Lump sum alimony payments are not deductible by the payer or taxable to the recipient. In Kuchera v. Kuchera, the Florida Court of Appeal recently stated that: “We reverse the trial court’s decision declining to characterize the payments to the former wife in the parties’ post-reconciliation marital settlement agreement (“MSA”) for federal tax purposes, and we remand for the trial court to make a ruling on that issue and amend the final judgment. In all other respects, we affirm the Third Amended Final Judgment. The parties’ MSA, under a provision titled ‘Lump Sum Alimony and Equitable Distribution,’ requires the former husband to pay the former wife one-half of his salary after payment of child support for ten years, to be followed by yearly payments…The former husband and the former wife agreed that the provision would be non-modifiable. The MSA is silent as to whether these payments would be deductible by the former husband, or includible in the income of the former wife.
‘The usual treatment of alimony is to make…[it]…taxable to the recipient and deductible by the payer.’Rykiel v. Rykiel, 838 So. 2d 508, 510 (Fla. 2003) (citation omitted). However, payments are not deductible by the payer…if they are ‘part of a property settlement agreement.’ Hyotlaine v. Hyotlaine,356 So. 2d 1319, 1321 (Fla. 4th DC A 1978). Lump sum alimony ‘is a fixed and certain amount, the right to which is vested in the recipient and which is not therefore subject to increase, reduction, or termination in the event of any contingency, specifically including those of death or remarriage.’ Boydv. Boyd, 478 So. 2d 356, 357 (Fla. 3d DCA 1985). If the payments qualify as lump sum alimony, they remain payable to the former wife’s estate in the event of her death, and consequently, generally will not be deductible by the former husband under the relevant Internal Revenue Code provisions. Roodv. Comm’r, T.C. Memo. 2012-122, 2012 WL1435009 (U.S. Tax Ct. Apr. 25, 2012); Sharp v. Comm’r,T.C. Summ. Op. 2004-27, 2004 WL 440429 (U.S. Tax. Ct. Mar. 11, 2004).”
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