Alimony

[Delta]

Page 12-12 of The Tax Book state that payments for alimony must be made in cash. Is there more guidance on this? I have a client who receives alimony as stated in the divorce decree but only does so with a notorized document which is used to offset by the child support he must pay. For example, he owes $350 in child support, his ex-wife owes $350 in alimony. No money is exchanged, they simply sign notorized statments which state that payment has been made and filed with the state. Is this considered alimony?

[taxmandan]

Alimony

I would have no problems considering that as alimony, if all of the other criteria are met. They are using the KISS method and I say it meets the rule.

[Bees Knees]

IRS Pub 504 says the following:

"Payments must be in cash. Only cash payments, includ-
ing checks and money orders, qualify as alimony. The
following do not qualify as alimony.

• Transfers of services or property (including a debt
instrument of a third party or an annuity contract).

• Execution of a debt instrument by the payor.

• The use of property.

Payments to a third party. Cash payments to a third
party under the terms of your divorce or separation instru-
ment can qualify as cash payments to your spouse. See
Payments to a third party under General Rules, earlier.
Also, cash payments made to a third party at the written
request of your spouse qualify as alimony if all the following
requirements are met.

1. The payments are in lieu of payments of alimony
directly to your spouse.

2. The written request states that both spouses intend
the payments to be treated as alimony.

3. You receive the written request from your spouse
before you file your return for the year you made the payments."

I would think that if this third party arrangment can qualify, the situtation you describe would qualify.

[jainen]

I guess it depends

I guess it depends on which one is your client. If you got the ex-wife, you will argue that the arrangement is equivalent to cross-payments. If you got the guy, you will say she withheld alimony after waiving child support. I think she has the upper hand, and it gets stronger and stronger with every C/S payment he misses. Yeah, I know it's all notarized, but one day some court is going to say that nothing about an alimony check can substitute for supporting your child.

[RLymanC]

Alimony

One day an audit letter comes from the IRS or State. Prove your alimony deduction.????
This of course assumes that that the payments are reported as income on one tax return and expenses on the other.

If the whole thing is ignored,,,OH WELL......good luck in the future.