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neither a heading nor a specific designation of money to be paid
to Tulay as alimony. Petitioner signed the MDA on August 23,
2002, and it was filed by Sobieski with the Chancery Court for
Knox County, Tennessee (the Tennessee Court), on August 28, 2002.
On September 3, 2002, the Tennessee Court entered a Final
Decree of Divorce and found that petitioner and Tulay had made
“adequate and sufficient provisions in their * * * [MDA] for an
equitable settlement of any and all property rights, custody and
support”. The MDA was incorporated as an “Order of the Court”,
and petitioner and Tulay were ordered to comply with its terms.
On September 16, 2002, UBS Paine Webber (Paine Webber)
issued a check to Tulay in the amount of $79,340.74, representing
a 50-percent interest in one of petitioner’s retirement accounts
and the $35,000 payment required under the terms of the MDA.
On April 15, 2003, petitioner electronically filed a Form
1040, U.S. Individual Income Tax Return, for 2002, on which he
claimed a deduction of $35,000 for alimony. Petitioner had
assistance from Harold Adair (Adair) of H&R Block in filling out
his tax return. Adair had been assisting petitioner in filling
out his tax returns for the prior 6 or 7 years. Petitioner told
Adair that the $35,000 payment was alimony to pay for the
education of Tulay; however, he did not provide Adair with the
MDA. After reviewing with petitioner Internal Revenue Service
Publication 504 and the requirements for a payment to be
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Last modified: May 25, 2011