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portion of stock options petitioner had exercised prior to the
divorce. On this record, the Court is satisfied that a portion
of the $20,977 gain from the exercise of the options included the
options owned by Ms. Lima. That portion of the distribution to
her, therefore, was not alimony but was simply an accounting, a
payment, or a distribution to petitioner of property she already
owned. With respect to the remainder of the $20,977,
respondent's position is that it is not alimony under section
71(b)(1)(D).4
Section 71(b)(1)(D) requires, as a condition to qualify as
alimony, that the obligation to pay terminate upon the death of
the former spouse. If the payer is liable for even one otherwise
qualifying payment after the recipient's death, none of the
related payments required before death will be alimony. Sec.
1.71-1T(b), Q&A-13, Temporary Income Tax Regs., 49 Fed. Reg.
34456 (Aug. 31, 1984). Whether such obligation exists may be
determined by the terms of the applicable instrument, or if the
instrument is silent on the matter, by looking to State law.
Morgan v. Commissioner, 309 U.S. 78, 80 (1940); Gilbert v.
4 The Court recognizes that, because, in the agreement,
the parties expressly waived the right to alimony, it is
plausible to conclude that the transfer or payment of the
remainder of the net proceeds from exercise of the stock options
to Ms. Lima was voluntary and, perhaps, a gift and, therefore,
not deductible. Respondent, however, did not make such a
contention, and, since the parties framed the issue as alimony,
the Court decides the case on that basis.
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