Discussion:Alimony Again

Code Sec. 71. Alimony and separate maintenance payments

A–2 An alimony or separate maintenance payment is any payment received by or on behalf of a spouse (which for this purpose includes a former spouse) of the payor under a divorce or separation instrument that meets all of the following requirements:

(a) The payment is in cash (see A–5).

(b) The payment is not designated as a payment which is excludible from the gross income of the payee and nondeductible by the payor (see A–8).

(c) In the case of spouses legally separated under a decree of divorce or separate maintenance, the spouses are not members of the same household at the time the payment is made (see A–9).

(d) The payor has no liability to continue to make any payment after the death of the payee (or to make any payment as a substitute for such payment) and the divorce or separation instrument states that there is no such liability (see A–10).

(e) The payment is not treated as child support (see A–15).

Code 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 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 such 
         payment as a payment which is not includible in gross income under 
         this section and not allowable as a deduction under section 215, 
 
         (C) in the case of an individual legally 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 payment for any period 
         after the death of the payee spouse and there is no liability to make 
         any payment (in cash or property) as a substitute for such payments 
         after the death of the payee spouse. 
 
 
    (2) DIVORCE OR SEPARATION INSTRUMENT 
 
    The term "divorce or separation instrument" means-- 
 
         (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 subparagraph (A)) requiring a spouse 
         to make payments for the support or maintenance of the other spouse. 
 
 

(c) PAYMENTS TO SUPPORT CHILDREN

    (1) IN GENERAL 
 
    Subsection (a) shall not apply to that part of any payment which the terms 
    of the divorce or separation instrument fix (in terms of an amount of 
    money or a part of the payment) as a sum which is payable for the support 
    of children of the payor spouse. 
 
 
    (2) TREATMENT OF CERTAIN REDUCTIONS RELATED TO CONTINGENCIES INVOLVING 
    CHILD 
 
    For purposes of paragraph (1), if any amount specified in the instrument 
    will be reduced-- 
 
         (A) on the happening of a contingency specified in the instrument 
         relating to a child (such as attaining a specified age, marrying, 
         dying, leaving school, or a similar contingency), or 
 
         (B) at a time which can clearly be associated with a contingency of a 
         kind specified in subparagraph (A), 
 
    an amount equal to the amount of such reduction will be treated as an 
    amount fixed as payable for the support of children of the payor spouse. 
 
 
    (3) SPECIAL RULE WHERE PAYMENT IS LESS THAN AMOUNT SPECIFIED IN INSTRUMENT 
 
    For purposes of this subsection, 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. 
 
 

(d) SPOUSE

For purposes of this section, the term "spouse" includes a former spouse.

(e) EXCEPTION FOR JOINT RETURNS

This section and section 215 shall not apply if the spouses make a joint return with each other.

(f) RECOMPUTATION WHERE EXCESS FRONT-LOADING OF ALIMONY PAYMENTS

    (1) IN GENERAL 
 
    If there are excess alimony payments-- 
 
         (A) the payor spouse shall include the amount of such excess payments 
         in gross income for the payor spouse's taxable year beginning in the 
         3rd post-separation year, and 
 
         (B) the payee spouse shall be allowed a deduction in computing 
         adjusted gross income for the amount of such excess payments for the 
         payee's taxable year beginning in the 3rd post-separation year. 
 
 
    (2) EXCESS ALIMONY PAYMENTS 
 
    For purposes of this subsection, the term "excess alimony payments" mean 
    the sum of-- 
 
         (A) the excess payments for the 1st post-separation year, and 
 
         (B) the excess payments for the 2nd post-separation year. 
 
 
    (3) EXCESS PAYMENTS FOR 1ST POST-SEPARATION YEAR 
 
    For purposes of this subsection, the amount of the excess payments for the 
    1st post-separation year is the excess (if any) of-- 
 
         (A) the amount of the alimony or separate maintenance payments paid 
         by the payor spouse during the 1st post-separation year, over 
 
         (B) the sum of-- 
 
              (i) the average of-- 
 
                   (I) the alimony or separate maintenance payments paid by 
                   the payor spouse during the 2nd post-separation year, 
                   reduced by the excess payments for the 2nd post-separation 
                   year, and 
 
                   (II) the alimony or separate maintenance payments paid by 
                   the payor spouse during the 3rd post-separation year, plus 
 
              (ii) $15,000. 
 
 
    (4) EXCESS PAYMENTS FOR 2ND POST-SEPARATION YEAR 
 
    For purposes of this subsection, the amount of the excess payments for the 
    2nd post-separation year is the excess (if any) of-- 
 
         (A) the amount of the alimony or separate maintenance payments paid 
         by the payor spouse during the 2nd post-separation year, over 
 
         (B) the sum of-- 
 
              (i) the amount of the alimony or separate maintenance payments 
              paid by the payor spouse during the 3rd post-separation year, 
              plus 
 
              (ii) $15,000. 
 
 
    (5) EXCEPTIONS 
 
         (A) WHERE PAYMENT CEASES BY REASON OF DEATH OR REMARRIAGE 
 
         Paragraph (1) shall not apply if-- 
 
              (i) either spouse dies before the close of the 3rd post- 
              separation year, or the payee spouse remarries before the close 
              of the 3rd post-separation year, and 
 
              (ii) the alimony or separate maintenance payments cease by 
              reason of such death or remarriage. 
 
 
         (B) SUPPORT PAYMENTS 
 
         For purposes of this subsection, the term "alimony or separate 
         maintenance payment" shall not include any payment received under a 
         decree described in subsection (b)(2)(C). 
 
 
         (C) FLUCTUATING PAYMENTS NOT WITHIN CONTROL OF PAYOR SPOUSE 
 
         For purposes of this subsection, the term "alimony or separate 
         maintenance payment" shall not include any payment to the extent it 
         is made pursuant to a continuing liability (over a period of not less 
         than 3 years) to pay a fixed portion or portions of the income from a 
         business or property or from compensation for employment or self- 
         employment. 
 
 
    (6) POST-SEPARATION YEARS 
 
    For purposes of this subsection, the term "1st post-separation years" 
    means the 1st calendar year in which the payor spouse paid to the payee 
    spouse alimony or separate maintenance payments to which this section 
    applies. The 2nd and 3rd post-separation years shall be the 1st and 2nd 
    succeeding calendar years, respectively. 
 
 

(g) CROSS REFERENCES

              (1) FOR DEDUCTION OF ALIMONY OR SEPARATE MAINTENANCE PAYMENTS, 
              SEE SECTION 215. 
 
              (2) FOR TAXABLE STATUS OF INCOME OF AN ESTATE OR TRUST IN THE 
              CASE OF DIVORCE, ETC., SEE SECTION 682. 
 

I think your client will have alimony payments.