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payment of the mortgages continued in effect.
Pursuant to the Judgment and Decree, petitioner made the
spousal maintenance payments from April 1994 through June 1996.
He made the second mortgage payments from April 1994 through
August 1996.
Betty graduated from the University of Minnesota and began
work in Newton Falls, New York. On July 17, 1996, the State
court entered an Amended Judgment and Decree. Therein
petitioner’s monthly child support payments were reduced from
$1,500 to $1,408.75 and his monthly spousal maintenance payments
to $500.
In August 1996, petitioner obtained an unsecured line of
credit to pay off the second mortgage. Later that month, Betty
sold the residence; petitioner received compensation for his
$42,000 lien from the proceeds; and Betty relocated to Canton,
New York. Petitioner continued to make the $500 spousal
maintenance payments at least through the end of 1996, the last
of the years at issue.
For Federal income tax purposes, petitioner used the filing
status "single" for each of the years at issue. In his Federal
income tax return for 1994, petitioner deducted $33,943 as
alimony paid. In the notice of deficiency, respondent allowed
$17,050 of the alimony deductions and disallowed the balance.
The amounts allowed included the court-ordered monthly
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