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taxes that Mr. Vanarsdall would have to pay on the income from
the partnership. Clearly, unlike Baker, petitioner and the
former spouse considered the tax consequences of their nonalimony
designation and made provisions thereof in the Agreement.
Because petitioner and the former spouse specifically agreed
that payments from Mr. Vanarsdall to the former spouse were not
alimony, the requirement of section 71(b)(1)(B) has not been
met;5 therefore, respondent is sustained. Petitioners are not
entitled to deduct the $18,398 as alimony.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
5The Court need not look to Indiana State law because the
terms of the Agreement were clear that the payments between
petitioner and the former spouse were not alimony or maintenance
payments. Cunningham v. Commissioner, T.C. Memo. 1994-474.
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