Michael K. Berry - Page 7

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          during 1999, and (3) his $114 payment to Dr. Caffaro on October             
          29, 1999.                                                                   
                                     Discussion                                       
          I.   Alimony Deduction                                                      
               A.   Introduction                                                      
                    1.   Statutory Overview                                           
               Generally, alimony and separate maintenance payments                   
          (hereinafter collectively referred to as alimony) are taxable to            
          the recipient and deductible by the payor.  Secs. 61(a)(8),                 
          71(a), 215(a).  Section 71(b)(1) defines “alimony” as follows:              
                      (1) In general.--The term “alimony or separate                  
                 maintenance payment” means any payment in cash if--                  
                         (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.                                        







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