ANSWER:First, everying in your case points to the payment as being alimony for federal income tas purposes.
Second, as to Proctor v. Comm
., 129 TC No. 12 (2007), YES, that case is directly applicable to the facts you are presenting.
Third, the provision of the parties' agreement that says that the payments "are not spousal support, but are to be considered a property division under the terms of § 20-107.3 of the Code of Virginia
" is NOT controlling, In Proctor
, the divorce decree referred to the payments as part of a division of the marital property. The IRS argued that this was sufficient to preclude the payments from being alimony for IRS purposes. The Tax Court rejected that arguement, explaining that "The classification of a payment as part of the division of marital property does not, however, preclude the payment from being alimony.
" In essence, "labels attached to payments mandated by a decree of divorce or marriage settlement agreement are not controlling
." The Tax Court said that a divorce decree or agreement that simply says the the payments are property division and not spousal support does not constitute a “clear, explicit and express direction
” that the payment not to be treated as alimony.
NOTE: "Spousal support" as defined under state law
is not necessarily the same thing as "alimony" as defined under the federal IRS law. For IRS purposes, just about any
payment made by one former spouse to the other former spouse WILL be alimony for federal income tax
purposes UNLESS the payment is disqualified
from being alimony for federal income tax.
As in Proctor
, the language of your agreement does not, in my opinion, disqualify the payments from being alimony for federal income tax purposes.
"Alimony paid" is deducted from gross income on Line 31a of IRS Form 1040.
NOTE: This is merely an opinion (and a pretty good one, if I say so myself) but should not be considered by you as "tax advice." I am not your tax advisor.