tax law

| December 14, 2015

Will the IRS / CA FTB consider these cash payments from my divorce agreement alimony instead of property settlement?

My finalized CA divorce agreement states the following:

“Petitioner pays respondent 75K within 60 days. Petitioner pays respondent 100K within 9 months. Respondent to quitclaim off condo. Respondent to cooperate if Petitioner needs to do equity line/refi on condo. Respondent not to quitclaim off until she gets the 75K mentioned above.”

The intent was the cash payments to be equalizing payment for my interest in the condo. However, I see an opening for these payments to be considered alimony (under IRS Section 71) given the payments are cash, occur after the divorce is final, occur while living in separate households and while not filing a joint return, don’t explicitly state they are for property settlement, don’t explicitly state not alimony, don’t explicitly establish obligation to pay after death.

Are my concerns valid? I am worried about an IRS/CA FTB audit if my ex continues to refuse to sign a clarifying statement.

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tax law
tax law

Category: Law

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