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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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Tax ProfessionalExample: $50,000 paid from Person A to

Customer Question

Tax ProfessionalExample: $50,000 paid from Person A to Person B. B had said he would be pay A a post divorce additional settlement (based on tax refunds from FTB and an excess proceeds sale -- profitable). Specifically not part of divorce decree -- signed afterwards.
Is the only way it is deductible to Person A (and taxable to Person B) is if the money were paid as personal services? Or also deductible if paid as further settlement of a claim? I"m assuming 1099 would need to be issued?
Basically, how can it be deductible, and to "win" if receiving spouse disputes and calls it a gift?Some of the note hasn't yet been paid. Person A doesn't want to play hardball and not pay the amount.What happens?
Does IRS force it to be a gift?
Submitted: 5 months ago.
Category: Tax
Expert:  JACUSTOMER-8nme36c9- replied 5 months ago.
My understanding is that it must be part of the divorce decree. Is there anything on the decree that has no monetary limit assigned? For example, medical expenses or standard of living? Could the money be reinvested in a joint asset?
Customer: replied 5 months ago.
No, there really isn't.
If it was not an ex-spouse, just someone off the street, there's no issue hiring someone to provide services, pay them and deduct the expense (if business). Is ex-spouse anything different (aside from the person threatening to call it a gift).Separately, if I give a non-relative $20,000 as a "thank you" for helping me on a deal, and I do NOT want to use $14K as an exclusion, as I then could not write it off, I can pay the person $20K, describe it on the check as "advising on a particular activity" and 1099 the person, right?
Expert:  JACUSTOMER-8nme36c9- replied 5 months ago.
What entity would the 1099 be issued from? Is there a sole proprietorship or corporation formed?
Customer: replied 5 months ago.
Is like an answer both ways.