Forest R. Preston - Page 10




                                       - 10 -                                         
                                     Discussion                                       
               We must determine whether petitioner may deduct any of the             
          disputed payments as alimony.  Respondent determined that he                
          could not.  Petitioner bears the burden of proving respondent's             
          determination wrong.  See Rule 142(a); Welch v. Helvering, 290              
          U.S. 111, 115 (1933).                                                       
               An individual may generally deduct a payment made during the           
          taxable year to a spouse3 to the extent it is alimony that is               
          includable in the spouse's gross income.  See sec. 215(a) and               
          (b).  A payment is alimony that is includable in a spouse's gross           
          income when:  (1) The payment is made in cash, (2) the payment is           
          received by (or on behalf of) the spouse under a divorce or                 
          separation instrument, (3) the divorce or separation instrument             
          does not provide that the payment is not reportable as alimony,             
          (4) the spouses reside in separate households at the time the               
          payment is made, (5) the spouses do not file a joint return, and            
          (6) the liability for payment does not continue for any period              
          after the spouse's death.  See sec. 71 (b)(1), (e).  Each of                
          these requirements must be met before a payor may deduct a                  
          payment as alimony.  We concern ourselves only with the three               
          requirements in dispute.                                                    
               First, the need for a cash payment requires that alimony be            
          paid in cash or a cash equivalent.  A check or money order that             
          is payable on demand is a cash equivalent.  A debt instrument               


               3 We use the term "spouse" to refer to a present or former             
          spouse.                                                                     


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