Payments surviving recipient’s death were not alimony

Plain-English summary

A divorced taxpayer received monthly payments under a decree incorporating a property settlement agreement. The agreement stated that the spousal-maintenance obligation would not end if the recipient died before the payment term expired. Federal alimony treatment required that no liability remain after the recipient’s death. Because that requirement was not met, the IRS ruled that the monthly payments were not alimony or separate maintenance payments under section 71(b).

Ruling snapshot

• Question: Were the monthly payments alimony when the obligation continued after the recipient’s death?
• Outcome: Approved as not constituting alimony
• Key authorities: IRC §§ 71(b)(1)(D) and 215; Temp. Treas. Reg. § 1.71-1T(b), Q&A-10

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201531013 Third Party Communication: None
Release Date: 7/31/2015 Date of Communication: Not Applicable
Index Number: 71.00-00
Person To Contact:
-----------------------, ID No. -------------------
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----------------------------- Telephone Number:
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Refer Reply To:
CC:ITA:B02
PLR-140938-14
Date:
April 30, 2015

TY: -------

Legend

Taxpayer = -------------------------------------------------
Ex-spouse = -------------------
Decree = -------------------------------------------------------------------------------
Date 1 = --------------------
Date 2 = --------------------
Date 3 = --------------------------
A = ------------------------------------------------------------
B = ----
C = --------------------------------------------------------------------------------------------------------------

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D = ----------------
PLR-140938-14 2

E = ----------

Dear -------------------:

This is in response to your request for a private letter ruling which was received by
the Service on Date 3. You requested a ruling that certain payments made to you by
your ex-spouse pursuant to a Decree do not constitute alimony payments within the
meaning of section 71(b) of the Internal Revenue Code.
FACTS

Taxpayer is an individual. On Date 1, Ex-spouse and Taxpayer entered into a
Property Settlement Agreement. On Date 2, a judge of the A, signed and entered the
Decree which incorporated the Property Settlement Agreement.
Paragraph B of the Property Settlement Agreement reads as follows:
B. C
LAW AND ANALYSIS
Section 71(a) provides that gross income includes amounts received as alimony or
separate maintenance payments. Section 71(b)(1) defines the term "alimony or
separate maintenance payment" as
any payment in cash if--(A) such payment is received by (or on behalf
of) a spouse under a divorce or separation instrument, (B) the divorce
or separation instrument does not designate such payment as a
payment which is not includible in gross income under section 71 and
not allowable as a deduction under section 215, (C) in the case of an
individual legally separated from his spouse under a decree of divorce
or of separate maintenance, the payee spouse and the payor spouse
are not members of the same household at the time such payment is
made, and (D) there is no liability to make such payment for any period
after the death of the payee spouse and there is no liability to make
any payment (in cash or property) as a substitute for such payment
after the death of the payee spouse.
If a payment satisfies all of the factors set forth in section 71(b) then it is alimony, but
if it fails to satisfy any one of the above factors, it is not alimony. Rood v.
Commissioner, T.C. Memo. 2012-122. See also Sperling v. Commissioner, T.C. Memo.
2009-141 (payments are not alimony under section 71(b)(1), as payor spouse’s liability
to make payments survived the death of the payee spouse under the divorce decree
and property settlement agreement). If the divorce decree or other relevant document
does not expressly state that the payment obligation terminates upon the death of the
payee spouse, the payment will qualify as alimony provided that the termination of the
obligation would occur by operation of state law. Hoover v. Commissioner, 102 F.3d
PLR-140938-14 3

842, 845-46 (6th Cir. 1996). See also Notice 87-9, 1987-1 C.B. 421 (divorce or
separation instrument executed after December 31, 1984, need not expressly state that
the payor spouse’s liability ends upon payee’s death if termination would occur by
operation of state law). The mere fact that the documents may characterize a payment
as alimony has no effect on the consequences of that payment for federal tax purposes.
Hoover, 102 F.3d at 844.
Section 1.71-1T(b), Q&A-10 of the Temporary Treasury Regulations, provides that
assuming all the other requirements relating to the qualification of certain payments as
alimony or separate maintenance payments are met, if the payor spouse is required to
continue to make the payments after the death of the payee spouse, then none of the
payments before (or after) the death of the payee spouse qualify as alimony or separate
maintenance payments.
In the instant case, based on the facts provided and the Taxpayer’s representations,
the requirements of subparagraphs (A), (B), and (C) of section 71(b)(1) are satisfied.
However, paragraph B of the Property Settlement Agreement provides that “Spousal
maintenance shall not terminate at Wife’s death . . .” so subparagraph (D) of section
71(b)(1) is not satisfied because Ex-spouse is required to continue making payments if
the Taxpayer dies prior to the expiration of the D year term set forth in paragraph B.
Therefore, the payments at issue are not alimony for federal tax purposes.
RULINGS
Based solely on the information submitted and the representations set forth above,
we rule that the payments of $E per month ordered pursuant to a Decree do not
constitute alimony or separate maintenance payments within the meaning of section
71(b).
CAVEATS
Except as expressly provided herein, no opinion is expressed or implied concerning
the tax consequences of any aspect of any transaction or item discussed or referenced
in this letter. No opinion is expressed as to the federal tax treatment of the transaction
under any other provisions of the Internal Revenue Code and the Treasury Regulations
that may be applicable or under any other general principles of federal income taxation.
This letter ruling is only applicable to matters under our jurisdiction. See Rev. Proc.
2015-1, 2015-1 I.R.B. 1, 18, Section 1. No opinion is expressed as to the tax treatment
of any conditions existing at the time of, or effects resulting from, the transaction that
are not specifically covered by the above ruling.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.
A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling.
PLR-140938-14 4

The rulings contained in this letter are based upon information and representations
submitted by the Taxpayer and accompanied by a penalty of perjury statement
executed by an appropriate party. While this office has not verified any of the material
submitted in support of the request for rulings, it is subject to verification on
examination.
Enclosed is a copy of this letter ruling showing the deletions proposed to be made in
the letter when it is disclosed under section 6110.

Sincerely,

NORMA C. ROTUNNO
Senior Technician Reviewer, Branch 2
Office of the Associate Chief Counsel
(Income Tax & Accounting)

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Enc. Copy for section 6110 purposes