- 7 - 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 thePage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011