Carol A. Johanson and Alfred F. Melzig, Jr. - Page 7

                                        - 7 -                                         
               We must decide whether payments from John to Carol, in 2002,           
          totaling $63,000, were alimony, a property settlement                       
          installment, or part of a guaranteed stream of payments for a               
          fixed term to Carol or her estate.  In the Agreement, the                   
          payments were specifically denominated “spousal support”.                   
               Alimony or separate maintenance payments are taxable to the            
          recipient (section 71(a)) and deductible by the payor (section              
          215(a)), so the proper characterization of the payments is very             
          significant.  The correct tax treatment of any other type of                
          payments, periodic or otherwise, is not at issue here.                      
               Alimony or separate maintenance payments are defined in                
          section 71(b), which provides:                                              
               SEC. 71.  ALIMONY AND SEPARATE MAINTENANCE PAYMENTS.                   
                    (a)  General Rule.  * * *                                         
                    (b)  Alimony or Separate Maintenance Payments                     
               Defined.--For purposes of this section--                               
                         (1)  In general.--The term ‘alimony or                       
                    separate maintenance payment’ means any                           
                    payment in cash if--                                              
                              (A)  such payment is received by                        
                         (or on behalf of) a spouse under a                           
                         divorce or separation instrument,                            
                              (B)  the divorce or separation                          
                         instrument does not designate such                           
                         payment as a payment which is not                            
                         includible in gross income under this                        
                         section and not allowable as a deduction                     
                         under section 215,                                           
                              (C)  in the case of an individual                       
                         legally separated from his spouse under a                    





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next

Last modified: May 25, 2011