Attorney-at-Law

FAMILY LAWYER, WELL DONE

In Uncategorized on 09/05/2018 at 15:29

Much have I admonished family law practitioners about their casual treatment of alimony and child support in the past. Congress has relieved me of that burden for divorces in years commencing January 1, 2019 and ending at midnight, December 31, 2025, as they’ve cut taxes and created jobs (or so they say…but this is a nonpolitical blog) by making alimony nondeductible and non-recognition for those years.

But here’s a family lawyer who did well, even though his/her client is pro se. So a Taishoff “Good Job” goes to the anonymous attorney for Jeremy Adam Vanderhal, 2018 T. C. Sum. Op. 41, filed 9/5/18.

CSTJ Lewis (“Spell It Again”) Carluzzo has this one, and he delves deeply into the ‘…the division and distribution of assets and debts * * * as set forth in the Exhibit ‘A” (agreement) attached to the divorce decree.” 2018 T. C. Sum. Op. 41, at p. 3.

Here’s where meticulous drafting pays off.

“The agreement includes a reference to a Sallie Mae student loan account that relates to petitioner’s former spouse.  That reference is found in the ‘Division of Community Debts’ section of the agreement and obligates petitioner to ‘assume and hold * * * [his former spouse] harmless’ from that debt.

“The agreement also includes a section titled ‘Tax Free Transfers’ that states

the parties ‘believe and agree that the transfers of property between them required by * * * [the agreement] are tax free transfers of property between them and are therefore tax-free transfers of property made pursuant to Section 1041 of the Internal Revenue Code and are not taxable sales or exchanges of property or payments for alimony, except where this agreement specifically denotes payments as such.’” Order, at p. 3.

The issue is whether Jeremy gets an alimony deduction for the Sallie Mae loan payments he made.

CSTJ Lew blows off IRS’ argument that it’s all property division, thus nondeductible.

“In this case the divorce decree and the agreement frequently distinguish between property and debt.  For example, the divorce decree states that petitioner and his former spouse ‘entered into an equitable agreement settling all issues regarding the division and distribution of assets and debts * * * as set forth in the’ agreement.  The agreement provides separate sections with respect to the division of community property and debt.  Other provisions of the agreement make reference to both community property and debt, in which case it is clear that the provisions apply to both.  Notably, the ‘Tax Free Transfers’  paragraph in the agreement refers only to ‘property’, without including any reference to debt.  As we construe the divorce decree and agreement, the reference to property in the ‘Tax Free Transfers’ section of the agreement does not clearly encompass the division of community debt.  Furthermore, in construing divorce or separation agreements, we can find no authority that suggests that the terms ‘property’ and ‘debt’ are interchangeable.  The divorce decree and the agreement do not otherwise address or ‘specifically denote’ the division of debts as tax-free transfers of property made pursuant to section 1041.” 2018 T. C. Sum. Op. 41, at p. 6.

So payment of loved-once’s debts are concededly alimony, and hence it’s not part of the property division.

Jeremy wins.

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