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that any payments made thereafter would be in furtherance of the
divorce.
The Initial Payment was made after the parties entered into
the arbitration agreement, but before April 1, 2002. This raises
two legal issues: (1) Whether the arbitration agreement is a
“divorce or separation instrument” as defined by section 71(b)(2),
and (2) whether the Initial Payment was made “under” a divorce or
separation instrument as required by section 71(b)(1).
As for check Nos. 1129 and 1148, Mr. Ray testified that,
subsequent to the examination of his return, he discovered
additional documentation to show that the two checks represent
alimony that was not previously accounted for. He claimed that
the checks, together with the documentation previously submitted
to respondent, show that he paid a total of $18,000 in alimony
between April 1 and August 1, 2002, or $2,000 more than previously
substantiated.
Mr. Ray argues that check No. 1129 should be recharacterized
to reflect that the entire check amount of $3,000, instead of only
$2,000, was alimony. Mr. Ray further argues that check No. 1148,
in the amount of $1,000, represented alimony, but it was not
accounted for, because the check was not discovered until after
the examination.
Check Nos. 1129 and 1148 raise an issue of fact. There is no
dispute that these payments were made under the divorce decree.
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