Originally published on Forbes.com Apr 19th, 2013
Back when I was dating a few years ago, I heard a lot about miserable ex-husbands. Apparently it is not a universal phenomenon. It seems like Danial Robert Martin was going for the best ex-husband of the decade award. When he split with Ruth his wife of 29 years in 2004, she was awarded spousal support of $1,000 per month. Ruth Martin ended up having a hard time:
In 2007 Ruth requested increased alimony payments directly from petitioner. Ruth had medical problems and was unemployed with no health insurance. She requested the increased alimony payments to pay her medical and living expenses.
At that point Mr. Martin began paying $2,300 per month. There were no legal formalities:
When petitioner started making the increased monthly payments to Ruth, he did not attempt to have the amount of spousal support required by the superior court’s judgment of dissolution amended or modified to take into account her changed circumstances.
He deducted the whole $27,600, he paid for the year as alimony. The IRS was only willing to allow the $12,000 called for in the written separation agreement. The Tax Court decision agreed with the IRS. The Code:
defines a divorce or separation instrument as a decree of divorce or a written instrument incident to such a decree, a written separation agreement, or a decree requiring a spouse to make payments for the support or maintenance of the other spouse. A divorce or separation agreement must be made in writing.
Letters which do not show a meeting of the minds between the parties cannot collectively constitute a written separation agreement.
Any amounts paid in excess of that required by a written instrument are not considered deductible alimony payments.
I really sympathize with Mr. Martin. I like the attorney who handled my divorce. We went to college together and he was my client for a long time. I still don’t like spending money on him. Going to court to get a voluntary increase approved does seem like kind of a waste, but it is probably the way to go. Reading between the lines, it may be that a written agreement signed by both of them might have stood up, even without a court visit, but there would probably have to have been an analysis of how enforceable it was.
At least the Tax Court saw what a good guy Mr. Martin was:
Petitioner’s testimony was credible, and his willingness to provide additional funds to his former spouse is admirable. While the result may seem harsh, we are bound by the provisions of the Internal Revenue Code defining the circumstances in which payments are deductible as alimony under sections 71(b) and 215(a).
I hope that was some comfort to him.
You can follow me on twitter @peterreillycpa.
Afternote
Lew Taishoff got to this one ahead of me, which is becoming annoyingly common. His post is titled “No Good Deed“. The story also brings to mind the quote attributed to Samuel Goldwyn – “Verbal contracts are not worth the paper they are printed on.”