Unallocated Support

[MFinancier]

What is the name of your state? IL

Got some disturbing info from another poster who appears to be very well versed in tax law and without questioning their veracity in any way...and having re read pub 517's section on alimony over and over, I'm very concerned about the current use of "unallocated support" here in IL. and it's impact on potential back taxes. I would therefore like to expand the discussion. I was under the impression that as long as appropriate measures were taken to comply with any childhood contingencies, recapture, death of payee, not designated as child support and not designated as "NOT alimony"...it was tax deductible in a similar manner as alimony. Is anyone else using unallocated support? Any other comments would be appreciated.

 

[fairisfair]

I, admittedly don't know a damn thing about it. . .
but these people seem to. . . .

http://www.family-law-illinois.com/child_support.html

 

[MFinancier]

Thanks fair...I just couldn't leave this alone though cuz I'm paying unallocated support and got alittle scared, so I did a little more home work. This is what I found....Kean Vs. IRS 3rd circuit...yes it is deductible. Lovejoy Vs. IRS 10nth circuit...no it isn't. Both fairly recent cases. Both cases primarily revolved around the issue of unallocated support terminating at payees death(all other requirements met). In Kean...he had joint custody...so they made the assumption that if the payee spouse died he would automatically get custody of the kids and the payments would naturally end! I quess that makes since! Lovejoy couldn't meet the burden of proof for this stipulation...didn't really pay attention why...sorry. Wew...I'm going for a cool one. Hope this helps anyone else who was wondering....check what circuit your in!!!

 

[LdiJ]

Thanks fair...I just couldn't leave this alone though cuz I'm paying unallocated support and got alittle scared, so I did a little more home work. This is what I found....Kean Vs. IRS 3rd circuit...yes it is deductible. Lovejoy Vs. IRS 10nth circuit...no it isn't. Both fairly recent cases. Both cases primarily revolved around the issue of unallocated support terminating at payees death(all other requirements met). In Kean...he had joint custody...so they made the assumption that if the payee spouse died he would automatically get custody of the kids and the payments would naturally end! I quess that makes since! Lovejoy couldn't meet the burden of proof for this stipulation...didn't really pay attention why...sorry. Wew...I'm going for a cool one. Hope this helps anyone else who was wondering....check what circuit your in!!!

I will be honest. I have been professionally preparing taxes for over 20 years, and I would not allow a client to deduct unallocated support as alimony...because unallocated support clearly isn't alimony, or at least clearly is mostly child support.

Yes, you found some case law on the subject, without a clear answer that your position is defendable. What you don't know about however, is all of the many people who got shot down by the IRS, and didn't have the resources to risk taking it all the way to the higher courts.

I would suggest that you post your question on the tax forum. Unlike most of the forums here all of the regular responders there are tax professionals, with lots of varying areas of expertise. I don't know if any of my collegues there will give you a different response, but I know that they will give you educated ones.