| Frumkes on Divorce
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Table of Contents
§ 1. PRELIMINARY ISSUES § 1.1 Responsibility to Present Tax Issues § 1.2 Manner of Representation § 1.3 Divorce Court's Orders Do Not Control Tax Consequences § 1.4 Tax Consequences Should Be Considered in Divorce Agreements § 1.5 Unknown Tax Consequences § 1.6 Tax Court Decisions § 1.7 Authoritative Tax Resources § 2. Property Aspects: Distribution of Assets and Liabilities § 2.1 Property Transfers § 2.1.1 Internal Revenue Code Section 1041 § 2.1.1.1 Non-Recognition of Tax for a Transfer From a Spouse or Former Spouse to a Spouse or Former Spouse Incident to Divorce § 2.1.1.1.1 Transfer Incident to Divorce; Presumption § 2.1.1.1.2 Non-Applicability of I.R.C. §1041 § 2.1.1.1.3 Tax Consequences of Transfer of Property From a Spouse or Former Spouse § 2.1.1.2 Capital Gain Rates § 2.1.1.3 Transfers to Third Parties on Behalf of a Spouse or Former Spouse § 2.1.1.4 Disposition of Closely Held Corporate Stock by Stock Redemption § 2.1.2 United States Savings Bonds; Accrued Interest Taxable to Transferor § 2.1.3 Stock Options, Transfer in Divorce § 2.1.4 Record Requirements § 2.1.5 Accounts Receivable; Value Reduced by Income Taxes § 2.1.6 Contingent Tax Liabilities; Effect on Valuation of Distributable Assets § 2.1.6.1 Effect on Distribution of Assets § 2.1.6.2 Some Possible Solutions to Consideration of Contingent Tax Liabilities § 2.1.6.3 Variations on Majority Rule § 2.1.6.4 Valuation of Marital Estate; Reduction in Value for Potential Tax § 2.1.7 Present Value; Rate of Reduction on Deferred Payments § 2.1.8 Tax Refunds and Carry Forwards of Tax Overpayments § 2.2 Sale of Principal Residence Pre-August 5, 1997—Two Rules to Avoid Gain § 2.2.1 Deferral of Gain Prior to August 5, 1997—I.R.C. § 1034 § 2.2.1.1 Gain Was Postponed, Not Forgiven § 2.2.1.2 Purchase Price Less Than Sales Price § 2.2.1.3 Postponement of Gain Was Mandatory § 2.2.1.4 Occupied as Principal Home § 2.2.2 Pre-August 5, 1997—Exclusion of Gain § 2.2.2.1 Ownership and Use Test § 2.2.2.2 Ownership and Use Tests Met at Different Times § 2.2.2.3 Exclusion of Gain Only Once—Taint Rule § 2.3 Sale of Principal Residence—Avoidance of Portion of Gain § 2.3.1 Excerpts of I.R.C. § 121 § 2.3.2 Exclusion of $250,000 of Gain § 2.3.3 Ownership and Use Test § 2.3.3.1 Reduced Maximum Exclusion § 2.3.3.1.1 Divorce or Legal Separation § 2.3.3.1.2 Other Unforeseen Circumstances § 2.3.3.1.3 Wedding Cancellations § 2.3.3 2 Title Controls Liability for Tax § 2.3.3.3 Single Owner Entities § 2.3.3.4 Trusts § 2.3.4 Principal Residence § 2.3.4.1 Multiple Residences § 2.3.4.2 Vacant Land § 2.3.5 Joint Filers, Exclusion up to $500,000 § 2.3.6 Exclusion Every Two Years § 2.3.7 Exercise of $125,000 Exclusion Under Previous Act § 2.3.8 Tacking on Ownership of Spouse in I.R.C. § 1041 Transaction § 2.3.9 Use Test Satisfied by Possession of Spouse under Divorce or Separation Instrument § 2.3.9.1 Exclusion Amount, Notwithstanding Remarriage of "In Spouse"
§ 2.4 Interest on Deferred Equitable Distribution Payouts § 2.4.1 Amount of Interest § 2.4.2 Tax Consequences of Interest Payments § 2.4.2.1 Interest Taxable to Payee § 2.4.2.2 Interest Deductible to Payor § 2.4.3 Solutions to Tax Treatment of Personal Interest § 2.4.3.1 Treat as Alimony § 2.4.3.2 Gross Up Deferred Payments § 2.4.4 Imputed Interest § 2.5 Mortgage Interest on Qualified Residence § 2.5.1 Excerpts from I.R.C. § 163(h) and I.R.C. § 280A(d)(1) § 2.5.2 Deductibility of Interest on Mortgage Encumbering Qualified Residence § 2.6 Carry Forwards § 2.7 Tax Liabilities; Distribution § 2.7.1 Jointly Liable § 2.7.2 Solely Liable § 2.7.3 Separate Returns § 2.8 Consideration of Tax Shelters § 2.9 Interest on Child Support in Arrears § 3. ALIMONY/SEPARATE MAINTENANCE PAYMENTS § 3.1 Taxability/Deductibility § 3.1.1 Label, Term or Title Immaterial § 3.1.1-A Support or Property Division; Distinguishing; Use Caution § 3.1.1.1 Estimated Payment of Income Tax on Alimony § 3.1.1.2 Tax Subsidy § 3.1.1.3 Above-the-Line Deduction § 3.1.1.4 Intent of Parties § 3.1.2 Internal Revenue Code § 71 § 3.1.3 Internal Revenue Code § 215 § 3.1.4 Payments After Remarriage § 3.1.5 Intent of Parties or Court § 3.1.6 Reporting Requirements § 3.2 Summary of Provisions of I.R.C. § 71 (The 7 “D”s) § 3.2.1 Spouse or Former Spouse Must Be Recipient § 3.3 Cash Payments § 3.3.1 Cash Received During Taxable Year § 3.3.2 Cash Paid to Third Party § 3.3.3 Writing Required, Voluntary Payment Does Not Qualify § 3.3.3.1 Letter From Husband to Wife (Not Signed by Wife) § 3.3.3.2 Amounts Paid in Excess of Instrument § 3.3.4 Nonqualifying Items, Services or Property § 3.3.5 Mortgage Payments on Marital Residence—As Alimony § 3.3.5.1 Payor Holds 100% of Title § 3.3.5.2 Payor Holds Title Jointly With Payee (Each Liable on the Mortgage) § 3.3.5.3 Payee Spouse Holds 100% Title § 3.4 Divorce or Separation Instrument § 3.4-A Exception—Written Request to Pay Third Party § 3.4-B Retroactive Effect of Instrument Not Recognized § 3.4.1 A “Decree” or Judgment, or Written Instrument Incident Thereto § 3.4.1.1 Invalid Decree or Judgment § 3.4.2 A Written Separation Agreement § 3.4.2.1 Separation Not Necessary § 3.4.2.1.1 Separation Need Not Be Specified § 3.4.2.2 Amounts Need Not Be Specified § 3.4.2.3 Letter Signed by Both Parties § 3.4.2.4 Letter From Attorney for Husband to Wife (Signed by Wife) § 3.4.2.5 Letters Between Attorneys § 3.4.2.6 Validity or Enforceability of Agreement § 3.4.2.7 Tax Consequences Cannot Be Changed § 3.4.2.8 Estimate Amount of Allowable Alimony § 3.4.3 A Decree (Order or Judgment) Requiring Support § 3.5 Designation as Not Taxable, Not Deductible; (Alimony Can Be Made Non-Taxable) § 3.5.1 Introduction § 3.5.1.1 Separate Streams of Payment, Difference Tax Effects § 3.5.2 Designation by the Parties § 3.5.2.1 Lump Sum Settlement of On-Going Monthly Alimony Obligations § 3.5.2.2 Reporting Designation § 3.5.3 Temporary Support Order, Designation by Court § 3.5.4 Final Decree of Divorce or Separate Maintenance, Designation by Court § 3.5.5 Rationale for Designation of Non-Taxable/Non-Deductible Alimony § 3.6 Different Households § 3.7 Termination on Death § 3.7.1 Non-Modifiable Alimony § 3.7.2 Lump Sum Alimony § 3.7.3 Use of “Alimony Trust” for Payments After Payee’s Death § 3.7.3.1 Gift Tax Considerations § 3.7.4 Cessation on Death of Payee of Unallocated Alimony and Child Support (Family Support) § 3.7.4.1 Unallocated Alimony and Child Support Not Taxable/Deductible § 3.7.4.2 Unallocated Alimony and Child Support Is Taxable/Deductible Alimony § 3.7.4.3 Cavaet: Provide in Writing That Liability Ceases § 3.7.5 Arrearage of Alimony § 3.7.5.1 Interest on Arrerage § 3.8 Child Support § 3.8.1 Alimony Must Not Be Fixed as Child Support § 3.8.1.1 Insufficient Amount to Cover Both Alimony and Child Support § 3.8.2 Alimony Not Fixed as to Child Support § 3.8.3 Advantage of Designating Child Support as Alimony § 3.8.4 Child Support Guidelines; Basis to Deviate § 3.8.5 Future Spousal Support Reduced by Court Ordered Child Support § 3.8.6 Unallocated Alimony and Child Support (Family Support) § 3.9 Third Year Recomputation Rule § 3.9.1 Recomputation—Recapture § 3.9.1.1 Post Separation Years § 3.9.2 Recomputation Rule § 3.9.2.1 Exceptions § 3.9.2.2 Potential Danger § 3.9.2.2.1 Solution I: Fixed Portion or Portions of Income § 3.9.2.2.1.1 Tax Returns, Copies to Spouse, Court Requirement § 3.9.2.2.1.2 Court’s Reluctance to Fluctuating Payments § 3.9.2.2.1.3 Court’s Award of Fluctuating Payments § 3.9.2.2.2 Solution II: Designate the Payments as Non-Taxable § 3.9.2.2.3 Arrearage Recapture Avoidance § 3.9.3 Carry-Back or Carry-Forward Not Available § 3.10 Alimony Payments to Non-Resident Aliens, Withholding Requirements § 3.11 Payments by Business In Lieu of Alimony § 3.12 Joint Returns § 3.12.1 Exemption for Spouse, Alimony Precluded on Separate Returns § 3.13 Alimony Trusts § 3.13.1 Differences Between Alimony Trust Payments and Alimony Pursuant to I.R.C. § 71 § 3.13.2 Gift Tax Consequences § 3.14 Attorneys’ Fees As Alimony § 4. PENDENTE LITE (TEMPORARY) SUPPORT § 4.1 Temporary Order for Support § 4.2 Exceptions Applicable to Temporary Support § 4.2.1 Separate Households § 4.2.2 Recomputation Inapplicable § 4.3 Litigation Required § 4.4 Designation Non-Taxable, Non-Deductible § 4.5 Separate Streams of Payment § 4.6 Cash to or on Behalf of a Spouse § 4.7 Payments Must Cease on Death of Payee § 4.8 Unallocated Temporary Alimony and Child Support (Family Support) § 4.8.1 Fixed as Child Support? § 4.8.2 Advantage of Unallocation § 4.8.2.1 Child Support Guidelines, Effect § 4.9 Modification or Correction of Temporary Orders § 4.10 Attorneys’ Fees Awarded for Adverse Party § 5. CHILD-RELATED EXEMPTIONS, CREDITS AND DEDUCTIONS § 5.1 The Dependency Exemption § 5.1.1 Entitlement § 5.1.1.1 Custodial Parent of Minor Children § 5.1.1.2 Parents Not Yet Divorced, Not Separated Under Agreement nor Living Apart for Last 6 Months of Calendar Year § 5.1.1.3 Custody Determination § 5.1.1.4 Children Reaching Age Nineteen § 5.1.1.5 Proof of Contributing Over One-Half of Support of Dependent § 5.1.2 Applicability to Parents Who Have Never Married; Paternity Actions § 5.1.3 Exceptions § 5.1.4 Relinquishment of Exemption by Custodial Parent § 5.1.5 Excerpts From I.R.C. § 152 § 5.1.5.1 Form 8332 (or Its Equivalent) § 5.1.5.2 Terms and Conditions § 5.1.5.3 Attachment to Tax Return § 5.1.5.4 Social Security Number Required § 5.1.5.5 Revocation of Release of Dependency Exemption § 5.1.5.6 Stepparent Entitlement to Dependency Exemption § 5.1.6 Court’s Power as to the Relinquishment § 5.1.6.1 Relinquishment Decisions; Rational § 5.1.6.1.1 Conditions for Relinquishment § 5.1.6.2 Alternating Annually Between Parents § 5.1.6.3 Courts Lack Power to Allocate Exemption § 5.1.6.4 Allocation of Exemption Only if Child Support Payments Are Current § 5.1.7 Requirement to Execute Waiver to Allocate Dependency Exemption § 5.1.8 Modification of Allocation Order § 5.1.9 No Minimum Support Requirement § 5.1.10 The Benefit of the Dependency Exemption § 5.1.11 Phase Out of Personal (Dependents) Exemption § 5.1.12 Dependency Exemption Considered as Property § 5.1.13 Dependency Exemption Award Impermissible In Lieu of Alimony § 5.2 Child Tax Credit § 5.2.1 Excerpt From Child Tax Credit Code Provision § 5.2.2 Child Tax Credit ($1000 for years 2005-2009) § 5.2.3 Phase-Out Thresholds § 5.3 Household and Dependent Care Credit § 5.4 Medical Expenses for Dependents § 6. REVENUE RECONCILIATION ACT OF 1993: THE EFFECT UPON DIVORCE TAXATION § 6.1 Introduction § 6.2 Individual Income Tax Rate Increase § 6.3 Additional 1993 Tax Can Be Paid Over Three Years § 6.4 Limit on Medicare Deduction Eliminated § 6.5 Limitation and Reduction in Itemized Deductions § 6.6 Amortization of Goodwill and Other Intangibles § 7. DEDUCTIBILITY OF ATTORNEYS' FEES § 7.1 Fees Attributable to the Dissolving Marriage § 7.2 Fees Related to Tax Advice § 7.2.1 Disclaimer As To Tax Advice § 7.3 Fees Related to the Production or Collection of Taxable Income § 7.4 Fees for Obtaining or Protecting Capital Assets § 7.5 Fees Paid By One Spouse to the Attorney of the Other Spouse § 7.6 Limitation on Deductibility of Fees § 7.7 Fees Paid Out of Spouse's Business Entity § 7.7.1 Fees for Profit Seeking Activities § 7.8 Allocation of Fees § 7.8.1 Factors in Arriving at Allocated Fee § 7.8.1.1 Time § 7.8.1.2 Complexity § 7.8.1.3 Legal Issues in Case § 7.8.1.4 Fee Customarily Charged in the Locality for Similar Services § 7.8.1.5 The Results Obtained in the Divorce Negotiations § 7.8.2 Kind and Weight of Evidence § 7.8.3 Practice § 7.8.4 Time Records § 7.8.5 Caveats § 8. THE KIDDIE TAX § 8.1 Tax for Children Under Age Eighteen § 8.1.1 I.R.C. §1(g) § 8.2 Parental Taxable Income § 8.2.1 If Parents Are Married and Filing Separate Return § 8.2.2 If Parents Are Divorced § 8.2.3 If Parent Remarries § 8.3 Responsibility for Filing § 8.4 Practice Tip § 8.5 Obtaining Necessary Information § 8.5.1 Consent for Information to Another § 8.5.2 Power of Attorney § 8.6 Estimates Permissible § 9. JOINT RETURNS—MARRIED FILING SEPARATELY § 9.1 Tax Rates—Four Tax Schedules § 9.1.1 Head of Household § 9.1.1.1 Stepparent Entitlement to Head of Household Status § 9.1.2 Legally Separated Spouses; Entitled To File As Unmarried Individuals § 9.1.2.1 Excerpts From I.R.C. § 7703 § 9.1.2.2 Decree of Separate Maintenance Required Which Legally Separates Spouses § 9.1.3 Separation Agreements § 9.1.4 Householders With Children, Living Apart § 9.1.5 Judgment of Dissolution § 9.2 Generally Beneficial to File Jointly § 9.2.1 Refunds and Carry Forwards of Tax Overpayments. § 9.2.1.1 Joint Returns § 9.2.1.2 Separate Returns, Previous Filing of Joint Return § 9.3 Joint Return Not Always Beneficial § 9.3.1 Medical Expenses § 9.3.2 Itemized Miscellaneous Deductions § 9.3.3 IRA Contributions § 9.3.4 Casualty Loss § 9.4 Marriage Penalty § 9.5 Allocation of Income and Deductions on Separate Return § 9.6 Joint and Several Liability § 9.6.1 Liability for Payment of Taxes, Assessed by Divorce Court § 9.7 Deficiency Notice § 9.7.1 Last Known Address § 9.7.2 Deficiency Notice Regarding Joint Return § 9.7.3 Change of Address § 9.7.4 Form 8822 § 9.8 Election to File Joint Return § 9.8.1 Amending from Separate to Joint; Joint to Separate § 9.8.1.1 Joint Return After Filing Separate Return § 9.8.1.2 Separate Return After Filing Joint Return § 9.8.2 Extensions § 9.8.3 Estimated Tax Payments § 9.8.4 Following Switch From Joint to Separate Filing § 9.8.5 Effect of Agreement § 9.8.6 Same Sex Couples; No Joint Returns § 9.9 Net Operating Losses § 9.10 Other Carryovers § 9.10.1 Charitable Contribution Carryover § 9.10.2 Investment Interest Expense Carryforward § 9.10.3 Capital Loss Carryforwards § 9.11 Court's Requirement to Sign Joint Return § 9.11.1 Courts Should Not Require Signing Joint Return § 9.11.2 Court Can Require Compliance With Agreement to Sign Joint Return § 9.11.3 Authority for Court Requiring Execution of Joint Return § 9.11.4 IRS Not Bound by Court-Ordered Requirement of Joinder § 9.12 Joint Returns: What Qualifies? § 9.12.1 Intent Controls: Non-Signing by One Spouse Does Not Preclude Joint Return Status § 9.12.2 Refusing to Sign as “Bargaining Chip” or “Ill Will” § 9.12.3 Fear Precludes Intent of Joint Return § 9.12.3.1 Facts Supporting Intent § 9.12.3.2 Facts Rebutting Intent § 9.12.4 Duress, Return Signed Under § 9.12.4.1 Definition of Duress § 9.12.4.2 Finding of Duress § 9.12.4.3 Finding No Duress § 9.12.5 Forging Spouse’s Signature Precludes Joint Status § 9.13 Filing Separate Return Precludes Joint Status § 9.13.1 Standard and Itemized Deductions for Married Persons Filing Separate Returns § 9.13.1.1 Introduction § 9.13.1.2 Election to Itemize Precludes Standard Deduction § 9.13.1.3 Relief by Divorce Court § 9.14 Obtaining an Indemnification and Hold Harmless Agreement for Signing a Joint Return §9.14.1 Court Requiring Execution of Indemnification § 9.15 Practice Tips § 9.16 Form of Indemnification and Hold Harmless Agreement § 9.17 Court Imposition of Income Tax Liability § 9.17.1 Tax Liability on Alimony, Payor’s Agreement to Pay; Amount § 9.18 Non-Marital Asset—Effect of Converting to Marital by Filing Joint Return § 9.19 Estimated Tax Payments; Joint, Then Filing Separate § 9.20 Alimony Amount Not Determined by Income on Joint Return § 10. Assignment of Income Doctrine, Applicability in Divorce § 10.1 Doctrine Precluding Assignment of Income § 10.2 Inapplicability of Doctrine § 10.3 Applicability of Doctrine § 10.4 Factors Considered § 10.5 Applicability in Divorce § 10.5.1 Nonqualified Deferred Compensation Accounts, Distributions to Spouse § 11. INNOCENT SPOUSE RELIEF (AND SEPARATION OF LIABILITY AND EQUITABLE RELIEF) § 11.1 Introduction § 11.2 Pre-1998 Innocent Spouse Rules § 11.3 1998 Changes to Rules—Generally § 11.3.1 Internal Revenue Code Section 6015 § 11.4 Request to IRS for Relief (Form 8857) § 11.5 Time for Election §11.5.1 Premature Request for Relief § 11.6 Innocent Spouse Election § 11.6.1 Knowledge or Reason to Know § 11.6.2 Facts and Circumstances Considered for Knowledge or Reason to Know Include, but Are Not Limited To: § 11.6.3 Burden of Proof § 11.6.4 Inequity § 11.7 Separate Liability Election § 11.7.1 Eligibility § 11.7.2 Members of the Same Household § 11.7.3 Burden of Proof § 11.7.4 Actual Knowledge § 11.7.5 Duress § 11.7.6 Examples by Conference Committee § 11.7.7 Practice Tip § 11.7.8 Limitations on Use of Separate Liability Election § 11.8 Tax Court Review § 11.9 Equitable Relief § 11.9.1 Relief Provided § 11.9.2 IRS Guidance § 11.9.3 Procedure § 11.10 Effect Upon Signing Joint Returns § 12. TAX PROBLEMS OF “LIVE-IN” RELATIONSHIPS § 12.1 Dependency Exemption § 12.2 Payments or Transfers of Property: A Gift or Taxable Income? § 12.2.1 Gift to “Live-In” § 12.2.2 Income to “Live-In” § 12.2.3 Gift and Income Part of Each § 12.2.4 Deductible by Payor § 12.2.5 Cohabitation Agreement § 12.3 Property Division § 12.4 Gifts § 12.5 Estate Taxes § 12.6 Retirement Funds/Death Benefits § 12.7 Filing Status § 12.8 Sale of Principal Residence § 13. QUALIFIED RETIREMENT BENEFITS § 13.1 General Background § 13.2 Anti-Alienation Provisions of ERISA § 13.3 Retirement Equity Act, Purpose § 13.4 Failure to Include Retirement Benefits in Distribution § 13.5 Definitions § 13.5.1 Alternate Payee § 13.5.2 Beneficiary § 13.5.3 Contributory Plan § 13.5.4 Defined Benefit Plan § 13.5.5 Defined Contribution Plan § 13.5.6 Domestic Relations Order § 13.5.7 Earliest Retirement Age § 13.5.8 Non-Contributory § 13.5.9 Non-Qualified Plans § 13.5.10 Participant § 13.5.11 Pay Status § 13.5.12 Plan Administrator § 13.5.13 Qualified Domestic Relations Order § 13.5.14 Qualified Plans § 13.5.15 Surviving Spouse § 13.5.16 Survivor Benefit § 13.5.17 Vested Benefits § 13.5.17.1 Graduated Vesting § 13.5.17.2 “Cliff” Vesting § 13.5.17.3 Accrued Benefit § 13.6 Rules for the Qualified Domestic Relations Orders (QDROs) § 13.6.1 I.R.C. § 414(p) § 13.6.2 Discussion of Rules for QDROs § 13.6.2.1 Summary of QDRO Requirements § 13.6.2.2 QDRO Requirements § 13.6.2.2.1 Benefits, Amounts or Percentage Must Be Stated § 13.6.2.2.1.1 When a QDRO Can Be Entered § 13.6.2.2.2 Fixed Amount of Payment § 13.6.2.2.3 Percentage of Benefits § 13.6.2.2.4 Inclusion of a Formula § 13.6.2.2.5 Early Distribution Option § 13.6.2.2.6 Benefits: As Provided Under Plan and Limited to Participant's Benefits § 13.6.2.2.7 Number of and Period For Payments § 13.6.2.2.8 Plan to Which the Order Applies § 13.6.2.2.9 Participant and Alternate Payee Identified § 13.6.2.2.10 Priority of Prior QDROs § 13.7 Payment of Benefits to Alternate Payee § 13.7.1 Earliest Date of Payments § 13.7.1.1 Definition of “Earliest Retirement Age” § 13.7.1.2 Examples § 13.7.2 Special Provisions in Plan § 13.7.3 Latest Date of Payment of Benefits § 13.7.4 Death, Disability or Separation From Service of Employee Spouse § 13.7.4.1 Special Rules Upon Death of Participant § 13.7.5 Other Plan Eligibility Requirements § 13.7.6 Complexities of Defined Benefit Plans § 13.8 Surviving Spouse Designations § 13.8.1 Form of Benefit § 13.8.1.1 Post-Starting Date of Payments; Qualified Joint and Survivor Annuity (QJSA) § 13.8.1.2 Pre-Retirement; Qualified Pre-Retirement Survivor Annuity (QPSA) § 13.8.1.3 Consent to Waiver § 13.8.1.4 Marriage of Less Than One Year Duration § 13.8.1.5 Waiver by Spouse of Survivorship Benefits § 13.8.1.5.1 Premarital Agreement, Ineffective as Waiver of Benefits in a Qualified Plan
§ 13.8.1.5.2 Premarital Agreement, Waiver
of Equitable Distribution Rights in § 13.8.1.6 Waiver by Spouse of Benefits in Qualified Plans § 13.8.2 Death of Alternate Payee § 13.9 Procedural Rules § 13.9.1 Steps to Take § 13.9.2 Compliance With State Law § 13.9.3 Disputes With Plan Administrator § 13.9.4 Fees for Plan Administrator Impermissible § 13.10 Alimony and Child Support, Use of QDRO’s § 13.10.1 Security for Future Payments § 13.10.2 Arrearages, Attorneys’ Fees, Temporary Support and Taxes Thereon § 13.10.2.1 Temporary Relief
§ 13.10.2.2 Use of a QDRO for Alimony in
Arrears 20 Years After Judgment From § 13.10.2.3 QDRO Entered in Same State to Collect Alimony in Arrears Nine Years Subsequent to Divorce § 13.10.2.4 Use of a Subsequent QDRO to Collect Delinquent Alimony and Child Support Held to Be a Permissible Modification of a Prior Judgment
§ 13.10.2.5 Use of a QDRO to Collect
Required Payment for Equitable Distribution of § 13.10.2.6 Minority Holding that Subsequent QDRO Constitutes Impermissible Modification, Notwithstanding for the Collection of Arrearage in Spousal Support § 13.11 Form for Court to Reserve Jurisdiction § 13.11.1 Time Within Which QDRO May Be Entered § 13.12 Qualified Domestic Relations Order Checklist § 13.13 Joinder of the Plan, Trust and Plan Administrator as Third Party Defendants Under State Law § 13.13.1 Attorneys’ Fees Cannot Be Awarded Out Of or Against the Plan § 13.14 Taxation of Payments of Retirement Funds § 13.14.1 Payments from Plan Without QDRO § 13.14.2 Taxation as Annuity § 13.14.3 Taxation of Lump Sum Distribution § 13.14.3.1 Five-Year Averaging § 13.14.3.2 Distributions to Participants Who Meet the Above Lump Sum Distribution Requirements and Were Age 50 Before January 1, 1986 § 13.14.3.3 Ten-Year Averaging § 13.14.3.4 Combined Capital Gain Treatment With Ten-Year Averaging § 13.14.4 “Roll-over” Alternative § 13.14.5 Loans From Plan § 13.14.6 Ten Percent Early Distribution Penalty § 13.14.6.1 Separation From Service § 13.14.6.2 Equal Payments § 13.14.6.3 Disability § 13.14.6.4 Alternate Payee Payments § 13.14.6.5 Medical Expenses § 13.14.7 Excess Distribution Tax § 13.14.8 Taxation Payments Received by Alternate Payee § 13.14.8.1 Lump Sum Payments § 13.14.8.2 Ten Percent Early Withdrawal Penalty § 13.14.9 Distribution for Child Support § 13.14.10 Twenty Percent Withholding on Distributions From Qualified Plans After 12/31/92 § 13.14.11 Exempt From Withholding Requirements § 13.14.12 Rollovers § 13.14.13 Required Minimum Distributions § 14. INDIVIDUAL RETIREMENT ACCOUNTS, TAX IMPLICATIONS § 14.1 Introduction § 14.2 Transfers Incident to Divorce or Legal Separation § 14.2.1 Post Nuptial Agreements § 14.3 Ten Percent Penalty § 14.4 Waiver of Penalty for Early IRA Withdrawal for Higher Education Expense and First Time Home Purchase § 14.4.1 Higher Education Expense § 14.4.2 First Time Homebuyer § 14.5 Twenty Percent Withholding on Distribution § 14.6 Transfers During Marriage § 14.7 Agreement Alone Not Sufficient to Avoid Tax § 14.8 How to Effectuate a Tax Free IRA Transfer § 14.9 Withdrawals From an IRA After Transfer § 14.10 Required Minimum Distributions § 14.11 Excess Distributions § 14.12 Borrowing or Pledging Prohibited § 14.13 Consideration of IRA in Determining Ability to Pay in Contempt Proceedings § 14.14 Beneficiary Designation Upon Divorce, Effect § 14.15 Income From IRA, Effect on Child Support § 14.16 Garnished Amounts Included in Income § 15. SUSPENDED PASSIVE ACTIVITY LOSSES § 15.1 Excerpt From I.R.C. § 469 § 15.2 Limitations on Deductibility of Passive Activity Losses § 15.2.1 Active Participation in Rental Real Estate, Allowed up to $25,000 Offset § 15.3 Attribution to Each Spouse § 15.4 Material Participation by Spouse § 15.5 Disposition of Passive Activity § 15.6 Disposition in Community Property States § 15.7 Discovery of Existence of Suspended Passive Activity Losses § 15.8 Consideration in the Value of Marital Assets § 15.9 Planning With Passive Activity Loss Property § 15.10 As a Deduction From Income to Determine Child Support Under the Guidelines Statute APPENDICES 1. Proposed forms of orders and judgments with income tax consideration under DRTRA I. Temporary—All payments taxable/deductible II. Final Judgment Provisions—Permanent periodic alimony deductible/taxable III. Final Judgment—Lump sum alimony deductible/taxable IV. Alimony under either temporary order or final judgment not to be taxable to the wife nor deductible to the husband V. Alternative to preceding clause (short form-no provision for adjustment) payments to be non-taxable and non-deductible VI. Clause for final judgment to designate certain payments of cash to a third party on behalf of a spouse as non-deductible/non-taxable VII. Clause for final judgment for a fixed percentage of payor's income—deductible to the payor and taxable to the payee VIII. Clause for insertion in final judgment whenever there is to be a transfer of property 2. Recapture Computation Schedules 3. IRS Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents 4. IRS Form 2120, Multiple Support Declaration 5. IRS Form 8615, Computation of Tax for Children Under Age 18 Who Have Investment Income of More Than $1,600 6. IRS Form 8857, Request for Innocent Spouse Relief (Rev. Feb. 2004) 7. Some Clauses to Achieve Lester Results 8. Temporary Regulations on Domestic Relations Tax Reform Act 9. Internal Revenue Service Notice 97-10 and 97-11, issued December 30, 1996 Reform Act
I. Internal Revenue Service Notice 97-10 Sample Language for a
Spouse’s II. Notice 97-11 Sample Language for a Qualified Domestic Relations Order 10. DuCanto's Calculation of Effective Federal Tax Rate (2006) In Percentage of Taxable 11. Rev. Rul. 2002-22 12. 2005 Tax Brackets (Table I) 13. Deductions from Income (Table II) 14A. Beneficiary Designation or Change 14B. Individual Retirement Account Change of Account Information 15. Other Protection (Some Useful Clauses) I. Rebut Presumption Not a § 1041 Transaction Where Transfer of the Marital Residence is Subsequent to 6 Years II. Prenuptial Agreement/Waiver of Interest in Qualified Plan III. Future Spousal Support Reduced by Court Ordered Increase in Child Support IV. Joint Returns: Indemnification, Deficiency Assessment, Contest, Amended Returns, and Refunds V. Requirement to Provide Records in I.R.C. § 1041 Transaction VI. Intended Taxable/Deductible Alimony Adjustment; Intent of Parties VII. Dependency Exemption (Child Tax Credit); Unallocated Support; and College Attendance VIII. Furnishing of Information to Tax Authorities IX. Stock Options; Responsibility for Tax Upon Exercise of Option X. Attorneys’ Fees; Attorneys’ Advice to Client, Deductible XI. Non-Taxable Nature of Property Transfer XII. Distributive Payment, Non-Taxable, Non-Dischargeable in Bankruptcy XIII. Untimely Payment of Alimony/Non-Taxable/Non-Deductible 16. Form 8379, Injured Spouse Claim and Allocation (Rev. January 2006) 17. Treas. Reg. §1.1041-2 18. Itemized Deductions on Separate Returns 19. IRS Revenue Procedure 2003-61: Equitable Relief From Income Tax Liability Table of Cases Index to Internal Revenue Code Sections Index to Treasury Regulations Index to Revenue Rulings Index to Internal Revenue Service Chief Counsel’s Advisory Index to Private Letter Ruling Citations Index
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