Rev. Rul. 62-53

Reconsideration has been given to Revenue Ruling 59-93, C.B. 1959-1, 22, in the light of the decision of the Supreme Court of the United States in Commissioner v. Jerry Lester , 366 U.S. 299 (1961), Ct. D. 1862, C.B. 1961-2, 241.

Revenue Ruling 59-93 holds that the decision in Charles S. Weil et al. v. Commissioner , 240 Fed.(2d) 584 (1957), certiorari denied, 353 U.S. 958 (1957), relating to the treatment of certain periodic payments made to a wife for the support of herself and minor children, will be followed by the Internal Revenue only in cases involving similar facts and circumstances. In determining whether payments made to a wife for the support of herself and minor children, treated as alimony or a portion is for the support of minor children, the ruling states that the Service will continue to follow the rationale of the decision in Jo Eisinger, et ux v. Commissioner , 250 Fed.(2d) 303 (1957), Ct. D. 1834, C.B. 1959-1, 661, certiorari denied, 356 U.S. 913 (1958), which held that the agreement in that case allocated the payments between alimony and support for the children with sufficient certainty, even though such payments were not specifically designated.

In the Lester case, the Supreme Court concluded that the Congress intended that, to come within the exception portion of section 22(k) of the Internal Revenue Code of 1939 allowing a portion of the payment which is payable for the support of minor children to be excluded from the wife's income, the agreement providing for the periodic payments must specifically state the amounts or parts thereof allocable to the support of the children. Thus, the agreement in the case providing for payment of certain monies to the wife for support of herself and the children which did not `fix' an amount for child support, but merely provided for a specific percentage reduction in payment to the wife upon the marriage, emancipation or death of any child, failed to meet the requirements of the statute and the payments were, therefore, fully deductible by the husband under section 23(u) of the 1939 Code.

While the Lester case was decided under sections 22(k) and 23(u) of the 1939 Code, the decision is equally applicable to sections 71 and 215 of the Internal Revenue Code of 1954.

In view of the foregoing, it is held that where periodic payments for support are made by a husband and received by a wife under a divorce decree, or an instrument or agreement described in section 71(a), such payments are includible in in the gross income of the wife under section 71 of the 1954 Code and are deductible by the husband under section 215, except to the extent that the terms of the decree, instrument, or agreement specifically designate or `fix' such payments, or a portion of such payment, as support for minor children of the husband.

Revenue Ruling 59-93, C.B. 1959-1, 22 is hereby revoked.