Buying out ex. Of our assets.... Several tax questions

[Txbizman]

So she wants nothing (other than $) I keep all the real estate, business etc and buy out her equity.

Question #1

Lets say the amount is 4000.00 a month for 10 years (48000.00) a year. What's the difference to a persons 6 figure tax return if it's alimony from me (taxable income to her, write off for me ) vs non alimony?

Question #2

I'm getting a lot of push back on the alimony so as an alternative I may propose I get the kids on my tax return every year.


Thoughts or experience with this anyone?

[chezfinz]

If it's alimony, it drops your taxable income by $48K a year. That's not chump change, you know. Why would you consider paying taxes yourself on $48K that she's taking right out of your pocket? $48K is more than a LOT of people earn in a year; shouldn't she pay taxes on that "income" of hers? Hell, $48K tax free....why would you *give* that to her? Kids on your tax return aren't going to make the difference a $48K drop in taxable income will.

Push for it to be alimony...because that's what it *is*. Unless $4K/mo is what the state child support calculator shows, she and her counsel have little to back an argument that it shouldn't be considered alimony for her. And, you should *each* get a kid on your return.

[hoosier_dad]

I think the main question is whether the payments are a property settlement, or alimony payments in addition to the equity she already received via a property settlement. The IRS does not consider property settlement payments alimony so you could run into tax issues down the road if your ex argues that these are property settlement payments and the decree isn't worded carefully.

[Txbizman]

If it's alimony, it drops your taxable income by $48K a year. That's not chump change, you know. Why would you consider paying taxes yourself on $48K that she's taking right out of your pocket? $48K is more than a LOT of people earn in a year; shouldn't she pay taxes on that "income" of hers? Hell, $48K tax free....why would you *give* that to her? Kids on your tax return aren't going to make the difference a $48K drop in taxable income will.

Push for it to be alimony...because that's what it *is*. Unless $4K/mo is what the state child support calculator shows, she and her counsel have little to back an argument that it shouldn't be considered alimony for her. And, you should *each* get a kid on your return.

It's a buy out of equity that I want at least a portion allocated to alimony for tax purposes.

[anonymous guest]

Thats not legal, so you could run into issues with the IRS.
Also, once you start alimony it opens up the possibility that she can go back to court to have alimony extended even if your decree states a set time (like 5 years).

Have you considered selling the real estate and useing the $ to pay her off?