- 11 -
is not treated as alimony].” Id. at 303 (emphasis added).9
Furthermore, the Court narrowly construed that requirement,
holding that language in a marital agreement providing for a pro
rata reduction in payments to the payee spouse as each child
became emancipated did not “fix” such amounts as child support as
contemplated in the statute.
The Court in Commissioner v. Lester, supra at 302,
recognized the pervasive incentive under Federal income tax law
to characterize marital payments as includable, deductible
alimony rather than excludable, nondeductible child support: “on
the other hand, the wife, generally being in a lower income tax
bracket than the husband, could * * * in the final analysis
receive a larger net payment from the husband if he could deduct
the gross payment from his income.” In blessing the technique
utilized by Mr. Lester, the Court afforded practitioners great
flexibility in disguising child support as alimony for tax
purposes. As one California court explained, in the aftermath of
Lester:
it became a common practice for spousal support awards
to be “loaded.” That is, a theoretically larger than
otherwise spousal support payment and a correspondingly
adjusted-down child support payment was agreed upon in
order to take advantage of the tax laws and, assumedly,
to provide adequately for the children through the
supported, custodial spouse’s increased income.
9 In so holding, the Court relied extensively on the
legislative history of the statute, including the passage quoted
above.
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