy. Ms. Marten had sole power to change the
beneficiary on the policy. Thus, the premium payments were paid
by Mr. Lane in discharge of a legal obligation because of the
marital or family relationship. We conclude that the premium
payments satisfy all of the elements of section 71(a) and
constitute alimony. Ms. Marten must include the premium payments
in income, and Mr. Lane is entitled to deduct the premium
payments.
Ms. Marten argues that the $750,000 policy was intended to
provide for Niklas’ support and thus cannot be alimony.
According to former section 71(b), payments fixed as support for
minor children were not alimony. In Commissioner v. Lester, 366
U.S. 299, 301 (1961), the U.S. Supreme Court held that in order
for a divorce decree to “fix” an amount as child support under
former section 71(b) the decree must expressly specify or fix the
amount of each payment which is for child support. The Court
held that absent such an express allocation, the entire payment
is alimony and taxable to the wife. See Commissioner v. Lester,
supra.3
3 Although Congress modified the result in Commissioner v.
Lester, 366 U.S. 299 (1961), by the amendments to sec. 71
(continued...)
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