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that such payments constituted property settlement payments and
not alimony or maintenance payments. The Court agrees.
Petitioners argue that, nonetheless, Article III, section 18
of the Agreement is not conclusive because it does not
specifically state that the payments are not alimony for Federal
income tax purposes. In support of that argument, petitioner
relies on Richardson v. Commissioner, 125 F.3d 551, 556 (7th Cir.
1997), affg. T.C. Memo. 1995-554, where the court stated: “In
common usage, the term designate means ‘to make known directly’.
* * * For a legal instrument to make known directly that a
spouse’s payments are not to be treated as income, we believe
that the instrument must contain a clear, explicit and express
direction to that effect”. Petitioners also argue that this Court
has held that the mere labeling of a payment as a property
settlement does not dictate the Federal income tax consequences
of the payments. Baker v. Commissioner, T.C. Memo. 2000-164.
Petitioner is correct in stating that this Court will not declare
a payment nonalimony merely because of a general label, with no
further clarification; however, petitioners’ reliance on and
interpretation of both Richardson and Baker is incorrect.
In Richardson, the payments at issue that were made from one
ex-spouse to the other were pursuant to a State court’s decree
that made no mention of the nature or characterization of the
payments. Richardson v. Commissioner, supra at 553.
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