Page 98

TITLE 26-INTERNAL REVENUE CODE PART REFERRE TO IN OTHER SECTIONS This part is referred to in section 61 of this title. § 71. Alimony and separate maintenance payments (a) General rule (1) Decree of divorce or separate maintenance 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 (whether or not made at regular intervals) received after such decree in discharge of (or attribut- able to property transferred, in trust or oth- erwise, in discharge of) a legal obligation which, because of the marital or family rela- tionship, is imposed on or incurred by the husband under the decree or under a written instrument incident to such divorce or separa- tion. (2) Written separation agreement If a wife is separated from her husband and there is a written separation agreement ex- ecuted after the date of the enactment of this title, the wife's gross income includes periodic payments (whether or not made at regular in- tervals) received after such agreement is ex- ecuted which are made under such agreement and because of the marital or family relation- ship (or which are attributable to property transferred, in trust or otherwise, under such agreement and because of such relationship). This paragraph shall not apply if the hus- band and wife make a single return jointly. (3) Decree for support If a wife is separated from her husband, the wife's gross income includes periodic pay- ments (whether or not made at regular inter- vals) received by her after the date of the en- actment of this title from her husband under a decree entered after March 1, 1954, requir- ing the husband to make the payments for her support or maintenance. This paragraph shall not apply if the husband and wife make a single return jointly. (b) Payments to support minor children Subsection (a) shall not apply to that part of any payment which the terms of the decree, in- strument, or agreement fix, in terms of an amount of money or a part of the payment, as a sum which is payable for the support of minor children of the husband. For purposes of the preceding sentence, if any payment is less than the amount specified in the decree, instrument, or agreement, then so much of such payment as does not exceed the sum payable for support shall be considered a payment for such support. (c) Principal sum paid in installments (1) General rule For purposes of subsection (a), installment payments discharging a part of an obligation the principal sum of which is, either in terms of money or property, specified in the decree, instrument, or agreement shall not be treated as periodic payments. (2) Where period for payment is more than 10 years If, by the terms of the decree, instrument, or agreement, the principal sum referred to in paragraph (1) is to be paid or may be paid over a period ending more than 10 years from the date of such decree, instrument, or agree- ment, then (notwithstanding paragraph (1)) the installment payments shall be treated as periodic payments for purposes of subsection (a), but (in the case of any one taxable year of the wife) only to the extent of 10 percent of the principal sum. For purposes of the pre- ceding sentence, the part of any principal sum which is allocable to a period after the taxable year of the wife in which it is received shall be treated as an installment payment for the taxable year in which it is received. (d) Rule for husband in case of transferred property The husband's gross income does not include amounts received which, under subsection (a), are (1) includible in the gross income of the wife, and (2) attributable to transferred proper- ty. (e) Cross references (1) For definitions of "husband" and "wife", see sec- tion 7701(a)(17). (2) For deduction by husband of periodic payments not attributable to transferred property, see section 215. (3) For taxable status of income of an estate or trust in case of divorce, etc., see section 682. (Aug. 16, 1954, ch. 736, 68A Stat. 19.) REFERENCES IN TEXT Date of the enactment of this title, referred to in subsec. (a)(2), (3), is Aug. 16, 1954. CROSS REFERENCES Alimony, etc., payments, as not subject to death benefits provisions, see section 101 of this title. Gross income as including alimony and separate maintenance payments, see section 61 of this title. Husband and wife, definition of, see section 7701 of this title. Payment includible in gross income of wife under this section not treated as payment by husband for support of dependent, see section 152 of this title. Payments in discharge of alimony as not subject to annuity provisions, see section 72 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 72, 101, 152, 215, 682, 7701 of this title. § 72. Annuities; certain proceeds of endowment and life insurance contracts (a) General rule for annuities Except as otherwise provided in this chapter, gross income includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, en- dowment, or life insurance contract. (b) Exclusion ratio Gross income does not include that part of any amount received as an annuity under an annuity, endowment, or life insurance contract which bears the same ratio to such amount as the investment in the contract (as of the annu- ity starting date) bears to the expected return under the contract (as of such date). This sub- section shall not apply to any amount to which subsection (d)(1) (relating to certain employee annuities) applies. Page 98