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Perkins.3 On March 13, 2006, respondent issued a notice of
deficiency. Petitioner then filed a timely petition with this
Court. A trial was held on March 7, 2007, in Knoxville,
Tennessee.
OPINION
I. Taxability of the $26,400 in Disability Benefits Received by
Petitioner Pursuant to Paragraph 14(f) of the MDA
As a general rule, the Commissioner’s determination of a
taxpayer’s liability for an income tax deficiency is presumed
correct, and the taxpayer bears the burden of proving that the
determination is improper. See Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933). But see sec. 7491(a).
“Payments incident to a divorce traditionally fell into one
of two categories for [the purpose of] Federal tax law: property
settlements or alimony.” Rogers v. Commissioner, T.C. Memo.
2005-50. Payments characterized as property settlements are
generally neither deductible from the income of the payor nor
includable in the income of the payee. See Yoakum v.
Commissioner, 82 T.C. 128, 134 (1984). The opposite is true for
payments characterized as alimony. See sec. 215(a) (“In the case
of an individual, there shall be allowed as a deduction an amount
equal to the alimony or separate maintenance payments paid during
such individual’s taxable year.”); sec. 71(a) (“Gross income
3 That return was prepared by John P. Konvalinka, the
attorney representing petitioner in this case.
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