Massachusetts Appellate courts have been busy interpreting the recent changes in alimony law, but they’re not the only courts struggling with legal questions surrounding alimony.  The U.S. Tax Court is tasked with interpreting the treatment of alimony under the I.R.S. Code and this has led to some interesting decisions in 2015.  Yes, I just used “tax” and “interesting” in the same sentence, but trust me if you are paying or receiving alimony, or representing clients who are, you need to know about these decisions. David H. Goodman, CPA/ABV/CFF, CVA of Gosule, Butkus & Jesson, LLP has been kind enough to provide us with summaries of these recent cases: U.S. Tax Court Alimony Decisions: 5 Cases You Should Know Guest Post by David H. Goodman, CPA/ABV/CFF, CVA Below I have summarized five U.S. Tax Court cases in which the Court ruled against the taxpayer on issues involving deductible alimony. In each of these the taxpayer attempted to deduct a payment as alimony and...

Issues 1 through 4 all focus on the tax liabilities created post-divorce. But what about tax liability incurred during the marriage? Issue #5. JOINT TAX LIABILITY: The Court has the power in a divorce case to assign both assets and liabilities, including tax liability incurred during the marriage. If there are joint tax returns filed during the marriage for which taxes are still owed, that liability is owed by both parties to the taxing authorities. The Court may assign that debt to one party by order or agreement, but that doesn't always satisfy the taxing authorities. Unless you file an innocent spouse application with the IRS (and the IRS makes an innocent spouse determination in your favor), they will still consider a joint debt owed by both parties until satisfied. A probate court order allows you to collect against your former spouse but does not prevent the IRS from collecting against you. Therefore, if there are any assets available for the payment of tax debt at t...