Marlin G. Springer - Page 11

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          death of Ms. Springer, then these payments are alimony under                
          section 71 and deductible from petitioner’s gross income under              
          section 215(a).  See Lovejoy v. Commissioner, 293 F.3d 1208, 1210           
          (10th Cir. 2002), affg. Miller v. Commissioner, T.C. Memo. 1999-            
          273.  The parties dispute (1) whether the divorce documents would           
          have required termination of the annual payments on the death of            
          Ms. Springer, and (2) whether the liability to make the annual              
          payments would have terminated under Nebraska law.  Additionally,           
          respondent argues that the annual payments were intended to be              
          “alimony in gross” under Nebraska law and that this implies that            
          petitioner cannot deduct the $50,000 payment.                               
               Current section 71 is the product of the Deficit Reduction             
          Act of 1984, Pub. L. 98-369, sec. 422, 98 Stat. 795, and the Tax            
          Reform Act of 1986, Pub. L. 99-514, sec. 1843(b), 100 Stat. 2853.           
          In Hoover v. Commissioner, 102 F.3d 842, 845 (6th Cir. 1996),               
          affg. T.C. Memo. 1995-183, the Court of Appeals for the Sixth               
          Circuit explained that by the 1984 revision, “Congress                      
          specifically intended to eliminate the subjective inquiries into            
          intent and the nature of payments that had plagued the courts in            
          favor of a simpler, more objective test.”  The statute as enacted           
          in 1984 required that the divorce or separation instrument itself           
          state that the liability to make payments would terminate on the            
          payee’s death.  The 1986 amendment eliminated the requirement               
          that the termination provision be stated in the instrument itself           

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Last modified: May 25, 2011