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deducted these amounts as alimony payments on his Federal income
tax returns. Petitioner did not file Federal income tax returns
for 1994 and 1995. She timely filed her 1996 return but did not
report the $22,944 payment as income. Petitioner made no Federal
income tax payments in 1994 or 1996, but $94 was withheld from
her 1995 wages. Petitioner and Mr. Baker did not live together
in the same household at any time from June 1, 1994, to December
31, 1996.
Respondent has determined that the military retirement
payments constitute alimony income to petitioner under section
71. Petitioner contends that the payments she received from the
military retirement plan were in furtherance of a division of
property and should be excluded from her income under section
1041.
Section 61 defines gross income to mean all income from
whatever source derived, including alimony payments. Sec.
61(a)(8). Whether a payment constitutes alimony within the
meaning of section 61(a)(8) is determined by reference to section
71. Section 71(a) provides that there shall be included in gross
income any amount received as alimony. Section 71(b)(1) defines
the term "alimony" as any cash payment that meets the following
four criteria:
(A) such payment is received by (or on behalf of) a
spouse under a divorce or separation instrument,
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