Schilling v. Comm’r, T.C. Memo. 2012‑256, 2012 WL 3848477 (2012)
(a) Facts: The parties settled their divorce case by signing a separation agreement. The agreement awarded the wife $2,450 per month on spousal support for six years. It, further, provided that the wife’s spousal support would drop by specified amounts when each of their three remaining minor children reached age 18 or left home for college, whichever occurred first. Finally, the agreement provided that the husband would pay no child support, justifying this downward deviation from the child support guidelines by pointing to the spousal support provision. The agreement was incorporated into an Ohio divorce decree.
The husband paid support as required. On her federal tax returns, the wife reported no alimony income. The IRS determined that the total amount of the payments, minus the total reductions upon emancipation of the children, was actually alimony, and therefore should have been reported as income. It, therefore, assessed a deficiency. The wife appealed to the Tax Court. Continue reading →