When can I deduct Lump Alimony payment?

[tyandi]

What is the name of your state? NC
In November 2006, there was a court order given, signed, dated and notorized that me ex wife would give me $60,000. This was the total, however I also had to pay a $20,000 lump sum. So My question is can I write this off for 2006? My attorney doesn't know.

My wife paid me the $60K in January 2007, but remember this was minus the lump alimony.

Please advise

[LdiJ]

Originally Posted by tyandi

What is the name of your state? NC
In November 2006, there was a court order given, signed, dated and notorized that me ex wife would give me $60,000. This was the total, however I also had to pay a $20,000 lump sum. So My question is can I write this off for 2006? My attorney doesn't know.

My wife paid me the $60K in January 2007, but remember this was minus the lump alimony.

Please advise

Ok....property settlements are not taxable events. Alimony is a taxable event to the receiver, and a tax deductible event to the payer. However, the characterization of the money is signficant in both instances.

If the 60k she gave you was from a retirement account, then it could be taxable, not because its a property settlement, but because its retirement funds. If the 20k you gave her was not specifically designated as alimony, it may be simply party of the property settlement.

[tyandi]

Below you responded. Yes, this is alimony. Again my question is this: I know I can deduct this payment, but the question no one seems to know is wether I can deduct this for 2006 or 2007? The court order was given, stamped, signed and notorized in November 2006 in which I was ordered to pay $20,000.00 in alimony, and she was supposed to give me $80,000.00 for distributional payment. She made a payment to me In January of 2007 for $60,000.00 (minus $20K) So technically, I never had the $20K in 2007 or did I? I just need to know what year I can deduct this? My paralegal "thinks" because the court ordered this and was final in Nov. 2006, I can claim this for 2006? I just want to make sure. I would love to claim $20K as a deduction for 2006!!!!!

If the 60k she gave you was from a retirement account, then it could be taxable, not because its a property settlement, but because its retirement funds. If the 20k you gave her was not specifically designated as alimony, it may be simply party of the property settlement.

[tranquility]

I'm not giving an opinion about if the payment is deductible. I suggest that with a payment this large you bring your documentation to a tax professional who will help you determine the deduction.

However, you are a cash-basis taxpayer. Income or deductions are reportable only in the year paid or received--not when the income or liability are accrued. I believe that alimony/support payments are treated on a cash basis even if the taxpayer is on accurral accounting method.

2007 it is.