Alimony Interest Treated As Alimony?

[mistoffolees]

I forgot, Misto is an expert on absolutely everything and anyone who disagrees with him even in the slightest must of course be ridiculed...and misquoted to back up that ridicule. I hope you don't treat your employees that way.

I'm still waiting for you to provide any evidence to back up your claim.

Second, no one misquoted you. You stated that 'personal interest' was incorrect terminology - yet the IRS uses it.

Fortunately, my employees don't go around blabbing about things they don't understand and don't insist that they're right - no matter how wrong they are so there's no need for me to do anything. If they acted like you did, they'd be fired for incompetence in a heartbeat. What's your excuse?

 

[CourtClerk]

I forgot, Misto is an expert on absolutely everything and anyone who disagrees with him ...

Famous last words...

we've used it on YOU so much, you've memorized it.

 

[Perky]

That's interesting and a change in wording from previous publications.

I'm pretty sure this wording goes back at least 5 years.

 

[LdiJ]

I'm pretty sure this wording goes back at least 5 years.

You are probably right. I don't read the pubs much because we do a great deal of continuing education each year, and we have access to other resources that we use that are more user friendly to find specific answers to questions.

Believe it or not the pubs are not considered to be "authority" for a tax professional taking a tax position. The reason for this is that they often contain errors. Therefore we would normally consult other sources, or the code directly, or if we are considering a really controversial position, the code, case law, memorandum rulings and letter rulings.

Those are what I was searching in relationship to alimony interest. However, in my further research today, I did find a non-published case that was specifically cited as not being able to be used as precedent, that indicated that CHILD SUPPORT interest was taxable income to the recipient. It was an old case however so I don't think that anyone should start panicking about that.

 

[mistoffolees]

You are probably right. I don't read the pubs much because we do a great deal of continuing education each year, and we have access to other resources that we use that are more user friendly to find specific answers to questions.

Yeah, I guess there's no reason for mail room personnel to keep current on tax laws.

Believe it or not the pubs are not considered to be "authority" for a tax professional taking a tax position. The reason for this is that they often contain errors. Therefore we would normally consult other sources, or the code directly, or if we are considering a really controversial position, the code, case law, memorandum rulings and letter rulings.

Those are what I was searching in relationship to alimony interest. However, in my further research today, I did find a non-published case that was specifically cited as not being able to be used as precedent, that indicated that CHILD SUPPORT interest was taxable income to the recipient. It was an old case however so I don't think that anyone should start panicking about that.

Which confirms that interest is interest - regardless of what the principal was. Interest is taxable to the recipient and not deductible to the payor (other than limited cases like mortgage interest or business interest which clearly don't apply here).

By the way, I notice that you STILL haven't provided the reference that you claimed to have found earlier - even though you've been back to this thread several times since then. I wonder why that is???

 

[LdiJ]

Yeah, I guess there's no reason for mail room personnel to keep current on tax laws.



Which confirms that interest is interest - regardless of what the principal was. Interest is taxable to the recipient and not deductible to the payor (other than limited cases like mortgage interest or business interest which clearly don't apply here).

By the way, I notice that you STILL haven't provided the reference that you claimed to have found earlier - even though you've been back to this thread several times since then. I wonder why that is???

Pound sand Misto...you simply aren't worth dealing with. Hopefully the posters asking for advice here will recognize that they shouldn't rely on advice from an internet forum and should consult a local professional.

 

[mistoffolees]

Pound sand Misto...you simply aren't worth dealing with. Hopefully the posters asking for advice here will recognize that they shouldn't rely on advice from an internet forum and should consult a local professional.

You mis-spelled "I was completely wrong because I don't know what I'm talking about and someone finally pointed that out. I'll go back to the mailroom, now".

 

[AlimonyQuestion]

Thanks everyone!

Thank you for your input on this. Clearly a lot of thought went into your responses and I appreciate it! And well as for the healthy/unhealthy debate.... Just gotta luv the internet!

Mark

 

[davew128]

Which confirms that interest is interest - regardless of what the principal was. Interest is taxable to the recipient and not deductible to the payor (other than limited cases like mortgage interest or business interest which clearly don't apply here).

Except you're wrong. Interest ISN'T always interest. I can think of one example off the top of my head where interest paid is reported by the recipient as something OTHER than interest income: Interest paid to lending institutions is reported as general gross receipts and not interest income and yes depending on the taxpayer it can make a difference of sorts.

The point is that characterization of items in the tax code is not always etched in stone. My gut is telling me the LdiJ is right. If the money is required by the court to be paid to the former spouse as amounts for back alimony, then its going to include the full amount paid as ordered so long as it meets the statutory requirements to be treated as alimony. If that means additional interest is included based on a deficiency in prior required payments, then thats what it is.

 

[mistoffolees]

Except you're wrong. Interest ISN'T always interest. I can think of one example off the top of my head where interest paid is reported by the recipient as something OTHER than interest income: Interest paid to lending institutions is reported as general gross receipts and not interest income and yes depending on the taxpayer it can make a difference of sorts.

The point is that characterization of items in the tax code is not always etched in stone. My gut is telling me the LdiJ is right. If the money is required by the court to be paid to the former spouse as amounts for back alimony, then its going to include the full amount paid as ordered so long as it meets the statutory requirements to be treated as alimony. If that means additional interest is included based on a deficiency in prior required payments, then thats what it is.

Go ahead and file your taxes based on your gut rather than the tax law and see where it gets you.

ALL interest received is taxable with only a very small number of legislated exceptions (interest on tax-exempt bonds, for example). The only interest paid which is tax-deductible is that which is specifically legislated to be deductible (home mortgage interest or business interest, for example).

All of the following are NOT deductible
- Interest paid on a credit card
- Interest paid on a car loan
- Interest paid on a personal loan
- And so on

So far, no one has come up with a single ruling or law or IRS regulation that even remotely suggests that this interest would be deductible (other than Ld's claim that she found something, but never documented it - as is her wont).

Logically, this interest is no different than any other personal interest. If you loan your ex $10,000 and they pay interest, that's interest income to you, but not deductible to them. If the court says they owe you $10 K and they can't pay it right away, why should that be any different?

Please feel free to come up with FACTS to support that position rather than WAGs.

 

[LdiJ]

Go ahead and file your taxes based on your gut rather than the tax law and see where it gets you.

ALL interest received is taxable with only a very small number of legislated exceptions (interest on tax-exempt bonds, for example). The only interest paid which is tax-deductible is that which is specifically legislated to be deductible (home mortgage interest or business interest, for example).

All of the following are NOT deductible
- Interest paid on a credit card
- Interest paid on a car loan
- Interest paid on a personal loan
- And so on

So far, no one has come up with a single ruling or law or IRS regulation that even remotely suggests that this interest would be deductible (other than Ld's claim that she found something, but never documented it - as is her wont).

Logically, this interest is no different than any other personal interest. If you loan your ex $10,000 and they pay interest, that's interest income to you, but not deductible to them. If the court says they owe you $10 K and they can't pay it right away, why should that be any different?

Please feel free to come up with FACTS to support that position rather than WAGs.

Misto, you have now had TWO tax professionals give you the same answer...as has happened on other threads.

We really don't care whether you disagree with us or not...and we can only hope that the OP will consult a tax professional themselves before taking disputed advice from an internet message forum.

 

[mistoffolees]

Misto, you have now had TWO tax professionals give you the same answer...as has happened on other threads.

Sorry, the fact that you apparently work in the mail room of a tax office doesn't interest me.

You've been shown to be wrong on so many tax issues that someone would be a fool to believe you.

Now, if you have any evidence to back up your claim, feel free to present it.

 

[LdiJ]

Sorry, the fact that you apparently work in the mail room of a tax office doesn't interest me.

You've been shown to be wrong on so many tax issues that someone would be a fool to believe you.

Now, if you have any evidence to back up your claim, feel free to present it.

And my entire practice loves to laugh at you because you are so absurd when it comes to tax issues...you prove squat. You have an entire practice of tax professionals who consider you to be comic relief

Done...going to bed now.

 

[CurrentlyUndone]

And my entire practice loves to laugh at you because you are so absurd when it comes to tax issues...you prove squat. You have an entire practice of tax professionals who consider you to be comic relief

Done...going to bed now.

There are entire law firms who love to laugh at you because you are so absurd when it comes to family law issues...you prove squat.

You have many, many family law experts consider you to be comic relief.

Also done. Going to bed now.

 

[CourtClerk]

Seriously... is there an entire tax firm that sits behind Ld's shoulders reading posts? Is everyone employed there spending their time posting here?

Someone needs new friends... or a friend.