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