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Monday, March 31, 2003


The IRS took inconsistent positions as to whether unallocated payments made to Jane Gilbert by Richard C. Hawley were alimony, and decided to just let them fight it out in Tax Court. The IRS is the government, and they do not even have to pretend to be consistent. The question is whether the any of these unallocated payments would have had to have been made if Gilbert had died, which she did not. The separation instrument did not state the answer, so Tax Court had to look at state law. Although recent legislation has answered that the payments would not continue, at the time the law was vague and their were no court cases on point. After an exhaustive review of Pennsylvania family court procedure, Tax Court ruled that if Gilbert had died during the years in question, the state court had the discretion to continue the payments. This discretion was all that was required for Tax Court to conclude the payments to Gilbert were not income.

Here is an interesting footnote from the Gilbert decision:
Respondent objects on grounds of relevance to stipulations 12, 13, and 23. Both Ms. Gilbert and respondent object on grounds of relevance to stipulation 25. This Court finds these objections to be moot because this Court does not rely upon those stipulations in reaching our decision.
Okay, so if your relevance objection is valid, that is the evidence truly is irrelevant, you lose because it does not affect the outcome, and is therefore moot, and so you lose. But if the objection is not moot, and the evidence could effect the outcome of the case, it is not, by definition, irrelevant, and so you lose. And can you really object to something you stipulated to anyway? Doesn't that defeat the purpose of stipulating, which is to establish what the parties will not be contesting?

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