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Abstract

Petitioner and her husband separated in January 1919 after marital difficulties. The following sequence of events transpired in the next four months: the husband employed detectives to follow his wife and discover evidence on which a divorce action could be predicated; petitioner instituted proceedings for legal separation; a separation agreement was executed under which the husband was to give petitioner an initial payment of $200,000 and subsequent annual payments of $30,000 for her life; the husband began a suit for divorce to which petitioner counterclaimed for a divorce; a divorce was decreed in favor of petitioner. Petitioner did not ask for alimony, relying instead on the separation agreement which provided that it would be unaffected by a subsequent divorce. Petitioner failed to report as income the $30,000 received in 1942 and 1943 and a deficiency for those years was determined by the Commissioner. The Tax Court held these sums to be taxable income to the petitioner. On appeal, held, affirmed. The conduct of the parties and the sequence of events demonstrated that the separation agreement was made in contemplation of divorce and payments made thereunder were "incident to" the divorce within the meaning of I. R. C., § 22(k). Izrastzoff v. Commissioner, (2d Cir. 1952) 193 F. (2d) 625.

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