A friend from the east coast emailed me this morning. (Well, to be honest, it was probably afternoon on the east coast.) Her question was: are alimony payments made in same-sex divorces taxable as gifts? Apparently a local family law expert had suggested that they are.
The answer is: it depends. If the relationship is recognized by state law and state law imposes an obligation of support, there is plenty of authority one can cite for the proposition that such payments are not taxable gifts. They are considered made for adequate considertaion: the release of the right to support.
DOMA should have no effect on this question. While DOMA prevents all same-sex couples from being treated as spouses under federal statutes, regulations, and rulings, DOMA does not prevent the normal application of sound tax principles that are not controlled by statute, regulation, or ruling. The rule on treatment of support is one of those sound tax principles.
Support obligations paid pursuant to state-imposed obligations are not taxable gifts, whether they are made during the relationship or after dissolution. They must, of course, truly be payments for support and not disguised gifts.
Support obligations paid out of love and affection, or even moral (as opposed to) obligation can be taxable gifts — at least to the extent they exceed the $13,000 annual exclusion. Whether I am supporting my ailing mother, needy sister, or my live-in lover, I should be filing a gift tax return on any amounts I expend on each individual in excess of $13,000. There are some good arguments against treating these transfers as taxable gifts, but the IRS has successfully imposed tax liability in most cases of this sort.
For a full discussion of arguments and authorities see my "white paper" on Support Payments and the Gift Tax.
[Coming soon: Support payments and the Income Tax]
