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Section 215(a) provides generally that alimony payments are
deductible by the payor spouse. Under section 215(b), "alimony"
means any alimony, as defined in section 71(b), which is
includable in the gross income of the recipient under section 71.
Under section 71(b), the term "alimony or separate maintenance
payment" is defined in section 71(b)(1) as any payment in cash
meeting the following four criteria:
(A) such payment is received by (or on behalf of)
a spouse under a divorce or separation instrument,
(B) 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,
(C) in the case of an individual legally separated
from his spouse under a decree of divorce or of
separate maintenance, the payee spouse and the payor
spouse are not members of the same household at the
time such payment is made, and
(D) there is no liability to make any such payment
for any period after the death of the payee spouse and
there is no liability to make any payment (in cash or
property) as a substitute for such payments after the
death of the payee spouse.
Petitioner's deduction for alimony is allowable only if the four
criteria of section 71(b)(1) are met. Jaffe v. Commissioner,
T.C. Memo. 1999-196.
The Court first notes that, in the agreement, Ms. Lima was
recognized as owner of one-half of all unexercised stock options
of her husband, petitioner, and, additionally, a substantial
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Last modified: May 25, 2011