Randolph John Beale - Page 9




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            U.S. 299 (1961).  The amount of child support must be fixed "in                            
            terms of an amount of money or a part of the payment" in order                             
            for it to be excludable from the payee spouse's income and                                 
            nondeductible by the payor spouse.  Sec. 71(b).  The statutory                             
            requirement is strict and carefully worded.                                                
                  In Commissioner v. Lester, supra, the Supreme Court held                             
            that periodic payments made by a husband to his divorced wife                              
            pursuant to a written agreement entered into by them and approved                          
            by the divorce court were deductible by the husband, as alimony,                           
            and includable in the wife's gross income where an amount or                               
            portion of the periodic payments was not specifically earmarked                            
            as payable for the support of the children.7                                               

                  6(...continued)                                                                      
                        (b) Payments to Support Minor Children.-–Subsection (a)                        
                  shall not apply to that part of any payment which the terms                          
                  of the decree, instrument, or agreement fix, in terms of an                          
                  amount of money or a part of the payment, as a sum which is                          
                  payable for the support of minor children of the husband.                            
                  For purposes of the preceding sentence, if any payment is                            
                  less than the amount specified in the decree, instrument, or                         
                  agreement, then so much of such payment as does not exceed                           
                  the sum payable for support shall be considered a payment                            
                  for such support.                                                                    
                  7For divorce or separation agreements executed after Dec.                            
            31, 1984, Congress overruled Commissioner v. Lester, 366 U.S. 299                          
            (1961), in that the amount by which support is reduced upon                                
            contingencies involving a child is treated as "fixed" as child                             
            support.  See sec. 71(c), as amended by DEFRA sec. 422(a).  The                            
            aforesaid is also true with respect to divorce or separation                               
            instruments (as defined in sec. 71(b)(2), as amended) executed                             
            before Jan. 1, 1985, but modified on or after that date if the                             
            modification expressly provides that the amendments to sec. 71                             
                                                                         (continued...)                





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