- 5 - household at the time such payment is made, and (D) there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment (in cash or property) as a substitute for such payments after the death of the payee spouse. If the payments received by petitioner meet the four enumerated criteria, they will be considered alimony and includable in petitioner’s income. There appears to be no dispute between the parties concerning the requirements of section 71(b)(1)(A), (B), and (C). As pertinent to our discussion, a divorce decree constitutes a "divorce or separation instrument", see sec. 71(b)(2)(A), and the parties do not dispute that the provisional order of the Divorce Court constitutes a separation instrument. On the other hand, the parties dispute whether the requirement of section 71(b)(1)(D) has been satisfied. The history of section 71(b)(1)(D) establishes that it was enacted to distinguish alimony, deductible by the payor and includable in the payee’s gross income, from payments in the nature of property settlements, which are nondeductible by the payor and excludable from the payee’s gross income. In 1984, Congress revised section 71 in an attempt to minimize the differences in Federal tax consequences created by differences in State laws and to establish an objective andPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011