NJSBA Family Law Section

There was recently a presentation given at the Mercer Family Bench-Bar on the new tax law. There seems to be divergence of opinion as to whether modifications made to existing alimony obligations retain their deductibility. This is, obviously, a hugely important issue. I wrote to the CPA who gave the presentation, but haven't heard back so I'm putting it out to the list. Before we start advising clients on this, the issue needs to be resolved. I believe, based on the plain language of the #TaxScam, that they retain deductibility. Hopefully this will be addressed at the Symposium tomorrow?

Thanks for giving the presentation today. Two quick things.

First, I'm very interested in hearing who claimed that an alimony obligation modified after 12/31/2018 loses its deductibility. The relevant statute section is only two paragraphs and appears to say the exact opposite. Section 11051(c) of the Tax Cuts & Jobs Act provides: "The amendments made by this section [removing the deductibility / includability of alimony] shall apply to – (1) any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986 as in effect before the date of the enactment of this Act) executed after December 31, 2018, and (2) any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It seems that anyone thinking its not deductible is stopping in the middle of the sentence before the word "if":

The amendments made by this section [removing the deductibility / includability of alimony] shall apply to ... any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It's obviously important that we all get this right, but it doesn't seem at all complex. I'm really curious what the argument to the contrary would be. I'm Cc'ing [another attorney], who said she'd "seen articles" claiming this, and I know other attorneys who've stated it -- but I can't see how anyone could reach that conclusion based on the above.

Second, [someone] asked whether a pendente lite obligation entered before 12/31/2018 retained its deductibility if it's later changed. Again, the relevant statute section is short and would seem to say that Carol is right: It remains deductible even if it's modified later. As per the above, the changes (removing deductibility) apply to "any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986...) executed after December 31, 2018."

As per IRS Circular 504 (which mirrors section 71(b)(2) of the Code), www.irs.gov/pub/irs-pdf/p504.pdf, a divorce or separation instrument is defined as "A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement)." (Emphasis added).

So, isn't Carol correct that a pendente lite obligation retains deductibility even if later modified?

Thanks,

(I hope those links come through okay - last time I tried one here, it didn't)

David Perry Davis, Esq.

----------------------------------------------------

www.FamilyLawNJ.pro

----------------------------------------------------

57 Hamilton Avenue -- Suite 301

Hopewell, NJ 08525

Voice: 609-466-1222

Fax: 609-466-1223

There was recently a presentation given at the Mercer Family Bench-Bar on the new tax law. There seems to be divergence of opinion as to whether modifications made to existing alimony obligations retain their deductibility. This is, obviously, a hugely important issue. I wrote to the CPA who gave the presentation, but haven't heard back so I'm putting it out to the list. Before we start advising clients on this, the issue needs to be resolved. I believe, based on the plain language of the #TaxScam, that they retain deductibility. Hopefully this will be addressed at the Symposium tomorrow?

Thanks for giving the presentation today. Two quick things.

First, I'm very interested in hearing who claimed that an alimony obligation modified after 12/31/2018 loses its deductibility. The relevant statute section is only two paragraphs and appears to say the exact opposite. Section 11051(c) of the Tax Cuts & Jobs Act provides: "The amendments made by this section [removing the deductibility / includability of alimony] shall apply to – (1) any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986 as in effect before the date of the enactment of this Act) executed after December 31, 2018, and (2) any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It seems that anyone thinking its not deductible is stopping in the middle of the sentence before the word "if":

The amendments made by this section [removing the deductibility / includability of alimony] shall apply to ... any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It's obviously important that we all get this right, but it doesn't seem at all complex. I'm really curious what the argument to the contrary would be. I'm Cc'ing [another attorney], who said she'd "seen articles" claiming this, and I know other attorneys who've stated it -- but I can't see how anyone could reach that conclusion based on the above.

Second, [someone] asked whether a pendente lite obligation entered before 12/31/2018 retained its deductibility if it's later changed. Again, the relevant statute section is short and would seem to say that Carol is right: It remains deductible even if it's modified later. As per the above, the changes (removing deductibility) apply to "any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986...) executed after December 31, 2018."

As per IRS Circular 504 (which mirrors section 71(b)(2) of the Code), www.irs.gov/pub/irs-pdf/p504.pdf, a divorce or separation instrument is defined as "A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement)." (Emphasis added).

So, isn't Carol correct that a pendente lite obligation retains deductibility even if later modified?

Thanks,

(I hope those links come through okay - last time I tried one here, it didn't)

David Perry Davis, Esq.

----------------------------------------------------

www.FamilyLawNJ.pro

----------------------------------------------------

57 Hamilton Avenue -- Suite 301

Hopewell, NJ 08525

Voice: 609-466-1222

Fax: 609-466-1223

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There was recently a presentation given at the Mercer Family Bench-Bar on the new tax law. There seems to be divergence of opinion as to whether modifications made to existing alimony obligations retain their deductibility. This is, obviously, a hugely important issue. I wrote to the CPA who gave the presentation, but haven't heard back so I'm putting it out to the list. Before we start advising clients on this, the issue needs to be resolved. I believe, based on the plain language of the #TaxScam, that they retain deductibility. Hopefully this will be addressed at the Symposium tomorrow?

Thanks for giving the presentation today. Two quick things.

First, I'm very interested in hearing who claimed that an alimony obligation modified after 12/31/2018 loses its deductibility. The relevant statute section is only two paragraphs and appears to say the exact opposite. Section 11051(c) of the Tax Cuts & Jobs Act provides: "The amendments made by this section [removing the deductibility / includability of alimony] shall apply to – (1) any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986 as in effect before the date of the enactment of this Act) executed after December 31, 2018, and (2) any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It seems that anyone thinking its not deductible is stopping in the middle of the sentence before the word "if":

The amendments made by this section [removing the deductibility / includability of alimony] shall apply to ... any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.

It's obviously important that we all get this right, but it doesn't seem at all complex. I'm really curious what the argument to the contrary would be. I'm Cc'ing [another attorney], who said she'd "seen articles" claiming this, and I know other attorneys who've stated it -- but I can't see how anyone could reach that conclusion based on the above.

Second, [someone] asked whether a pendente lite obligation entered before 12/31/2018 retained its deductibility if it's later changed. Again, the relevant statute section is short and would seem to say that Carol is right: It remains deductible even if it's modified later. As per the above, the changes (removing deductibility) apply to "any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986...) executed after December 31, 2018."

As per IRS Circular 504 (which mirrors section 71(b)(2) of the Code), www.irs.gov/pub/irs-pdf/p504.pdf, a divorce or separation instrument is defined as "A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement)." (Emphasis added).

So, isn't Carol correct that a pendente lite obligation retains deductibility even if later modified?

Thanks,

(I hope those links come through okay - last time I tried one here, it didn't)

David Perry Davis, Esq.

----------------------------------------------------

www.FamilyLawNJ.pro

----------------------------------------------------

57 Hamilton Avenue -- Suite 301

Hopewell, NJ 08525

Voice: 609-466-1222

Fax: 609-466-1223