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Respondent points to the requirements of section 71(b)(1)(C)
as disqualifying petitioner's payments from deductibility since
(in the case of individuals legally separated under a decree of
divorce or of separate maintenance) the payee spouse and the
payor spouse cannot be members of the same household. In making
his argument, however, respondent has failed to consider the
effect of the requirement under section 71(b)(1)(A), and the
definition contained in section 71(b)(2).
A payment may be "alimony" if it is a cash payment "under a
divorce or separation instrument". Sec. 71(b)(1)(A). A divorce
or separation instrument can be any of three types: (1) A decree
of divorce or separate maintenance; (2) a written separation
agreement; or (3) a decree requiring payments for support or
maintenance, other than a decree of divorce or separate
maintenance. See sec. 71(b)(2). The separate household
requirement of section 71(b)(1)(C) applies by its terms only to
an individual legally separated under a decree of divorce or of
separate maintenance.
Respondent insists that the parties were never "separated",
citing sec. 1.71-1T(b), Q&A-9, Temporary Income Tax Regs., 49
Fed. Reg. 34451, 34455 (Aug. 31, 1984). The regulation states
that "a dwelling unit formerly shared by both spouses shall not
be considered two separate households" in the case of spouses
legally separated under a decree of divorce or separate
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