- 9 -
Section 71 was amended by the Deficit Reduction Act of 1984, Pub.
L. 98-369, sec. 422(a), 98 Stat. 494, 795, to establish an
objective standard to distinguish between a payment received in
the division of property (which is not includable in gross
income) and a payment received as spousal support (which is
includable in gross income). Hoover v. Commissioner, 102 F.3d
842, 845 (6th Cir. 1996), affg. T.C. Memo. 1995-183; H. Rept. 98-
432 (Part II), at 1495 (1984) (“The committee bill attempts to
define alimony in a way that would conform to general notions of
what type of payments constitute alimony as distinguished from
property settlements and to prevent the deduction of large, one-
time lump-sum property settlements”.).
In this case, the $17,900 payment petitioner made to Ms.
Simpson in 1997 was a property settlement and not deductible
alimony. Although the transfer was made under a divorce or
separation instrument, the payment was designated in the divorce
decree as part of the division of the community estate between
the parties. The divorce decree specifically stated that the
payment “does not constitute, nor shall it be interpreted to be,
any form of spousal support, alimony, or child support.” In
ascertaining the applicability of subparagraph (B) of section
71(b)(1), “the divorce or separation instrument need not mimic
the statutory language of the subparagraph (e.g., the instrument
need not specifically refer to sections 71 and 215).” Estate of
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011