Pamela L. Light - Page 11

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          possession as of February 2002 does not imply that the monthly              
          payments were expressly and only for this purpose.  Additionally,           
          there was no evidence presented of petitioner’s obligation to pay           
          Mr. Gutzler’s automobile insurance out of the monthly payments.             
               Petitioner also maintained an erroneous belief that because            
          she was using part of the payments to satisfy her attorney’s fees           
          in the underlying divorce action, these payments would not be               
          includable in her gross income.  As previously discussed, section           
          71(b) provides that if a spouse receives alimony pendente lite,             
          the amount received must be included in the gross income of the             
          payee.  Secs. 71(b)(1), (2)(C).  Moreover, because petitioner had           
          unfettered discretion and control over the payments, she may not            
          exclude from her gross income amounts which she alone designated            
          for her own attorney’s fees.                                                
               Finally, while we are sympathetic to petitioner’s argument             
          that she would not have signed the order were it not for her                
          understanding that she would not have to include payments                   
          received in her gross income, her misunderstanding is an error of           
          law.  See secs. 61(a)(8), 71(b)(1).  Accordingly, because we find           
          the underlying order and agreement clear, controlling, and the              
          exclusive statement of all of the terms of the parties’                     
          settlement, we sustain respondent’s deficiency determination.               

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