## Facts

- Karen Rykiel (former wife) and Stephen Rykiel (former husband) litigated a dissolution of marriage in Florida.
- The trial court awarded the wife permanent periodic alimony.
- The final judgment stated the alimony would be “nontaxable” to the wife, effectively attempting to change the federal income-tax consequences of alimony by decree.
- The Fifth District Court of Appeal reversed the “nontaxable” provision, reasoning that federal law governs tax consequences and that a state court order cannot change alimony’s taxability.
- The Florida Supreme Court accepted review to resolve conflict with a decision that had upheld a trial court’s allocation of alimony-related tax consequences.

## Issues

1. Whether a Florida trial court may, by final judgment alone, designate permanent periodic alimony as “nontaxable” to the recipient for federal income-tax purposes.
2. Whether federal law permits a “nontaxable/nondeductible” alimony treatment only through an express designation by the parties, and what role a state court may play in recording or enforcing that designation.

## Decision

- The Florida Supreme Court quashed the Fifth District’s decision in part to the extent it suggested there is never legal authority for alimony to be treated as nontaxable.
- The Court held a trial court cannot unilaterally dictate the federal tax treatment of alimony by labeling it “nontaxable” in a dissolution judgment.
- The Court held a state court may incorporate and enforce the parties’ explicit designation—made in a written instrument or clearly on the record—that payments otherwise qualifying as alimony will be nondeductible to the payor and excludable from the payee’s income under federal law.
- The Court clarified that the authority to “designate” this alternate tax treatment belongs to the parties under federal law, not to the court acting on its own.

## Legal Principles

- Federal law controls the federal income-tax characterization of alimony; state domestic-relations law creates the obligation, but federal law determines how it is taxed.
- Under 26 U.S.C. § 71, qualifying alimony is generally includable in the recipient’s income and deductible by the payor, subject to federal requirements.
- Temporary Treasury Regulation § 1.71-1T permits spouses to designate that payments otherwise meeting the federal definition of alimony will be nondeductible by the payor and excludable from the payee’s income.
- A valid designation must be explicit and made in a written instrument (or clearly on the record); a court cannot supply the designation unilaterally but may approve, incorporate, or enforce one the parties actually made.

## Conclusion

The Florida Supreme Court held that a dissolution court cannot, by decree alone, change alimony’s federal tax treatment, but it may enter and enforce a judgment that reflects an explicit, federally valid designation by the parties to make otherwise qualifying alimony nondeductible and excludable.


Rykiel v. Rykiel, 838 So. 2d 508 (Fla. 2003)