§71 — Repealed. Pub. L. 115–97, title I, § 11051(b)(1)(B), Dec. 22, 2017, 131 Stat. 2089]

Whether a payment constitutes alimony within the meaning of sections 71(a) and 215(a) is determined by reference to section 71(b)(1), which provides: Sec. 71(b). Alimony or separate maintenance payments defined.—For purposes of this section— (1) In general.—The term “alimony or separate maintenance payment” means any payment in cash if— (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument, (B) the divorce or separation instrument does not designate

When enacting this definition in 1984, Congress intended “to establish an objective standard to distinguish be- tween a payment received in the division of property . . . and a payment received as spousal support.” Estate of Goldman, 112 T.C. at 322 (citing legislative history). Petitioner contends that his $300,000 payments to Ms. Roberts in 2017 and 2018 constituted deductible alimony. Respondent contends that the payments were components of a marital property settlement (or otherwise failed t

In determining whether YA Global’s payment of withholding tax would result in an overpayment, as defined by Liberty Glass Co., if the amount paid does not take into account nonpartnership deductions available to YA Offshore, the tax paid should be compared to the section 71 1446 withholding tax properly due.

days before the Federal Register and the Code of Federal Regulations, the Treasury Department published its regulations in consecutively numbered pamphlets. Henry Campbell Black, A Treatise on the Law of Income Taxation Under Federal and State Laws sec. 71 (2d ed. 1915) (available at heinonline.org); Richmond & Yamamoto, supra, 148. One of these numbered pamphlets was Regulations 86 Relating to the Income Tax Under the Revenue Act of 1934. This publication bears a publication date of 1935. The

Served 01/25/23 2 After concessions,2 the issue for decision is whether a payment of $15,000 that petitioner made to his ex-spouse’s attorney constitutes deductible “alimony” pursuant to section 71(b) for the year in issue.

§§ 71(a), 215(a).5 This general rule is inapplicable, however, for payments in an amount fixed by the terms of a divorce or separation instrument that were made or treated as made to support the payer’s children.

Pursuant to section 71(b)(1)(D), for an alimony or separate maintenance payment to be deductible there must be no liability for the payor to make such payments, or for the payor to make substitute payments, after the death of the payee spouse.

Discussion Section 215(a) generally permits an individual to deduct from gross income “alimony or separate maintenance payments,” as defined in section 71(b).4 This deduction is allowable, however, only if the alimony or separate maintenance payments are includible in the recipient’s gross income under section 71. § 215(b). As a general rule, alimony or separate maintenance payments are includible in the payee spouse’s gross income. § 71(a). This general rule is inapplicable, however, and conseq

lso deduct the alimony payments. - 6 - B. “Alimony Regime” If a taxpayer pays alimony as defined in section 71(b), then the taxpayer may deduct such payments from gross income if the amounts are includible in the gross income of the recipient under section 71. Secs. 62(a)(10), 215(a) and (b).8 We are satisfied, and respondent does not dispute, that the alimony payments statutorily qualify as alimony and that Ms. Leyh was required to include these amounts in her gross income in accordance with se

e.5 IV. Alimony Section 215(a) allows a taxpayer a deduction for alimony payments during the taxable year. The term “alimony” is defined for purposes of section 215(a) as any payment of alimony that is includible in the income of the recipient under section 71. See sec. 215(b). In pertinent part, section 71(b)(1) defines “alimony” as any payment in cash that satisfies four requirements: (1) the payment is 5Respondent also had raised a challenge as to whether petitioners had established that they

or separate maintenance payment" is any payment in cash if (1) the payment is received by a spouse under a divorce or separation instrument, (2) the divorce or separation instrument does not state the payment is not includible as gross income under section 71 and is not allowed as a deduction -7- under section 215, (3) the spouses are not living in the same household at the time ofthe payment, and (4) there is no liability to make the payments for any period after the death ofthe payee spouse a

We have previously decided that even ifthere are separately allocated child support payments, other monthly payments made pursuant to ajudicial decree will still qualify as child support under section 71 ifit contains an explicit contingency related to a child.

defined in section 71(b) as any payment in cash if(1) such payment is received by a spouse under the divorce decree, (2) the divorce or separation agreement does not designate such payment as a payment which is not includible in gross income under section 71 and not allowed as a deduction under section 215, (3) the spouses are not living in the same household at the time ofthe payment, and (4) there is no liability to make the payments for any period after the death ofthe payee spouse and there

We hold that the $27,245 was, for Federal tax purposes, alimony and separate maintenance under section 71(b)2 and therefore taxable income which petitioner failed to include; and 2.

nes "alimony" as any cash payment if(A) the payment is received by a spouse under a divorce or separation instrument, (B) the divorce or separation instrument does not designate such payment as a payment which is not includable in gross income under section 71 and not allowable as a deduction under section 215, (C) the payor and payee spouses are not members ofthe same household when the payment is made, and (D) the payment obligation terminates at the death ofthe payee spouse and there is no li

ourt referenced the alimony factors and stated that an alimony award was not appropriate.4 Accordingly, because petitioner failed to establish that his obligation to pay Kelley's share oftheirjoint debts (without the right ofcontribution) would terminate upon her death, he has not satisfied section 71(b)(1)(D).5 4 To the extent there are any questions about alimony's automatic termination at death under Arkansas law in 2012, see supra note 3, the amended divorce decree's wording does not otherwi

Relying on the language in the "Tax Free Transfers" section ofthe agreement, however, respondent takes the position that petitioner fails to satisfy subparagraph (B) ofsection 71(b)(1) because the divorce decree designates the Sallie Mae student loan payments as nonalimony and subject to the provisions of section 1041. According to petitioner, that section ofthe agreement applies only to the division ofproperty, not community debt, and therefore it does not apply to the Sallie Mae student loan p

nes "alimony" as any cash payment if(A) the payment is received by a spouse under a divorce or separation instrument, (B) the divorce or separation instrument does not designate such payment as a payment which is not includable in gross income under section 71 and not allowable as a deduction under section 215, (C) the payor and payee spouses are not members ofthe same household when the payment is made, and (D) the payment obligation terminates at the death ofthe payee spouse and there is no li

t. Discussion Section 215(a) allows a taxpayer a deduction for alimony payments made during the taxable year. The term "alimony" is defined for purposes ofsection 215(a) as any payment ofalimony that is includible in the income ofthe recipient under section 71. See sec. 215(b). In pertinent part, section 71(b)(1) defines an alimony payment as any payment in cash that satisfies the following four requirements: (A) such payment is received by (or on behalfof) a spouse under a divorce or separation

(continued...) - 13 - [*13] requirements for alimony under section 71(b)(1) and is not deductible under section 215(a). III. Section 6662(a) Accuracy-Related Penalty We next address the accuracy-relatedpenalty under section 6662(a) determined in the notice. Section 6662(a) and (b)(1) and (2) imposes a penalty equal to 20% ofany portion ofan underpayment that is attributable to negligence or disregard ofrules or regulations or to any substantial understatement ofincome tax. Section 6662(d)(1)(A)

Bulakites' oral modification ofhis written separation agreement doesn't work--it's well settled that an oral modification ofa written instrument does not meet section 71's requirements.

Each ofthese cases held that legal fees paid by a wife in obtaining alimony includible in her gross income pursuant to section 71 were - 9 - [*9] deductible under section 212(1).

Section 1041(a)(2) provides the general rule that "no gain or loss shall be recognized on a transfer ofproperty from an individual to * * * a former spouse, but only ifthe transfer is incident to divorce." Section 1041(c) provides that, for purposes ofsubsection (a)(2), a transfer is incident to divorce ifit occurs within one year after the date on which the marriage ceases or such transfer is related to the cessation ofthe marriage.

We, therefore, conclude that the law ofthe marital - 7 - [*7] domicile is not the law that we must interpret.4 Section 71 requires us to interpret the divorce order.

oof remains his. I. Alimony Generally Section 215(a) allows a deduction for alimony payments made during the payor's taxable year. Alimony means any "payment (as defined in section 71(b)) which is includible in the gross income ofthe recipient under section 71." Sec. 215(b). An alimony payment is defined as any payment in cash that satisfies the following four requirements: (1) the payment is received by (or on behalfof) a spouse under a divorce or separation instrument; (2) the divorce or separ

31, 1984) (regulation), provides the following (we have numbered the sentences to facilitate our references to the regulation): [1] A transfer ofproperty is treated as related to the cessation ofthe marriage ifthe transfer is pursuant to a divorce or separation instrument, as defined in section 71(b)(2), and the transfer occurs not more than 6 years after the date on which the marriage ceases.

Set against the definition - 6 - ofalimony contained in section 71,3 the express language ofthe divorce decree, clearly directed towards the elements ofthat definition, strongly suggests that respondent's position is beyond dispute.

-16- [*16] though, because state law can supply the missing termination-on-death-of- payee condition that section 71 requires.

-16- [*16] though, because state law can supply the missing termination-on-death-of- payee condition that section 71 requires.

Set against the definition - 6 - ofalimony contained in section 71,3 the express language ofthe divorce decree, clearly directed towards the elements ofthat definition, strongly suggests that respondent's position is beyond dispute.

le 34(b)(4). The parties agree that the remaining amounts in dispute are from "future attorney's fees" that arose under paragraph 25.A.(2) ofthe final decree. The parties dispute whetherthe future attorney's fees meet the requirements ofalimonyunder section 71. Amounts received as alimony are includible in the gross income ofthe recipient. Sec. 71(a); see also sec. 61(a)(8). Correspondingly, a taxpayerwho made alimony payments during a tax year is entitled to deduct them ifthey meet the requirem

5.15.1.11(2)(f) requires certain child support payments that a taxpayer receives to be included in determining the amount that a taxpayerwould be able to pay each month to the IRS with respect to an unpaid tax liability, even though the taxpayermay exclude from gross income under section 71(c) child support payments described in that section.

nt. Although petitioner and Mr. Williams agreed that petitioner's transfer ofthe Sweet Briar property would replace $80,000 ofpetitioner's alimony obligation, the intent ofthe parties does not determine the deductibility ofa payment as alimony under section 71. See Okerson v. Commissioner, 123 T.C. 258, 264-265 (2004). Instead the test for - 7 - [*7] whether a payment is deductible as alimony is a straightforward, objective test that rests entirely on the fulfillment ofexplicit requirements set

, section 215(a) and (b) allows a deduction to the paÿing spouse for the alimony or separate maintenance payments, as defined in section 71(b), made during the paying spouse's tax year that are includible in the recipient spouse's gross income under section 71. The term "alimony or separate maintenance payment" is defined in section 71(b)(1) as follows: (1) In general.--The term "alimony or separate maintenance payment" means any payment in cash if- -7- (A) such payment is received by (or on beh

The divorce instrument does not designate the "maintenance" payments that Resnik paid to Wells Fargo as either not includible in his ex-wife's gross income under section 71 or not deductible by Resnik under section 215..

le 34(b)(4). The parties agree that the remaining amounts in dispute are from "future attorney's fees" that arose under paragraph 25.A.(2) ofthe final decree. The parties dispute whetherthe future attorney's fees meet the requirements ofalimonyunder section 71. Amounts received as alimony are includible in the gross income ofthe recipient. Sec. 71(a); see also sec. 61(a)(8). Correspondingly, a taxpayerwho made alimony payments during a tax year is entitled to deduct them ifthey meet the requirem

ments paid during the taxable year. For purposes of section 215, "'alimony or separate maintenance payment' means any alimony or separate maintenance payment (as defined in section 71(b)) which is includable in the gross income ofthe recipient under section 71." Sec. 215(b). - 8 - [*8] Section 71(b)(1) sets forth a four-pronged inquiry for determining whether a payment constitutes alimony or separate maintenance. Section 71(b)(1) provides: (1) In general.--The term "alimony or separate maintenan

Pursuant to section 71(c)(3) and the regulations thereunder, $8,307 ofthe $9,688 ofpayments is allocated to - 6 - child support, leaving the $1,381 remainder as alimony.

Filippini did not constitute alimony under section 71 and was therefore not deductible by petitioner.

during the taxpayer's taxable year. For purposes ofsection 215, "'alimony or separate maintenance payment' means any alimony or separate maintenance payment (as defined in section 71(b)) which is includable in the gross income ofthe recipient under section 71." Sec. 215(b). Section 71(b)(1) sets forth a four-pronged inquiry for determining whether a payment constitutes alimony or separate maintenance. Section 71(b)(1) provides: (1) In general.--The term "alimony or separate maintenance payment"

meet the definition ofalimony under sections 71 and 215.3 We begin with the alimony deduction. A deduction from gross income is allowed for alimony payments to the extent such payments are includible in the gross income ofthe recipient spouse under section 71. Sec. 215(a) and (b). Whether a payment constitutes alimony withinthe meaning ofsections 71(a) and 3The taxpayer generallybears the burden ofproving the Commissioner's determinations are erroneous. Rule 142(a). The burden ofproofmay shift t

On the record before us, we hold, consistent with petitioner's reporting position on her 2007 return, that the $50,000 she received from Mr.

Because the spousal maintenance payments terminate based on a child-related contingency, we hold that Mr.

Liability to make payment after death, under section 71(b)(1)(D) The parties do not dispute whetherMr. Laremore's 2009 payment satisfies section 71(b)(1)(C), but the Commissioner contends that he fails to meet the other three requirements ofthe statute in subparagraphs (A), (B), and (D). We need not address all three ofthese, because we hold that Mr. Laremore did remain liable to make the payment in the event ofhis ex-wife's death.3 The 2009 payment therefore did not meet the requirement ofsecti

- 10 - [*10] payment (as defined in section 71(b)) which is includible in the gross income ofthe recipient under section 71." Section 71(b)(1) provides the following definition ofthe term "alimony or separate maintenance payment": SEC.

317, 322 (1999) ("'The committee bill attempts to define alimony in a way that would conform to general notions ofwhat type ofpayments constitute alimony as distinguished from property settlements and to prevent the deduction oflarge, one-time lump-sum property settlements.'" (quoting H. Rept. 98-432 (Part 2), at 1495 (1984), 1984 U.S.C.C.A.N. 697, 1137)) (citing Hoover v. Commissioner, 102 F.3d 842, 845 (6th Cir. 1996), af_f'f'g T.C. Memo. 1995-183), aff'd without published opinion sub nom. Sch

ount equal to the alimony or separate maintenance payments paid during such individual's taxable year." Section 215(b) defines the term "alimony or separate maintenance payment" for purposes ofsection 215 to mean "any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income ofthe recipient under section 71." Section 71(b)(1) provides the following definition ofthe term "alimony or separate maintenance payment": - 10 - [*10] SEC.

to the alimony or separate njaintenance payments paid during such individual's taxable year." Section 215(b) defines the term "alimony or separate maintenance pay- - 7 - ment" for purposes ofsection 215 to mean "any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b)(1) provides the following definition ofthe term "alimony or separate maintenance payment": SEC.

Moreover, we do not find any distinguishable facts in this case that merit a differentresult. We therefore find that petitioner had no continuing liability for the family support payments past the death ofMs. DeLong and that the section 71(b)(1)(D) requirement is met.

equal to the ali- mony or separate maintenance payments paid during such individual's taxable year." Section 215(b) defines the term "alimony or separate maintenance pay- ment" for purposes ofsection 215 to mean "any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b)(1) provides the following definition ofthe term "alimony or separate maintenance payment": SEC.

equal to the ali- mony or separate maintenance payments paid during such individual's taxable year." Section 215(b) defines the term "alimony or separate maintenance pay- ment" for purposes ofsection 215 to mean "any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b)(1) provides the following definition ofthe term "alimony or separate maintenance payment": SEC.

e that section 7491 applies, nor did she introduce the requisite evidence to invoke that section; therefore, the burden of proofremains on petitioner. II. Alimony For alimony to be taxable to the payee, the payments must satisfy all ofthe elements ofsection 71. Classification ofa payment as alimony under a State statute does not necessarily mean that the payment is considered alimony under Federal tax law ifany ofthe elements required by section 71 is missing. Hoover v. Commissioner, 102 F.3d 84

Section 215(b) defines alimony or separate maintenance as any "payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony.

Section 215(b) defines alimony or - 6 - separate maintenance as any "payment (as defmed in section 71(b)) which is includible in the gross income ofthe recipient under section 71." Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony: SEC.

Although the language does not precisely mimic the language of section 71(b)(1)(B), we hold that the substance ofa nonalimony designation is reflected in the Temporary Orders.

Accordingly, we hold that the military retired pay of$15,384 and $15,738 that petitioner received for tax years 2007 and 2008, respectively, is gross income.

71(t)(1) and (2); see also Dwyer v. Commissioner, 106 T.C. 337 (1996). The distribution does not meet any ofthe exceptions set forth in section 72(t)(2). Respondent also contends that petitioner received and failed to report an additional $17 ofinterest income. Respondent, however, did not present any predicate evidence relating to this matter

History ofAlimony PaymentDèductions Under Section 71 Before 1984 section 71 required courts to consider anumber offactors to determine whether certain transfers ofmoney would be treated as alimony for Federal income tax purposes.

Alimony as defined in section 71 specifically excludes child support payments.

Petitioner overlooks the fact that in 1986 Congress amended section 71 to provide that alimony treatment is not limited to situations where a separation agreement or a divorce decree expressly states that the support payments are to terminate upon the death ofthe payee spouse.

ccordingly, we hold that petitioner is not entitled to deduct as alimony the $50,000 payment made in 2007.

e made to his former wife as alimony under section 215. Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215 (b) defines "alimony" as alimony which is 'includable in the gross income of the recipient under section 71. Section 71(b) (1) defines alimony as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section.2 Accordingly, if 2 Sec. 71(b) (1) provides: SEC. 71 (b) . Alimony or Separate Maintenance Payments

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215(b) defines "alimony" as alimony which is includable in the gross income of the recipient under section 71. Section 71(b) (1) defines alimony as - 4 - any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section.2 Accordingly, if any portion of the payments made by petitioner fails to meet any one of the

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215(b) defines "alimony" as alimony which is includable in the gross income of the recipient under section 71. Section 71(b) (1) defines alimony as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section.5 Accordingly, if 5 Sec. 71(b) (1) provides: SEC. 71(b). Alimony or Separate Maintenance Payments Def

e maintenance payments made during such individual's taxable year. Alimony or separate maintenance payment means any alimony or separate maintenance payment (as defined in section 71(b)) which is includable in the gross income of the recipient under section 71. Sec. 215(b). Alimony or separate maintenance payment is defined as any payment in cash that satisfies the four requirements listed under section 71(b) (1). The first such requirement is I that the payment be received by or on behalf of a

Section 215(b) defines alimony or separate maintenance as any "payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony: SEC.

section 71 (b) (1) (A) through (cid:16)042(D) . Because the payment does not meet the requirements of section 71(b) (1) (B), we need not address whether it .meets the other requirements. 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 ars

We have held that whenever the resólution of adjustments requires factual determinations, the Commissioner is not obliged to concede those adjustments until the Commissioner has received, and has had a reasonable time to verify, adequate substantiation for the matters,:ba question. 4 See Huynh v. Commissioner, T.C. Memo. 2002-110; Gealer v

Accordingly, we hold that petitioners are entitled to a $5,746 alimony deduction for the mortgage payments on the Casas Lindas residence for 2006 .

For the reasons discussed above, we sustain respondent's determination that the payments received by petitioner from her 'ex-husband in 2005 were alimony and not child support under section 71, and accordingly, Decision will be entered for respondent.

e Payments Defined .-- For purposes of this section, the term "alimony or separate . maintenance payment" means any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71 . Section 71(a) provides that "Gross income includes amounts received as alimony or separate maintenance payments ." As previously stated, alimony or separate maintenance payments are defined by section 71(b)(l), which provides : SEC . 71(b

Pursuant to section 71(b)(1)(D), petitioner may deduct as alimony only those expenses his liability for which does not survive his former spouse's death .

Accordingly, we hold that petitioner's .

, provides that the part of an attorney's fee and the part of the other costs paid in connection with a divorce * * *, which are properly attributable to the production or collection of amounts ,includible in gross income under section 71 are deductible by the * * * [person who receives amounts includable in gross

7491(a) does not apply here because petitioner has not produced any evidence that he has satisfied the preconditions for its application.

Accordingly, we hold that, under the unique facts of this case, petitioner's payments made to his former wife in-2007 satisfied the conditions set forth in section 71 and were thus properly deductible as alimony under section 215 for that taxable year.

Therefore, we hold that petitioner is not entitled to alimony deductions for the years at issue .

s ex-wife $11,200 pursuant to the final orders, and he deducted that amoun t as alimony on his Federal income tax return . 2 Respondent disallowed the claimed eduction because the payments did not meet the requirements or an alimony deduction under section 71 . Discussion3 Section 71(a) provides the general~ rule that alimon y payments are included in the gross income of the payee spouse ; section 215(a) provides the complementary general rule that alimony payments are tax deductible by he payor

x-husband $26,181 in order to extinguish his interest in the property . .Petitioner-deducted $26,181 as,alimony on her 2005 Federal income tax return . Respondent disallowed the claimed deduction because the payment did not constitute alimony under section 71 . Mechanical adjustments to petitioner's Federal income tax followed, an d rc respondent determined a deficiency of $6,025 . Discussion2 Section 71(a) provides the general rule that alimon y payments are included in the gross income of the

r section 215(a ) and includable in the gross income of the payee spouse under sections 61(a)(8 ) and 71 . Section 215 (b) defines an alimony or separate maintenance payment as a payment which is includable in the gross income of the recipient under section 71.. Section 71(b)(1) provides a : - 6 four-step inquiry for determining whether a payment -is alimony'wor separate maintenance. Section .,,71(b)(1).'provides SEC . 71(b) .(1) . Alimony or Separate 'Maintenance . Payments Defined .--For purpo

Since the documents are probative as to when the disputed payments were made, sufficient grounds exist under Rule-174(b) to overrule respondent's objections .

rce instrument fix as a sum payable for the support of the children of the payor spouse . Sec . 71(c) ; Zinsmeister v . Commissioner, supra . Furthermore, payments which are part of a property settlement are capital in nature and are not subject to section 71 . Zampini v . Commissioner , T .C . Memo . 1991-395 (citing Yoakum v. Commissioner , 82 T .C . 128, 134 (1984), Thompson v. Commissioner , 50 T .C . 522 (1968), and Price v . Commissioner, 4 9 T .C . 676 (1968)) . While property interests o

The committee bill attempts to define alimony in a way that would conform to general notions of what type of payments constitute alimony as distinguished from property settlements and to prevent the deduction of large, one-time lump-sum property settlements. [H . Rept . 98-432 (Pt . 2), at 1495-1496 (1984).]" [alteration in original . ] Although the parties to a divorce proceeding may intend that certain payments be considered alimony for Federal income tax purposes, and a court overseeing that

71-1314, in effect for 2004, is now Neb . Rev . Stat . Ann. sec. 38-2122 (LexisNexis 2008) . There is no substantive change . See 2007 Neb . Laws 463, 740 . Subsequent references to Neb . Rev. Stat . Ann. are to the current (LexisNexis 2008) edition . R 4 - Massachusetts . Although, petitioner actually completed the internship in Massachusett

(b)(7), Income Tax Regs ., provides the follow- ing exception to the general rule stated therein : the part of an attorney's fee * * * in connection with a divorce, legal separation, written separation agree- ment, or a decree .for support, which are properly attributable to the .production or collection of amounts includible in gross income under section 71 are deduct- ible by the * * * [person who receives amounts includible in gross income under sec .

Alimony Deduction Section 71, as amended by the Deficit Reduction Act of 1984, Pub . L . 98-369, sec . 422, 98 Stat . 795, (DEFRA), applies to divorce or separation instruments'executed after December 31, 1984 . Sec . 1 .71-1T(e), Temporary Income Tax Regs ., 49 Fed . Reg. 34458 (Aug . 31, 1984) . Mr . Heydt and his former spouse's stipulation was incorporated into the superior court's order in August 1980 . Accordingly, the tax consequences of petitioners' payments are governed by relevant sect

We disagree with petitioners ' contention .

Section 71 (c) requires the Secretary to prescribe guidelines for e luating offers in compromise and to "develop and publish hedules of national and local allowances designed to provide th taxpayers entering into a compromise have an adequate means to ovide for basic living expenses ." Sec . 7122(c)(1) and (2) (A) . ' Furthermore, petitioner alread

We hold that they are .

Payments Defined .-- For purposes of this section, the term "alimony or separate maintenance payment" means any alimony or separat e maintenance payment (as defined in ',section 71(b)) which is includible in the gross income of t' he recipient under section 71 . Section 71(a) provides that "Gross ,income includes amounts received as alimony or separate maintenance payments ." As previously stated, alimony or separate maintenance payments are defined by section 71(b)(1), which provides in part :

t . 4 .2 Dennis ' obligation to pa child support as described herein shall terminate u on the emancipation of [the younger child] . * * * The divorce decree does not state hether Mr. Raga's payments are includable in petitioner's gross income under section 71 . It does not state that the unallocated support payments from Mr . Raga will terminate u on the death of petitioner or Mr . Raga . The divorce de ree grants petitioner and Mr . Raga joint legal custody of their c ildren . During 2004 petit

OPINION Under section 71(b)(1) the term alimony is defined as, among other things, a "payment in cash" .

requirements : (a) Such payment is received by, or on behalf of, a spouse under a divorce or separation instrument ; (b) the divorce or separation instrument does not designate such payment as a payment which is not includable in gross income under section 71 and not allowable as a deduction under section 215 ; (c) the payee spouse and the payor spouse are not members of the same household at the time the payment is made ; and (d) there is no liability to make any such payment, or a substitute f

. Alimony Deduction Section 215(a) allows a deduction for alimony paid during the taxable year . Section 215(b) provides that the term "alimony" means any alimony (as defined in section 71(b)) that is includable in the recipient's gross income under section 71 .. .__ : Section 71(b)(1) defines alimony as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) .' The first criterion is that the payment must be made "under a divorce or separation instrument . Sec . 71(

Bangs' argument that the monthly payments at issue constitute alimony under section 71 and are deductible under section 215(a) .

Bangs' argument that the monthly payments at issue constitute alimony under section 71 and are deductible under section 2 5 (a) .

71,' .215 The parties agree that the payments satisfy all requirements of section 71(b) ;(1)5 except that the payee spouse and the payor spouse may not-be members of the same'household-at'the,time'the payment is made .

71(a), (b)(1)(D), (c) (1) . In determining whether a payment obligation is to end upon the death of a taxpayer , we first examine the applicable divorce order, which, if unambiguous, is dispositive of the issue . Okerson v . Commissioner, 123 T.C. 258, 264 (2004 ) (citing Hoover v . Commissioner, 102 F . 3d 842 (6th Cir . 1996), affg . T.C. Me

3(...continued) determination in his petition, amended petition, or second amended petition. Each issue not addressed by a clear and concise assignment of error in the petition is deemed to be conceded. Rule 34(b)(4). Accordingly, petitioner is deemed to have conceded the correctness of respondent’s deficiency determination. - 7 - Petitioner’

requirements : (a) Such payment is receiv d by, or on behalf of, a spouse under a divorce or separation ins rument ; (b) the divorce or separation instrument does not design to such payment as a payment which is not includable in gross income under section 71 and not allowable as a deduction under s ction 215 ; (c) the payee spouse and the payor spouse are not memb rs of the same household at the time the payment is made ; and (d) there is no liability to make any such payment, or a substitute

The test under section 71 (b)(1) is conjunctive ; a payment is deductible as alimony only if all four requirements of section 71(b)(1) are present . See Jaffe v . Commissioner, T .C . Memo . 1999-196 . Section 71 (b)(2) defines a "divorce or separation instrument" as : (A) a decree of divorce or separate maintenance or a written instrument incident to such a decree , (B) a written separation agreement, or (C) a decree (not described in a subparagraph (A)) requiring a spouse to make payments for

ce payments paid during the individual's taxable year . The term "alimony or separate maintenance payment" means any alimony or separate maintenance payment (as defined in section 71(b)) which is includable in the gross income of the recipient under section 71 . Sec . 215(b) . An alimony or separate maintenance payment is any payment in cash that satisfies the four requirements listed under section 71(b)(1) . Sec . 71(b) . The first requirement is that the payment be received by or on behalf of

440 (1934) . In the case of an individual, section 215(a) "[allows] as a deduction an amount equal to the alimony * * * payments paid during such individual's taxable year ." The definition of "alimony", for purposes of section 215(a), is found in section 71 . Sec . 215(b) . In general and as relevant here, section 71(b)(1) defines the term "alimony" as any cash payment if : (1) The payment is - 5 - received by a spouse' under a divorce decree ; (2) the divorce decree does not state that the pa

In short, all of these payments were child support, and petitioner is not entitled to any deduction for the payments pursuant to section 71(c) .

" The term "alimony" means any alimony as defined in section 71, the relevant provision of which explains : 3 The Uniform Code of Military Justice can be found at 10 U.S .C .

Accordingly, we hold that, under the unique facts of thi s case, petitioner's payments made to his ex-wife in 2002 satisfied the conditions set forth in section 71 and were thus properly deductible as alimony for that taxable year .

Accordingly, $2,687 of the $6,074 paid by petitioner in 2002 is, pursuant to section 71(c)(3), child support and cannot be deducted as alimony .

This requires us to decide whether the payments were made pursuant to a written separation agreement under section 71(b)(2)(B) and, therefore, qualify as alimony as defined by section 71 (b) (1) .1 Background Most of the facts have been stipulated and are so found .

Accordingly, we hold that petitioner's payments made to his wife in 2004 did not satisfy all the conditions set forth in section 71 and thus are not properly deductible as alimony for the taxable year in issue .

Thus, we hold that the $12,000 paid to Von Bergen in 2004 pursuant to the settlement agreement between petitioner and Von Bergen does not qualify to be deducted as alimony paid by - 7 - petitioner under section 215 .

That issue is resolved by whether the $9,200 payments satisfy the definition of "alimony or separate maintenance payment" under section 71 (b)(1)(D) .

We hold that he did not .

We hold that petitioners are entitled to an alimony deduction limited to the $1,317 total of the three spousal support payments for October, November, and December 2002 plus one-half of each $561 monthly mortgage payment for May through December 2002 .

In the latter case, if all of the payment was intended as child support, then petitioner would not be entitled to any deduction pursuant to section 71(c) .

Section 215(b) defines alimony as a payment that is includable in the gross income of the recipient under section 71 . Section 71(a) provides that gross income includes amounts received as alimony or separate maintenance payments . Under the temporary order, petitioner was obligated to pay to Ms . Katcher alimony payments of $500 per month . Although not specified in the temporary order, petitioner claims that the 'Petitioner has not raised the issue of sec . 7491(a), which shifts the burden of

In short, all of these payments were child support, and petitioner is not entitled to any deduction for the payments pursuant to section 71(c).

" The term "alimony" means any alimony as defined in section 71, the relevant provision of which explains : SEC .

Characterization of 2002 Payment s Petitioners argue that they are entitled to deduct $16,773 from their 2002 gross income pursuant to section 71(b)(1) as alimony paid to Ms .

5 (a) provides a deduction to an individual equal to the alimony or separate maintenance payments paid during that individual ' s taxable year . Section 215(b) defines alimony. as any payment that is includable in the gross income of the payee under section 71 . Section 71 (a) provides for the inclusion in .income of any alimony or separate maintenance payments received during the taxable year . Section 71.(b)(1) defines "alimony or separate maintenance payment" as any payment in cash if-- (A) s

as property taxable to the former spouse. In those cases, the Court concluded that the payments were includable in the former spouses’ gross income pursuant to sec. 61(a)(ll) but did not address whether the payments qualified as alimony, pursuant to sec. 71. Conversely, in Baker v. Commissioner, T.C. Memo. 2000-164, the Court agreed with the Commissioner that the military retirement payments received by a former spouse qualified as alimony, pursuant to sec. 71.

nt shown was (a) alimony and (b) paid”. Discussion5 Section 215(a) allows a deduction for alimony payments paid during the payor’s taxable year. Section 215(b) defines alimony as payment which is includable in the gross income of the recipient under section 71. Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony. Section 71(b) provides: SEC. 71(b). Alimony or Separate Maintenance Payments Defined.–-For purposes of this section-- (1) In general.--The term

Initial Payment Qualifies as Alimony Under Section 71(b) Section 215(a) allows a deduction for the payment of alimony . during a taxable year . Section 215(b) defines alimony as a payment that is includable in the gross income of the recipient under section 71 . Section 71(a) provides that gross income includes amounts received as alimony or separate maintenance payments . Under section 71(b)(1), the term "alimony or separate maintenance payment" means any cash payment if-- (A) such payment is r

It follows that petitioner is not entitled to an alimony deduction for 2002, and respondent’s disallowance of that deduction is sustained. 2. Negligence Penalty According to respondent, the underpayment of tax required to be shown on petitioner’s 2002 return is due to negligence or intentional disregard of rules or regulations. See sec.

We hold that he did not .

enalty . Consequently, the only issue remaining for decision is whether the payments totaling $63,000 which petitioner Carol A . Johanson (petitioner or Carol) received in 2002 from her former spouse, John Weiler (John), are taxable as alimony under section 71 . Petitioners resided in California when they filed their petition . - 3 - FINDINGS OF FACT Some of the facts have been stipulated and are so found . Petitioner and John (the Parties) were married on February . 18, 1966, and separated on o

Section 215(b) provides that the paying spouse may deduct a payment as alimony if the payment is "includible in the gross income of the recipient under section 71 ." Section 71(b)(1) defines an alimony payment as any cash payment meeting each of the following four criteria : (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument , (B) the divorce or separation .

for an amount equal to alimony or separate maintenance payments paid during the taxable year. “Alimony or separate maintenance payment” means any alimony or separate maintenance payment that is includable in the gross income of the recipient under section 71. Sec. 215(b). Section 71(b)(1) defines “alimony or separate maintenance payment” as any payment in cash if-- (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument, - 6 - (B) the divorce or separ

Section 71(c)(3) provides a special rule where the amount of the child support payment is less than the amount specified in the order : "if any payment is less than the amount specified in the instrument, then so much of such payment as does not exceed the sum payable for support shall be considered a payment for such support ." See also Hazam v .

aintenance and child support . The circumstances support his testimony. The Court finds that $30,000 of the payments received by petitioner from Arias in 2002 is includable in her gross income - 7 - as alimony or separate maintenance payments under section 71 . Reviewed and adopted as the report of the Small Tax Case Division . To reflect the foregoing, Decision will be entered for respondent . I/I//ih/II//III//II/ih//////////g NITED STATES TAX COURT WASHINGTON, D.C. 20217-0002 7004 289q Oppp 93

Initial Payment Qualifies as Alimony Under Section 71(b) Section 215(a) allows a deduction for the payment of alimony . during a taxable year . Section 215(b) defines alimony as a payment that is includable in the gross income of the recipient under section 71 . Section 71(a) provides that gross income includes amounts received as alimony or separate maintenance payments . Under section 71(b)(1), the term "alimony or separate maintenance payment" means any cash payment if-- (A) such payment is r

The sole issue for decision is whether petitioner is entitled to deduct attorney’s fees paid in 2002 as alimony pursuant to section 71(b).

shown was (a) alimony and (b) paid" . Discussions Section 215(a) allows a deduction for alimony payments paid during the payor's taxable year . Section 215(b) defines alimony as payment which is includable in the gross income of th e recipient under section 71 . Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony . Section 71(b). provides : SEC . 71(b) . Alimony or Separate Maintenance Payments Defined .--For purposes of this section-- (1) In general .--T

shown was (a) alimony and (b) paid" . 5 Discussion Section 215(a) allows a deduction for alimony payments paid during the payor's taxable year . Section 215(b) defines alimony as payment which is includable in the gross income of the recipient under section 71 . Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony. Section 71(b) provides : SEC . 71(b) . Alimony or Separate Maintenance Payments Defined .--For purposes of this section-- (1) In general .--The

f indebtedness; (13) Distributive share of partnership gross Income; (14) Income in respect of a decedent; and .(15) Income from an interest in an estate or trust. (b) Cross References.-- For items specifically included in gross income, see part II (sec. 71 and following). For 4(...continued) (2) the sections 1 and 55 taxes as limited by section 1211(b) constitute direct taxes that must be apportioned; and (3) full deductibility of capital losses is the preferred way to save the entire income ta

re allowed a deduction equal to alimony or separate maintenance payments made during the taxable year. Sec. 215(a). Alimony or separate maintenance payments are defined in section 71(b) and must be included in the gross income of the recipient under section 71. Sec. 215(b). An alimony or separate maintenance payment is any payment in cash if: (a) Such payment is received by, or on behalf of, a former spouse under a divorce or separation instrument;2 (b) the divorce or separation instrument does

o indebtedness; (13) Distributive share of p rtnership gross income; (14) Income in respect of a ecedent; and (15) Income from an interest in an estate or trust. (b) Cross References.-- For items specifically included in gross income, see part II (sec. 71 and Tollowing). For 4(...continued) (2) the sections 1 and 55 taxes as limited by section 1211(b) constitute direct taxes that must be apportioned! and (3) full deductibility of capital losses is the preferred way to save the entire income tax

on 215(a) and includable in gross income by the receiving spouse under sections 61(a)(8) and 71. Section 215(b) provides that the paying spouse may deduct a payment as alimony if the payment is “includible in the gross income of the recipient under section 71”. Section 71(b)(1) defines an alimony payment as any cash payment meeting each of the following four criteria: (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument, (B) the divorce or separatio

Clearly, unlike Baker, petitioner and the former spouse considered the tax consequences of their nonalimony designation and made provisions thereof in the Agreement. Because petitioner and the former spouse specifically agreed that payments from Mr. Vanarsdall to the former spouse were not alimony, the requirement of section 71(b)(1)(B) has not been met;5 therefore, respondent is sustained.

It is undisputed that the retirement plan from which petitioner withdrew the $68,583 is a plan described in section 401(k), and, therefore, the exception contained in section 71(t)(2)(E) does not apply.

ucted the payments as alimony on his 2002 income tax return . Petitioner did not include the $9,600 as alimony income on her 2002 return . Discussion The parties dispute whether the payments received by petitioner from Wolf are taxable to her under section 71 . Resolution of this dispute depends on whether the payments, as a matter of law, terminate on the death of petitioner . Section 71(a) provides that gross income generally includes amounts received as alimony or separate maintenance payment

Former Spouse Section 215(a) provides generally that alimony payments are deductible by the payor spouse. Under section 215(b), “alimony” means any alimony, as defined in section 71(b), which is includable in the gross income of the recipient under section 71. Under section 71(b), the term “alimony or separate maintenance payment” is defined in section 71(b)(1) as any payment in cash meeting the following four criteria: (A) such payment is received by (or on behalf of) a spouse under a divorce o

Lester continues, however, to stand for the proposition that, subject to section 71(c)(2), amounts will not be treated as child support for purposes of section 71 unless specifically designated as such in the governing divorce document.

Tennessee divorce law, for example, used to classify all alimony as either in solido (roughly equivalent to property settlements) or in futuro (roughly equivalent to section 71 alimony).

It is undisputed that the retirement plan from which petitioner withdrew the $100,000 is a plan described in section 401(k), and, therefore, the exception contained in section 71(t)(2)(E) does not apply.

Thus, child support payments are neither includable in income under section 71 nor deductible under section 215.

Accordingly, we hold that the lump-sum alimony payments, automobile lease payments, and SBA loan payments made by petitioner under the terms of the settlement agreement are not - 11 - alimony within the meaning of section 71.

that taxpayer’s taxable year. For purposes of section 215, “alimony - 4 - or separate maintenance payment” means any alimony or separate maintenance payment (as defined in section 71(b)) that is includable in the gross income of the recipient under section 71. Sec. 215(b). Section 71 provides in pertinent part: SEC. 71. ALIMONY AND SEPARATE MAINTENANCE PAYMENTS. (a) General Rule.--Gross income includes amounts received as alimony or separate maintenance payments. (b) Alimony or Separate Maintena

des generally that alimony payments are deductible by the payor spouse. Section 215(b) provides in pertinent part that the term "alimony" means any alimony, as defined in section 71(b), which is includable in the gross income of the recipient under section 71. Section 71(b) defines alimony as follows: SEC. 71(b). Alimony or Separate Maintenance Payments Defined.--For purposes of this section–- (1) In general.--The term "alimony or separate maintenance payment" means any payment in cash if–- (A)

The committee bill attempts to define alimony in a way that would conform to general notions of what type of payments constitute alimony as distinguished from property settlements and to prevent the deduction of large, one-time lump-sum property settlements. [H. Rept. 98-432 (Pt. 2), at 1495-1495 (1984).] Although the parties to a divorce proceeding may intend that certain payments be considered alimony for Federal income tax purposes, and a court overseeing that proceeding may intend the same,

me. Cf. Mivec v. Commissioner, T.C. Memo. 1981-695 (“[I]t is well settled that where, upon divorce, a husband makes payments in satisfaction of the property rights of his wife, the amounts received by the wife, even though periodic and incident to a divorce, are capital - 10 - in nature and, therefore, are not includable in her gross income under section 71.”). Decision will be entered for petitioners.

f law. - 5 - Section 215(a) provides generally that alimony payments are deductible by the payor spouse. Under section 215(b), "alimony" means any alimony, as defined in section 71(b), which is includable in the gross income of the recipient under section 71. Under section 71(b), the term "alimony or separate maintenance payment" is defined in section 71(b)(1) as any payment in cash meeting the following four criteria: (A) such payment is received by (or on behalf of) a spouse under a divorce or

marriage settlement agreement are not controlling”. Benedict v. Commissioner, 82 T.C. 573, 577 (1984). A payment must satisfy all the requirements of sec. 71(b) to qualify as alimony. See Jaffe v. Commissioner, T.C. Memo. 1999-196. Congress amended sec. 71 in the Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 422(a), 98 Stat. 494. The purpose behind the amendment was to “eliminate the subjective inquiries into intent and the nature of payments that had plagued the courts in favor of a simp

iciency of $2,795.40 in petitioner’s Federal income tax for 2000. The issue to be decided is whether a certain payment to petitioner by her former husband pursuant to a separation agreement constitutes alimony that is includable in her income under section 71. All section references are to the Internal Revenue Code, as amended, - 2 - and all Rule references are to the Tax Court Rules of Practice and Procedure. Background The parties submitted the instant case, fully stipulated, without trial, pu

408(d)(6) provides as follows: TRANSFER OF ACCOUNT INCIDENT TO DIVORCE.--The transfer of an individual’s interest in an * * * [IRA] to his spouse or former spouse under a divorce or separation instrument described in subparagraph (A) of section 71(b)(2) is not to (continued...) - 6 - We disagree.

Here, the applicable Federal law is set forth in section 71, which, in its present form, provides the exclusive means by which a taxpayer may deduct a payment as alimony for Federal income tax purposes.

ter v. Commissioner, 242 F.3d 390 (10th Cir. 2000). However, section 215(a) allows a deduction for the payment of alimony during a taxable year. Section 215(b) defines alimony as payment which is includable in the gross income of the recipient under section 71. Section 71(b) provides a four-step inquiry for determining whether a cash payment is alimony. Section 71(b) provides: SEC. 71(b). Alimony or Separate Maintenance Payments Defined.–-For purposes of this section-- (1) In general.--The term

Respondent argues alternatively that the benefits are includable in petitioner’s gross income as alimony pursuant to section 71.5 4The relevant provision is codified, as amended, at 10 U.S.C.

the payment of alimony or separate maintenance payments during a taxable year. Section 215(b) defines the term alimony or separate maintenance payment as alimony or separate maintenance which is includable in the gross income of the recipient under section 71. Section 71(b)(1) defines alimony or separate maintenance as any cash payment meeting the four criteria provided in subparagraphs (A) - 6 - through (D) of that section. Respondent contends that Mr. Meyer is not entitled to any alimony deduc

- 9 - Section 71 was amended by the Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 422(a), 98 Stat. 494, 795, to establish an objective standard to distinguish between a payment received in the division of property (which is not includable in gross income) and a payment received as spousal support (which is includable in gross income). Hoover v. Com

Kean) constitutes alimony under section 71 that is deductible by Mr.

After concessions, the issue remaining to be decided is whether any part of the unallocated support payments constitutes alimony under section 71 that is deductible by the payor spouse, Mr.

Springer, then these payments are alimony under section 71 and deductible from petitioner’s gross income under section 215(a).

Appeals. Sec. 6015(c)(4) (B)(ii) (I).) This presumption, however, does not apply to any transfer made pursuant to a decree of divorce or separate maintenance or a written instrument incident to such a decree. Sec. 6015(c)(4) (B) (ii) (II); see also sec. 71(b)(2) (B) (explaining that the term "divorce or separation instrument" means a written - 25 - separation agreement). Consequently, this presumption is not applicable in this case because the transfer of assets from Mr. Ohrman to petitioner to

e, we will rely on Mr. Maher’s testimony to sustain his burden of establishing error in respondent’s determinations. Alimony Section 215(a) permits a deduction for the payment of alimony which is includable in the gross income of the recipient under section 71. Section 71(b)(1) defines alimony or separate maintenance as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section. Respondent concedes that Mr. Maher is entitled to an alimony deduction consi

Kean) constitutes alimony under section 71 that is deductible by Mr.

After concessions, the issue remaining to be decided is whether any part of the unallocated support payments constitutes alimony under section 71 that is deductible by the payor spouse, Mr.

“Alimony” is defined in section 71(b) as a payment if “the divorce or separation instrument does not designate such payment as a payment which is not includible in gross income under this section and not allowable as a deduction under section 215".

The issues for decision are: (1) Whether certain payments received by petitioner pursuant to a court order are gross income to petitioner under section 71 and (2) whether petitioner is liable for an addition to tax under section 6651(a)(1).

The payments are to continue until the mortgage is paid or the house is sold. The payments constitute a division of marital property. Estate of Goldman v. Commissioner, 112 T.C. 317, 323-324 (1999), affd. without published opinion sub nom. Schutter v. Commissioner, 242 F.3d 390 (10th Cir. 2000). The language of the decree also mee

nance payments defined. – For purposes of this section, the term “alimony or separate maintenance payment” means any alimony or separate maintenance payment (as defined in section 71(b)) which is includable in the gross income of the recipient under section 71. Section 71(a) provides: “Gross income includes amounts received as alimony or separate maintenance payments.” In pertinent part, section 71(b) and (c) provides: SEC. 71. ALIMONY AND SEPARATE MAINTENANCE PAYMENTS (b) Alimony or separate ma

ional adjustments which will be resolved by the Court’s holding on the issue in this case. - 4 - “Alimony or separate maintenance payments” are deductible by the payer in the year paid if they are includable in the payee spouse’s gross income under section 71. Sec. 215(a) and (b). Subject to further requirements not relevant here, the phrase “alimony or separate maintenance payment” is defined as “any payment in cash if * * * such payment is received by (or on behalf of) a spouse under a divorce

Based upon our analysis of Florida law, we hold that Mr.

The issues for decision are: (1) Whether amounts received by petitioner pursuant to a judgment of divorce are includable in her income under section 71; and (2) whether petitioner is liable for accuracy-related penalties under section 6662(a) for negligence or disregard of rules or regulations.

Child support payments, on the other hand, are neither includable in income under section 71 nor deductible under section 215.

Section 71 was amended by the Deficit Reduction Act of 1984 (DEFRA 1984), Pub. L. 98-369, sec. 422(a), 98 Stat. 494, 795. However, DEFRA 1984 is applicable only to divorce instruments executed after December 31, 1984, or modified after December 31, 1984, where the modified instrument states that the amended version of section 71 will apply. See DEF

ane in 1993 and 1994 on the policy - 4 - constituted alimony includable in Ms. Marten’s income pursuant to section 71(a)(1), prior to amendment by the Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec. 422(a), 98 Stat. 494, 795 (pre-DEFRA section 71). On November 5, 1999, Ms. Marten filed a motion for reconsideration of our opinion. On April 20, 2000, we granted the motion for reconsideration to consider whether we had erred in applying pre-DEFRA section 71 as opposed to section 71, aft

We held that under section 71, before amendment by the Deficit Reduction Act of 1984 (DEFRA), Pub.

greement state a specific dollar amount of support; it is sufficient if the agreement states an ascertainable 8 Although Bogard v. Commissioner, 59 T.C. 97 (1972), construed the meaning of “written separation agreement” as used in a prior version of sec. 71, the regulations provide that the term has the same meaning under the current statute. See sec. 1.71-1T(a), Q&A-4, Temporary Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31, 1984). - 21 - standard. See Jacklin v. Commissioner, 79 T.C. 340, 351

71(a), 98 Stat. 494, Congress expressly rejected Rev. Rul. 60- 345, supra, stating in the legislative history that “accrued but unpaid items should not be treated as partnership liabilities for purposes of section 752.” On the basis of these factors, the Commissioner interpreted section 752 as follows: Under P’s method of accounting, P’s oblig

After a concession by respondent,1 the issue for decision is whether certain payments 1 Respondent concedes that petitioner is entitled to a (continued...) - 2 - received by petitioner are includable in her gross income as alimony under section 71.2 We hold that they are.

Berry’s attorney’s fees pursuant to the State court’s August 28, 1996, order constituted alimony within the meaning of section 71 that is deductible under section 215.

venue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concessions, the issues are whether: (1) Certain payments to Ms. Hazam from Mr. Hazam are properly included, pursuant to section 71, in Ms. Hazam’s income, and deducted, pursuant to section 215, by Mr. Hazam as alimony; and (2) Ms. Hazam is liable, pursuant to section 6651(a)(1), for additions to tax for failure to file timely returns. FINDINGS OF FACT When the petitio

her 1995 wages. Petitioner and Mr. Baker did not live together in the same household at any time from June 1, 1994, to December 31, 1996. Respondent has determined that the military retirement payments constitute alimony income to petitioner under section 71. Petitioner contends that the payments she received from the military retirement plan were in furtherance of a division of property and should be excluded from her income under section 1041. Section 61 defines gross income to mean all incom

ane in 1993 and 1994 on the policy - 4 - constituted alimony includable in Ms. Marten’s income pursuant to section 71(a)(1), prior to amendment by the Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec. 422(a), 98 Stat. 494, 795 (pre-DEFRA section 71). On November 5, 1999, Ms. Marten filed a motion for reconsideration of our opinion. On April 20, 2000, we granted the motion for reconsideration to consider whether we had erred in applying pre-DEFRA section 71 as opposed to section 71, aft

Tang were deductible as alimony during the years in issue under section 215. Ms. Eads Section 2153 provides a deduction for amounts paid by a taxpayer to a former spouse if the payee spouse is required to include these amounts in gross income under section 71.4 3Sec. 215 was amended by the Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec. 422(b), 98 Stat. 494, 797. The amendment applies to divorce or separation instruments (as defined in sec. 71(b)(2), as amended) executed after Dec. 3

Petitioner paid alimony, as defined under section 71, in the amounts of $2,312.46 and $2,865.84 during 1995 and 1996, respectively.

greement state a specific dollar amount of support; it is sufficient if the agreement states an ascertainable 8 Although Bogard v. Commissioner, 59 T.C. 97 (1972), construed the meaning of “written separation agreement” as used in a prior version of sec. 71, the regulations provide that the term has the same meaning under the current statute. See sec. 1.71-1T(a), Q&A-4, Temporary Income Tax Regs., 49 Fed. Reg. 34455 (Aug. 31, 1984). - 21 - standard. See Jacklin v. Commissioner, 79 T.C. 340, 351

We begin our analysis with the third requirement under which a payment is not treated as alimony if the divorce or separation instrument designates that the payment is not includable in the recipient’s income under section 71 or deductible by the payor under section 215.

Child support payments, on the other hand, are neither includable in income under section 71 nor - 5 - deductible under section 215.

We held that under section 71, before amendment by the Deficit Reduction Act of 1984 (DEFRA), Pub.

ance of the second mortgage in August 1996. OPINION The issue in this case is whether certain payments made by petitioner pursuant to the court orders and decrees in his divorce proceeding are "alimony or separate maintenance payments" as defined in section 71. If so, they are deductible by petitioner in the year paid. See secs. 71(a), 215(a). Alimony does not include any part of a payment which the terms of the divorce instrument fix as a sum payable for the support of the children of the payer

T.C. Memo. 1999-273, we decided that “unallocated child support and maintenance” payments made pursuant to a Colorado State court decree were not deductible by the payor spouse under section 215 or includable in the income of the payee spouse under section 71. The only issues remaining for decision are: (1) Whether a State court decree which awarded the dependency exemptions for petitioners’ minor children to the noncustodial parent but which was not signed by the custodial parent qualifies as

The parties agree that the 1989 Property Settlement was, pursuant to section 71(b)(2), "incident to" the divorce decree because its purpose was to divide the marital property.

494, 795, to establish an objective standard to distinguish between a payment received in the division of property (which is not includable in gross income) and a payment received as spousal support (which is includable in gross income). See Hoover v. Commissioner, 102 F.3d 842, 845 (6th Cir. 1996), affg. T.C. Memo. 1995-183; see also H. Rept. 98-432 (Part 2), at 1495 (1984) ("The committee bill attempts to define alimony in a way that would conform to general notions of what type of payments co

Section 215(b) provides that the term "alimony or separate maintenance payment" means "any alimony or separate maintenance payment (as defined by section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b) provides as follows: SEC.

71 (b)(1), (e). Each of these requirements must be met before a payor may deduct a payment as alimony. We concern ourselves only with the three requirements in dispute. First, the need for a cash payment requires that alimony be paid in cash or a cash equivalent. A check or money order that is payable on demand is a cash equivalent. A debt ins

thin the meaning of section 71(b), and, therefore, could not be deducted under section 215. In the notice of deficiency issued to Linda, respondent determined that the payments must be included in her income for the appropriate year as alimony under section 71. - 5 - Discussion Gross income includes amounts received as alimony. See secs. 71(a), 61(a)(8). Amounts includable as alimony in a payee spouse's gross income are deductible to the payor spouse. See secs. 71, 215. There is no dispute among

ments paid during the year. For purposes of section 215, the term "alimony or separate maintenance payment" means any alimony or separate maintenance payment (as defined in section 71(b)) that is includable in the gross income of the recipient under section 71. See sec. 215(b). Section 71(a) provides that gross income generally includes amounts received as alimony or separate maintenance payments. Section 71(b)(1) defines alimony or separate maintenance payment as any payment in cash if-- (A) su

Jaffe during 1994 constitutes alimony or separate maintenance payments includable in her income under section 71 and deductible by Mr.

each of those cases, however, a written instrument did exist that created a legally enforceable obligation upon the husband to either make certain payments or maintain a certain standard of living for the 3 These cases interpret a former version of sec. 71. The statute, as amended, still requires a decree or a written instrument and requires that the payments be made under such decree or written instrument. - 5 - spouse. While the instrument does not have to be part of the divorce decree itself

Lane on a life insurance policy are alimony within the meaning of section 71.2 FINDINGS OF FACT Some of the facts have been stipulated and are so found.

OPINION Section 71 provides in pertinent part: SEC.

Lane on a life insurance policy are alimony within the meaning of section 71.2 FINDINGS OF FACT Some of the facts have been stipulated and are so found.

rocedure. - 2 - Respondent determined deficiencies of $3,063 and $2,750 in petitioner's Federal income taxes for 1994 and 1995, respectively. The issue for decision is whether petitioner must include payments from her former husband in income under section 71. Some of the facts were stipulated and are so found. The stipulation of facts and annexed exhibits are incorporated herein by reference. Petitioner resided in Burgettstown, Pennsylvania, at the time her petition was filed. Petitioner separa

this opinion are: (1) Whether any part of "unallocated child support and maintenance" payments made pursuant to a State court decree is alimony deductible by the payor spouse under section 2152 and includable in the income of the payee spouse under section 71; and 1Mr. Lovejoy has conceded that a State tax refund of $175 is includable in his gross income for the taxable year 1993. Respondent has conceded that Ms. Miller is entitled to claim additional medical expenses for the taxable year 1993 i

ule Under section 215, an individual taxpayer is allowed to deduct amounts paid as "alimony or separate maintenance" as defined under section 71(b). Alimony and separate maintenance payments are includable in the gross income of the recipient under section 71. - 12 - The purpose of the Federal tax treatment of alimony is to relieve the payor of the burden of paying tax on the income which is transferred to the payee spouse as alimony and to impose that burden on the spouse receiving the alimony.

Jaffe during 1994 constitutes alimony or separate maintenance payments includable in her income under section 71 and deductible by Mr.

elations order which shifted the income tax liability to the wife. Although the facts and operative Code section involved in this case differ from those involved in Hawkins, our reading of the specificity requirements of sec. 71(b)(1)(B) is analogous insofar as we find that the agreement made an effective designation without referring expressly to sec. 71 or 215.

101 and following)." Section 79 uses the same articulation as section 83 in providing that the cost of employees' group-term life insurance "shall be included in the gross income" of employees.

e to mean all income from whatever source derived, including alimony or separate maintenance payments. Sec. 61(a)(8). Whether a payment constitutes alimony or separate maintenance within the meaning of section 61(a)(8) is determined by reference to section 71. Section 71(a) generally provides that gross income includes amounts received as alimony or separate maintenance payments. Section 71(b)(1) defines the term "alimony or separate maintenance payment" as any payment in cash if-- (A) such paym

Therefore, the payment did not satisfy the definition of alimony under section 71 and could not be includable in petitioner's income.

Human (Anita), constitute alimony within the meaning of section 71 so as to be deductible by petitioner pursuant to section 215(a); and (2) whether petitioner is liable for the section 6662(a) accuracy-related penalty.

* * * The payments are intended to qualify as income to the Wife and deductible to the Husband for tax purposes, pursuant to section 71 and section 215 of the Internal Revenue Code of 1986 as amended.

payments of alimony are deductible to the paying spouse (here, the ex-husband) and includable in income by the recipient spouse (here, the ex-wife). The axis along which that statement runs connects, at one end, - 5 - section 215 and, at the other, section 71. In pertinent part, section 215 provides: (a) General Rule.--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. (b)

.C. 1275, 1283 (1981); Martin v. Commissioner, 73 T.C. 255, 265 n.2 (1979); sec. 1.71-1(b)(4), Income Tax Regs. Payments that are part of a property settlement are capital in nature and, therefore, are not deemed alimony subject to the provisions of section 71. Gammill v. Commissioner, 73 T.C. 921 (1980), affd. 710 F.2d 607 (10th Cir. 1982). In evaluating whether a particular payment constitutes support or property settlement, the labels assigned to the payments are not determinative. Id.; Hesse

Nelson to his former spouse during the years in issue constitute alimony within the meaning of section 71 and are therefore deductible pursuant to section 215.

since conceded that Marta is not liable for the accuracy-related penalty. Discussion We must decide whether spousal support payments made by Norman to Marta from January 6, to June 9, 1992, in the amount of $63,170 are alimony within the meaning of section 71. To protect the fisc, respondent has taken inconsistent positions in the notices of deficiency issued to petitioners. On brief, however, respondent supports Norman's position that the payments are alimony, and thus deductible by him pursua

mony or separate maintenance payments. Secs. 61(a)(8), 71(a). Section 215(a) allows a deduction for the payment of alimony during a taxable year. Section 215(b) defines alimony as payment that is includable in the gross income of the recipient under section 71. Section 71(c) provides that section 71(a) does not apply to any payment that is fixed by the terms of the divorce or separation instrument as payable for the support of the children - 7 - of the payor spouse. If alimony is includable in t

means all income from whatever source derived, including (but not limited to) the following items:” and then lists 15 items specifically included in gross income. Section 61(b) provides: “For items specifically included in gross income, see part II (sec. 71 and following). For items specifically excluded from gross income, see part III (sec. 101 and following).” Section 79 uses the same articulation as section 83 in providing that the cost of employees’ group term life insurance “shall be includ

oyalty payments received from books he had written. OPINION Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215(b) defines alimony as alimony which is includable in the gross income of the recipient under section 71. Section 71(b)(1) defines alimony or separate maintenance as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section. Accordingly, if any portion of the payments made by petitioner - 4 - fails t

Although we agree with petitioner's argument that the interest payments do not constitute alimony under section 71, and therefore, are not includable in income as such, we disagree with her contention that unless the payments constitute alimony they need not be included in her income.

Section 215(b) further provides that "the term 'alimony or separate maintenance payment' means any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71." Section 71(b)(1) defines the term "alimony or separate maintenance payment" in pertinent part as any payment in cash received by (or on behalf of) a spouse under a divorce or separation instrument.

received as alimony or separate maintenance. Sec. 71(a); Brown v. Commissioner, 50 T.C. 865, 867-868 (1968), affd. 415 F.2d 310 (4th Cir. 1969). On the other hand, payments which represent a property settlement are not taxable to the recipient under section 71. Yoakum v. Commissioner, 82 T.C. 128, 134 (1984); Thompson v. Commissioner, 50 T.C. 522, 525 (1968). Pursuant to section 215(a), a taxpayer may deduct amounts paid to a former spouse if those payments are includable in the former spouse's

uct this amount pursuant to the order. We disagree. - 14 - Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215(b) defines alimony as alimony which is includable in the gross income of the recipient under section 71. Section 71(b)(1) defines alimony or separate maintenance as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section. Accordingly, if any portion of the payments made by petitioner fails to meet

income to mean income from whatever source derived, including alimony or separate maintenance payments. Sec. 61(a)(8). Whether a payment constitutes alimony or separate maintenance within the meaning of section 61(a)(8) is determined by reference to section 71. Pursuant to section 71, a payment is alimony if, in addition to meeting other requirements, the payment is received by (or on behalf of) a spouse under a divorce or separation instrument. Sec. 71(b)(1)(A). For purposes relevant to the pre

tly, H was directed by a California court to pay monthly "family support" payments (the marital payments) to W. H deducted the marital payments as alimony pursuant to sec. 215, I.R.C. W did not report the marital payments as gross income pursuant to sec. 71, I.R.C. R disallowed H's deduction and included the marital payments in W's income. 1. Held: The marital payments are not alimony; therefore H may not deduct such payments, and W need not include them in gross income. 2. Held, further, R's de

Child support payments are neither includable in income under section 71 nor deductible under section 215.

the marital or family relationship, is imposed on or incurred by the husband under the decree (continued...) - 10 - 867-868 (1968), affd. 415 F.2d 310 (4th Cir. 1969). Payments which are a property settlement are not taxable to the recipient under section 71. Estate of Smith v. Commissioner, 208 F.2d 349, 351 (3d Cir. 1953), affg. in part and revg. in part a Memorandum Opinion of this Court dated Nov. 28, 1952; Yoakum v. Commissioner, 82 T.C. 128, 134 (1984); Thompson v. Commissioner, 50 T.C. 5

unts deducted as alimony were actually paid. - 5 - OPINION Section 215(a) permits a deduction for the payment of alimony during a taxable year. Section 215(b) defines alimony as alimony which is includable in the gross income of the recipient under section 71. Section 71(b)(1)3 defines alimony or separate maintenance as any cash payment meeting the four criteria provided in subparagraphs (A) through (D) of that section. Accordingly, if any portion of the payments made by petitioner 3 Sec. 71(b)(

er to buy out her interest in the property under an implicit property settlement between the parties or income payments attributable to her joint property interests with petitioner. Section 215 permits a deduction for alimony payments, as defined in section 71. For purposes of this case, payments may qualify as alimony if, in addition to satisfying other requirements, they are received by a spouse under a decree of divorce or of separate maintenance. Sec. 71. In this case, the -30- original divo

tly, H was directed by a California court to pay monthly "family support" payments (the marital payments) to W. H deducted the marital payments as alimony pursuant to sec. 215, I.R.C. W did not report the marital payments as gross income pursuant to sec. 71, I.R.C. R disallowed H's deduction and included the marital payments in W's income. 1. Held: The marital payments are not alimony; therefore H may not deduct such payments, and W need not include them in gross income. 2. Held, further, R's de

299 (1961), held that the requirement in section 71 that child support payments be "fixed" should be taken literally and that child 7(...continued) separated from his spouse under a decree of divorce or of separate maintenance, the payee spouse and the payor spouse are not members of the same household at the time such payment is made, and (D) there is no liability to make any such paymen

the marital or family relationship, is imposed on or incurred by the husband under the decree (continued...) - 10 - 867-868 (1968), affd. 415 F.2d 310 (4th Cir. 1969). Payments which are a property settlement are not taxable to the recipient under section 71. Estate of Smith v. Commissioner, 208 F.2d 349, 351 (3d Cir. 1953), affg. in part and revg. in part a Memorandum Opinion of this Court dated Nov. 28, 1952; Yoakum v. Commissioner, 82 T.C. 128, 134 (1984); Thompson v. Commissioner, 50 T.C. 5

299 (1961), held that the requirement in section 71 that child support payments be "fixed" should be taken literally and that child 7(...continued) separated from his spouse under a decree of divorce or of separate maintenance, the payee spouse and the payor spouse are not members of the same household at the time such payment is made, and (D) there is no liability to make any such paymen

r section 71(b)(1)(D) was not satisfied in this case. Whether or not the parties intended for the payments to be deductible to petitioner, we must focus on the legal effect of the agreement in determining whether the payments meet the criteria under section 71. Since section 71(b)(1)(D) is not met, the payments are not considered alimony for Federal income tax purposes. As we stated in Webb v. Commissioner, T.C. Memo. 1990-540, the current section 71 was enacted to prevent the type of litigation

e 231, nor has she demonstrated that respondent's position was not - 6 - substantially justified.3 Petitioner argues that respondent's position was not substantially justified because the payments she received were not alimony within the meaning of section 71. Petitioner asserts that the payments were not alimony because they were made in accordance with the terms of a promissory note which provided that the payments would continue after her death. First we must determine whether petitioner has

penalty in the amount of $1,012. After concessions by respondent,2 the sole issue for decision is whether $13,808 of rental payments paid by petitioner's former spouse pursuant to the terms of a separation agreement constitute taxable alimony under section 71. Some of the facts have been stipulated and are so found. The stipulations of fact and attached exhibits are incorporated herein by this reference. Petitioner resided in New York, New York, on the date the petition was filed in this case. P

§ 71(c) (McKinney 1988). We do not quarrel with respondent's interpretation of New York partnership law. We disagree, however, that, on June 30 1979, pursuant to the June 1979 agreement, Cecil made a contemporaneous transfer of any percentage of her partnership interest to Marvin. The June 1979 agreement states that Cecil has agreed to sell to Marv