Tax News

CCH (cch.taxgroup.com) reports:

  Spousal support payments that an individual received from her former husband pursuant to a divorce decree were alimony and were includible in her income in the year received. The taxpayer failed to establish that: (1) the divorce decree designated each of the monthly payments at issue as a payment that is not includible in gross income under Code Sec. 71(a) and not allowable as a deduction under Code Sec. 215; (2) she and her former husband were members of the same household at the time the monthly payments were made; or (3) the divorce degree provided that her former husband was obligated to make any spousal support payments after the taxpayer's death. Under state (Ohio) law, any award of support payments will terminate automatically upon the death of either party unless the order expressly provides otherwise.

  The taxpayer was liable for the Code Sec. 6662 underpayment penalty because she failed to show that she had reasonable cause for not including the payments in her income or that she acted in good faith with respect to the underpayment. Her claimed belief that the term "alimony" related to child support or that an amount paid as spousal support was not includible in gross income was without a reasonable basis.

K.J. Reid, TC Memo 2008-177, Dec. 57,498(M)

Other References:

 
Code Sec. 71

  CCH Reference - 2008FED ¶6094.265

  CCH Reference - 2008FED ¶6094.38

 
Code Sec. 6662

  CCH Reference - 2008FED ¶39,651G.305

  Tax Research Consultant

  CCH Reference - TRC INDIV: 21,200 CCH Reference - TRC PENALTY: 3,106.10