Rev. Rul. 59-93

The Internal Revenue Service has been requested to state its position with respect to the decisions of the United States Courts of Appeals in Charles S. Weil, et al. v. Commissioner, 240 Fed. (2d) 584, certiorari denied, 353 U.S. 958, and Jo Eisinger et ux. v. Commissioner, 250 Fed (2d) 303, certiorari denied, 356 U.S. 913. The problem involved in each case is the determination of the portion of a periodic payment that will be treated as alimony where the payment is made in one amount to the wife pursuant to court decree or agreement for the support of both the wife and minor children. While these cases were decided under sections 22(k) and 23(u) of the Internal Revenue Code of 1939, they are equally applicable to sections 71 and 215 of the Internal Revenue Code of 1954.

Section 71(a) of the 1954 Code provides in general, that if a wife is divorced or legally separated from her husband under a decree of divorce or of separate maintenance, the wife's gross income includes periodic payments received after such decree in discharge of a legal obligation which, because of the marital or family relationship, is imposed on or incurred by the husband under the decree or under a written instrument incident to such divorce or separation. Section 71(a) of the Code does not apply to that part of any periodic payment which the terms of the decree, instrument, or agreement fix as a designated sum payable for the support of minor children of the husband. See section 71(b) of the Code.

Section 215 of the Code provides that, in the case of a husband described in section 71, there shall be allowed as a deduction amounts includible under section 71 in the gross income of his wife. Payments for the support of the children are not deductible by the husband since such amounts are not includible in the gross income of the wife under section 71 of the Code.

In the Weil case, the agreement between the parties provided for periodic payments to the wife with which she was to support their children and herself. The only designation of any specific portion of the payments allocated for the support of the children was contingent on the wife's remarriage. The United States Court of Appeals for the Second Circuit held that the entire amount paid was deductible as alimony.

In the Eisinger case, the payments were to be reduced by one-fourth when either of the two children reached majority or died, and to be reduced by one-half if the wife remarried. The United States Court of Appeals for the Ninth Circuit held that the agreement in the Eisinger case allocated the payments between alimony and support for the children with sufficient certainty. It distinguished the Weil case on factual grounds, noting that the Weil agreement ear-marked a specific sum for the support of the children only upon remarriage of the wife, an event which might never occur.

The Service will follow the decision of the United States Court of Appeals in the Weil case on this issue in cases involving similar facts and circumstances. However, in determining whether payments made under a divorce decree or separation agreement are to be treated as alimony or whether a portion is for the support of minor children, the Service will continue to follow its position as set forth in the rationale of the decision of the United States Court of Appeals in the Eisinger case. See Ct. D. 1834, page 661 of this bulletin.

Acquiescences in the Tax Court's decision in the Charles S. Weil, Beulah Weil and Charles S. and Adreana Weil cases, C.B. 1957-2, 7, are hereby withdrawn.

¹ Based on Technical Information Release 119, dated December 16, 1958.