- 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 and
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011