- 7 -
would have allowed the parties thereafter to incorporate such a
condition upon petitioner's liability for the $32,000. The fact
that the $32,000 payment is described in the agreements between
petitioner and his former spouse as "alimony" is not controlling
for Federal income tax purposes as this Court has held in
Benedict v. Commissioner, 82 T.C. 573, 577 (1984), that labels
used by taxpayers in an instrument are not controlling.
At trial, petitioner acknowledged that, in negotiations with
his former wife leading up to the separation agreement, his
former wife sought alimony of $500 per month "until she died".
Petitioner rejected that offer and instead offered to pay her the
lump sum of $32,000. His offer was accepted, and that obligation
was incorporated in the settlement agreement. The Court is
satisfied from this testimony that it was not intended that, upon
the death of the former spouse, petitioner would have been
relieved of the obligation of paying the $32,000. Since payment
of the $32,000 was an enforceable obligation upon petitioner, and
that obligation would not have been extinguished by the prior
death of petitioner's former spouse, it follows that the $32,000
obligation is not alimony under section 71(b)(1)(D). Respondent
is sustained on this issue.
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