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Consequently, that Court held that, because the court order did
not specifically designate the payments as nonalimony, thereby
making them tax free to the recipient, the payments would be
treated as alimony for Federal income tax purposes. In this
case, the Agreement was not silent as to the designation of
payments from Mr. Vanarsdall to the former spouse. On the
contrary, the Agreement specifically stated that the payments
“shall constitute property settlement and not maintenance or
alimony”. This designation is a “clear, explicit, and express
direction” that the payments were not alimony for Federal income
tax purposes.
Furthermore, petitioners’ reliance on Baker in support of
their assertion is misplaced. In Baker, payments between the
former spouses were made pursuant to a Judgment of Divorce that
labeled the payments “property settlement”. This Court held that
this blanket label, without further clarification, “does not
clearly inform us that the parties considered the Federal income
tax consequences of the payments under sections 71, [and] 215".
Baker v. Commissioner, supra. Petitioner and the former spouse
did not simply label the payments between them a property
settlement without further discussion. On the contrary, the
Agreement specifically states that such payments are “not
maintenance or alimony”. The Agreement further provides that the
former spouse reimburse Mr. Vanarsdall for her portion of the
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