Voluntary Alimony Held Deductible

Many people think you must have a legally enforceable obligation to pay alimony
in order to claim a tax deduction. This would mean that the court ordered
payments to be made to one’s ex-wife, and in addition, that the payments be
included in the ex-wife’s income. But, what if it specified that the payments
were not a legally actionable duty of the ex-husband? The key issue was whether
this provision, which made the payments not legally enforceable, also removed the
payor’s tax deduction. One may claim a deduction for alimony payments that
meet the Code Section 215 requirements. These include that the payments must end
on the death of the payee, be made under a divorce or separation agreement, not
be specified as being not taxable or non-deductible, are made to a legally
separated spouse who is not part of the same household as the payor, etc. The
IRS argued that since the payments were not made under a legally enforceable
duty they could not be deducted as alimony. In Webb, TC Summary Opinion 2007-91 (not a
binding precedent for other taxpayers) the court held that Code
Section 71 did not require that the payments be made under a legally
enforceable agreement.