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Commissioner, 82 T.C. 128, 134 (1984).
Sections 215 and 71 of the Code are where these general
principles take specific shape in the current Code. Section 215,
which allows a deduction for alimony paid, defines “alimony” as a
payment that meets the four tests spelled out in section 71(b).
One of these is section 71(b)(1)(D), which requires that “there
[be] no liability to make any such payment for any period after
the death of the payee spouse.”3 Sec. 71(b)(1)(D). Limiting
deductibility to obligations that end with the death of the payee
stops taxpayers from disguising property settlements as alimony.
But one recurring problem has been how to tell whether a
particular obligation to pay alimony really would stop at death.
For a time, the Code had a strict bright-line test:
deductibility was denied unless there was an express provision in
the divorce decree or separation instrument itself ending
payments upon the death of the payee spouse. 26 U.S.C. sec.
71(b)(1)(D) (1984). In 1986, though, Congress softened section
71(b) to allow deductibility without such an express provision,
but only if state law would end the obligation at death anyway.
3 We note that under sec. 1.71-1T(b) A-5, Temporary Income
Tax Regs., 49 Fed. Reg. 34455 (Aug. 31, 1984), “Transfers of
services or property (including a debt instrument of a third
party or an annuity contract) * * * do not qualify as alimony or
separate maintenance payments.” The parties never addressed
whether weekly payments made from an insurance company to a
former wife fall within this exclusion, and neither do we.
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