A Conversation with
Elizabeth
2000
Re: Good Morning
From:
Elizabeth
To:
LMixson@PEC.com
Sent: Friday,
February 4, 2000 12:06 PM
Subject: Re: Good Morning
Right--what a long time to sign a lease for. I'd need to check my
notes from both Tax Law and also Domestic Relations, and this is just a
"theoretical" discussion because I'm not supposed to be dispensing legal
comment without a license and you may know this already--but--there are
two forms of "alimony." One is called just alimony and the other
is called "alimony in gross." They differ in the TAX deductions to
the person paying AND the person receiving. The IRS is the ones
who will catch you if you try to "play with" the categories. I
think the way it would be is this: if you payed 15,000 in a lump
sum or alimony in gross, its considered a property settlement, with no
tax benefits to you and no income to Julie, hence no taxes for her. (I
hope I have that right.) But if you paid 1000 a month for
15 months, you would get to deduct the payment BUT she would have to pay
taxes on it. (I hope I don't have this backwards, but check it out
in your readings or on the net.) There is a strict rule, and
calculation about the first few payments NOT being BIG and the rest of
the payments small, if you are trying to say it is alimony and not
alimony in gross and get a tax deduction. If the IRS "detects"
that, then there is a severe penalty to the person paying. The
"trick" from what I recall in class, is when the receiving person is in
a lower income category, you transfer enough to still keep their taxes
low (they are lower anyway), but still get a tax benefit for yourself.
It doesn't matter that you are really "settling property." You
just keep the two separate. I keep the house. I pay you 1000
a month for 15 months. You don't have to connect the two.
You may know all this already. Legal advice is everywhere, but I
thought I'd mention it. Have a good weekend. I'm ready to
leave, but its ONLY 11 o'clock. Elizabeth
Updated: 04-29-2024