Alimony/Separate Maintenance Payments

• Author: Brian C. Vertz and Mitchell E. Benson
• Pages: 87-118

ALIMONY/SEPARATE

MAINTENANCE

PAYMENTS

3-1

CHAPTER 3

ALIMONY/SEPARATE

MAINTENANCE PAYMENTS

§3.1 DEDUCTIBLE OR NOT?

§3.1.1 Pre-2019 Grandfathered Alimony

§3.1.1.1 Divorce Instrument.

§3.1.1.2 Modif‌ication of Pre-2019 Grandfathered Alimony

§3.1.1.3 Post-2018 Periodic Payments

§3.1.1.4 Estimated Payment of Income Tax on Alimony

§3.1.1.5 Tax Subsidy

§3.1.1.6 Above -the-Line Deduction

§3.1.2 Internal Revenue Code §71 (repealed as of January 1, 2019)

§3.1.3 Internal Revenue Code §215 (repealed as of January 1, 2019)

§3.1.4 T.C.J.A. §11051—The Repeal of the Alimony Tax Deduction

§3.2 SUMMARY OF PROVISIONS OF I.R.C. §71 (THE 7 “D’S”)

§3.3 CASH PAYMENTS

§3.3.1 Alimony Reportable in Calendar Year Actually Received

§3.3.2 Alimony Paid to Third Party

§3.3.3 Writing Required; Voluntary Payment Does Not Qualify

§3.3.3.1 Amounts Paid in Excess of Instrument

§3.4 DIVORCE INSTRUMENT

§3.4.1 Modif‌ication of Divorce Instrument

§3.4.2 Decree or Written Instrument Incident to Such Decree

§3.4.2.1 Interim Decree or Judgment

§3.4.3 A Written Separation Agreement

§3.4.3.1 Agreement Subsequently Rescinded or Decree Vacated

§3.4.3.2 Tax Consequences Cannot Be Changed

§3.4.4 A Decree (Order or Judgment) Requiring Support

§3.4.5 Prenuptial Agreements

§3.5 DESIGNATION AS NOT TAXABLE, NOT DEDUCTIBLE (ALIMONY CAN BE MADE NONTAXABLE)

§3.5.1 Separate Streams of Payment, Different Tax Effects

§3.5.2 [Reserved]

§3.5.3 Temporary Support Order, Designation by Court

§3.5.4 Final Decree of Divorce or Separate Maintenance, Designation by Court

§3.5.5 Distinguishing Correction from Retroactive Modif‌ication

ALIMONY/SEPARATE

MAINTENANCE

PAYMENTS

Divorce Taxation 3-2

§3.6 DIFFERENT HOUSEHOLDS

§3.7 TERMINATION ON PAYEE’S DEATH

§3.7.1 Non-Modif‌iable Alimony

§3.7.2 Lump Sum Alimony

§3.7.3 [Reserved]

§3.7.4 Unallocated Alimony and Child Support (Family Support)

§3.7.5 Arrearage of Alimony

§3.8 CHILD SUPPORT

§3.8.1 Alimony Must Not Be Fixed as Child Support

§3.8.1.1 Payment Insuff‌icient to Cover Alimony and Child Support Obligations

§3.8.1.2 Penalties for Deducting Child Support

§3.8.2 – 3.8.3 [Reserved]

§3.8.4 Clawback Provisions of Separation Agreements

§3.8.5 Unallocated Alimony and Child Support (Family Support)

§3.9 THIRD YEAR FRONTLOADING RECOMPUTATION (“RECAPTURE”) RULE

§3.9.1 Recomputation—Recapture

§3.9.1.1 Post-Separation Years

§3.9.2 Recomputation Rule

§3.9.2.1 Exceptions

§3.9.3 Carry-Back or Carry-Forward Not Available

§3.10 ALIMONY PAID BY NONRESIDENT ALIENS

§3.11 ALIMONY ALTERNATIVES

§3.11.1 Conveyance of Property with Taxable Gains or Income

§3.11.2 Annuitizing Retirement Funds

§3.11.3 Use of Trusts

§3.11.4 Payments by Business in Lieu of Alimony

§3.12 JOINT RETURNS

§3.13 ALIMONY TRUSTS

§3.13.1 Differences Between Alimony Trust Payments and Alimony Pursuant to I.R.C. §71

§3.13.2 Gift Tax Consequences

§3.14 ATTORNEYS’ FEES AS ALIMONY

ALIMONY/SEPARATE

MAINTENANCE

PAYMENTS

3-3 Alimony/Separate Maintenance Payments §3.1

§3. ALIMONY/SEPARATE MAINTENANCE PAYMENTS

 



 













 

−







1



2



  



  



   





   

 −



   

   

   



  

   



§3.1 DEDUCTIBLE OR NOT?



 



   −







1  



2 

 

 