Unallocated Support

[MFinancier]

What is the name of your state? IL

There seems to be some confusion on the "alimony and support" boards about the use and deductibility of unallocated support in divorce cases. Lots of Illinois attorneys are using it, subject to "child contingencies" and recapture rules. The IRS seems to differ in their acceptance on a circuit by circuit basis...and in general the issue revolves around the ending of payments upon the death of the payee. There are a few people getting nervous and it was suggested this be posted here. Any help would be appreciated.

 

[LdiJ]

What is the name of your state? IL

There seems to be some confusion on the "alimony and support" boards about the use and deductibility of unallocated support in divorce cases. Lots of Illinois attorneys are using it, subject to "child contingencies" and recapture rules. The IRS seems to differ in their acceptance on a circuit by circuit basis...and in general the issue revolves around the ending of payments upon the death of the payee. There are a few people getting nervous and it was suggested this be posted here. Any help would be appreciated.

A decent chunk of the people who responded to the threads on the family law forum are also the same people who respond here.

Basically, IL family law attorneys are recommending that instead of someone paying child support and alimony, that they pay "unallocated support" instead, with the attorneys espousing the theory that the entire amount of unallocated support is deductible to the payer, and income to the payee. In other words, it allows the payer to deduct child support as well as alimony.

This OP is doing such and is now nervous that its incorrect and has been researching case law and isn't finding clear cut case law that backs up his position.