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The settlement agreement further provided that petitioner
would have custody of the children and receive monthly “child
support for the benefit of the minor children” in the amount of
$650 per child from Mr. Shepherd with annual increases
commensurate with increases in the consumer price index. Under
the terms of the agreement, child support payments were to
continue for each child as long as petitioner had custody of that
minor child or until the child died, married, or reached the age
of 18, whichever occurred first. In addition, if the alimony
payments were to cease due to petitioner’s remarriage or because
she engaged in a meretricious relationship, the child support
payments would immediately increase to $1,200 per month per
child.
Petitioner filed U.S. individual income tax returns for
1993, 1994, and 1995, and treated the $28,800 in “alimony”
received each year from Mr. Shepherd under the terms of the
settlement agreement as nontaxable child support. Respondent
maintains that the payments were in fact alimony and thus should
be included in petitioner’s taxable income.
Discussion
Alimony is taxable to the recipient and is deductible by the
payor. See secs. 71(a), 215(a). Child support payments, on the
other hand, are neither includable in income under section 71 nor
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