Neil Jerome Proctor - Page 6
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Respondent contends that the retirement payments are part of
a property settlement and do not qualify as alimony. An
individual may generally deduct payments made to a spouse during
the taxable year to the extent that those payments are alimony
includable in the spouse’s gross income. See sec. 215(a) and
(b). Section 71(a) requires amounts received as alimony to be
included in gross income.
In order to qualify as alimony, payments must meet the
requirements of section 71(b)(1)(A) through (D). Ms. Holdman
received the retirement payments pursuant to a divorce decree.
Thus, such payments meet the requirements of section 71(b)(1)(A).
In addition, petitioner and Ms. Holdman resided in separate
households at the time the payments were made. Thus, such
payments also meet the requirements of section 71(b)(1)(C).
Respondent contends that the retirement payments do not, however,
meet the requirements of section 71(b)(1)(B) and (D).
Section 71(b)(1)(B) requires that the divorce instrument
“not designate such payment as a payment which is not includible
in gross income under this section and not allowed as a deduction
under section 215”. Respondent contends that this prong is not
met because the divorce decree refers to the payments as part of
a division of the marital property. The classification of a
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Last modified: November 10, 2007