Thomas B. Benham - Page 4




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            It was Leslie Benham's belief during the entire period that she                            
            and petitioner were attempting a reconciliation of their                                   
            marriage.                                                                                  
                  From July of 1994 through January of 1995, petitioner made                           
            the total monthly payments of $2,700 provided for by the                                   
            Agreement.  Out of the monthly payments she received under the                             
            Agreement, Leslie Benham continued to pay the same household                               
            expenses she had paid in preceding years.                                                  
                  In February of 1995, petitioner dismissed his divorce suit                           
            against Leslie Benham and at the same time entered into a third                            
            agreement with her in which the parties agreed to a division of                            
            the marital property in the event of a divorce.  Leslie Benham                             
            subsequently filed for divorce in 1995, and petitioner thereupon                           
            left the marital residence.                                                                
                  On his separate individual Federal income tax returns for                            
            1994 and 1995, petitioner deducted $12,000 and $2,000,                                     
            respectively, as alimony payments to Leslie Benham.  He also                               
            deducted State income tax paid in 1993 on his return for 1994 and                          
            attorney's fees and legal costs associated with his divorce                                
            action on both year's returns.                                                             
                                               OPINION                                                 
                  Because petitioner and Leslie Benham resided in the same                             
            household in 1994 and in January of 1995, respondent maintains                             








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