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49 Fed. Reg. 34456 (Aug. 31, 1984), payments are treated as
substitute payments for purposes of section 71(b)(1)(D) to the
extent that they would begin as a result of the payee spouse’s
death and would substitute for a continuation of payments which
would otherwise qualify as alimony but which would terminate on
account of the payee spouse’s death. See also H. Rept. 98-432,
supra at 1496. Such is the case here. All of the post death
payments described in the decrees would be made after Okerson’s
death, and they would be made only if Okerson died before
petitioner satisfied his alimony obligations under the decrees.
The post death payments also would be made in substitute of the
alimony payments under the decrees, which would terminate on
account of Okerson’s death.
Petitioners rely erroneously upon the fact that petitioner
never actually made one of these post death payments. This fact
is unimportant. The standard established by Congress for
substitute payments is not, as petitioners would have it,
whether a payor spouse actually makes a substitute payment. The
standard, as gleaned from section 71(b)(1)(D), as well as from
the regulations interpreting that section and from the
legislative history, is whether the payor spouse could have to
make a substitute payment upon the death of the payee spouse.
Section 71(b)(1)(D) provides that payments qualify as alimony for
Federal income tax purposes if the payments are made in cash and
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