Chester W. Bonar - Page 4

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                    SPOUSAL SUPPORT/RETIREMENT:  Husband shall pay to                 
               Wife as and for spousal support, alimony and                           
               maintenance, the periodic sum of SEVEN HUNDRED ($700)                  
               dollars per month, payable in one installment of                       
               $700.00 on the 20th day of each month, beginning July                  
               20, 1993, subject to automatic termination upon (a) the                
               Wife’s re-marriage, or (b) the death of Wife or                        
               Husband, or (c) the youngest child reaching age                        
               eighteen (18), whichever of said terminating                           
               contingencies shall first occur.                                       
          Pursuant to the provision providing for spousal support,                    
          petitioner made payments to his former wife totaling $8,400 in              
          1995 and $8,400 in 1996.  Petitioner treated the payments as                
          alimony within the meaning of section 215(a) and deducted them              
          from his gross income in 1995 and 1996 on his Forms 1040, U.S.              
          Individual Income Tax Returns.  Respondent determined that the              
          payments were not deductible as alimony and issued petitioner a             
          notice of deficiency.                                                       
               Pursuant to sections 71(a) and 215(a), alimony is taxable to           
          the recipient and is deductible by the payer.  Child support                
          payments, on the other hand, are neither includable in income               
          under section 71 nor deductible under section 215.  See sec.                
          71(c).  Alimony is any payment in cash if:                                  
                    (A) such payment is received by (or on behalf of)                 
               a spouse under a divorce or separation instrument,                     
                    (B) the divorce or separation instrument does not                 
               designate such payment as a payment which is not                       
               includible in gross income under this section and not                  
               allowable as a deduction under section 215,                            

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