Gene E. Utterback, EA, RFC, ABA wrote:
- quote -


Former spouse wanted the $20K all at once. That was the whole
idea behind finding the present value of a stream of payments.
She paid it. She needed better tax advice.


- quote -

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"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:qz%pl.11434$hc1.5727[at]flpi150.ffdc.sbc.com...
- quote -

I have not done the math but your theory is sound. The underlying concept
is intended to prevent the misclassification what should have been a
property settlement.

With that being said, and with the knowledge that your client is going to
face a recapture issue in year 3 anyway, have you considered the possibility
of simply writing down the alimony to an amount that will NOT cause a
recapture? I am not even sure such a move is allowed or legal, but if it
were my client I'd check into it.

Keep in mind, and remind your client, that as much as they would like to
believe they can, state court judges have NO AUTHORITY to modify Federal tax
law.

Good luck,
Gene E. Utterback, EA, RFC, ABA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Alan wrote:
- quote -


The concept is correct from everything I've read. You got the $5K from
the "Worksheet 1. Recapture of Alimony" in Pub 504? I did not try to
work through it myself.

I assume your client was Spouse A. I wonder if the discount rate
included tax effects?

-Mark Bole

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In article <qz%pl.11434$hc1.5727[at]flpi150.ffdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -


I'm too tired to do the math, but claimed alimony over 15,000
that significantly decreases the first three years has to be
recaptured.


Recapture of alimony is described, along with worksheets,
starting on page 15 of IRS Pub 504.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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This popped up today with a client.

The 2008 divorce was going to call for alimony to be paid from
Spouse A to Spouse B. Spouse B wanted it all at once. A discount
rate was applied and the amount of alimony became a single
payment of $20,000. The divorce decree identifies this as spousal
support. I was doing quality review and cautioned the taxpayer,
that it looked as if the IRS would treat this as excess alimony
as the amount would decrease by more than $10,000 in the second
year. I told the taxpayer that there could be a $5000 hit in 2010.

Was I right?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >