Mario G. Duckett, Docket No. 6697-22, filed 12/17/24, has two ex-spouses to pay in year at issue (pre-TCJA). The ladies come away with $117K between them, but Mario gets his Section 215 alimony deduction for a mere $82K, leaving Mario holding a $35K nondeductible bag.

Separation and death are the problems.

Mario’s marital settlement agreement (MSA) incident to divorce from ex-2 provided Mario had to dump some stock and options, from the proceeds of which he had to pay ex-2 the lesser of $30K or whatever he got. But the heading of the section of the MSA that spells this out reads “Equitable Distribution of Marital Property.” The MSA section relating to periodic installments of alimony is entitled “Support.” That section only deals with periodic payments, and that IRS folds.

Mario’s trial testimony that the stock money was intended to offset a higher monthly payout demanded by ex-2 doesn’t get it. “However, the subjective intent of the parties is not determinative of whether a payment constitutes alimony.” Transcript, at p. 9.

Remember, family lawyers, while your documents don’t have to track the statutes word for word, if you separate property settlement too far from alimony, your clients will have separation anxiety when their returns get examined.

Death? That’s the usual Section 71(b)(1)(D) death of either party cancels obligation. Mario obligingly testifies nobody ever mentioned death at the negotiations of the MSA. Game over, of course.

Now the TCJA put paid to all this stuff for years after 2018. But in case it ever comes back, beware!