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Section 215(a) allows a deduction for alimony paid during a
taxable year. “Alimony” is defined in section 71(b) as a payment
if “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". The settlement entered into by petitioner with his former
wife expressly stated that the payments agreed to would not be
income to Ms. Tiley and would not be deductible by petitioner.
Thus, the amount paid by petitioner to Ms. Tiley during 1998
clearly was not alimony deductible by petitioner.
Section 6662 imposes a penalty in an amount equal to
20 percent of the portion of an underpayment attributable, among
other things, to negligence or disregard of rules or regulations.
“‘[N]egligence’ includes any failure to make a reasonable attempt
to comply with the provisions of * * * [Title 26], and the term
‘disregard’ includes any careless, reckless, or intentional
disregard.” Sec. 6662(c).
This case clearly justifies the penalty. Petitioner
expressly agreed in open court, in response to questions from his
counsel and from the court, that the amounts that he paid to
Ms. Tiley would not be deductible alimony. He ignored that
agreement and, instead, seeks to justify his deduction on the
basis of his preexisting liabilities that were reduced and
liquidated in the settlement. Even if we were to accept
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Last modified: May 25, 2011