@IRonMaN 

Dear Judge FeMan (FE, iron. Got it??):

Now that you've executed the dude, let me ask you this:

What if the man kept a pot of muni bonds and fully use the interest to fund the alimony?  Would the alimony be deductible?

How about the case of an old client of mine, who was hit by a truck and got a judgement (by you, I think) of $100K per year for life, with COLA, 100% for pain and suffering.  He had NO other income and used the funds to buy into a partnership interest.  Was his investment in the partnership at risk? 

How about the stock he bought with the tax-free pain money?  Did he get any basis for the stock?  (Well, it turned out to be moot because he went all in with Enron anyway, but that was another story.)

NO research here. But did you ask counsel whether:

1.  Sec 125 allowed such arrangement?

2.  Did that particular 125 plan allow such an arrangement?

IF Yes and Yes, wouldn't it worth to entertain an argument that, by the grace of his employment, as he was entitled to such a tax perk, shouldn't the Alimony deduction be allowed??

Of course, going by what you said in one of your prior postings, because my avatar  is a cartoon provided by Lacerte, my comments are NOT binding.  Especially right before the drop dead day and AFTER my daily regimen of you know what.

That said, if I were to rule on this, I will:

1.  Call Lacerte Support; and

2.  Take out my luckiest quarter, and - quoting Anton Chigurh - tell the dude: "Just call it, Friendo".

But then, OMG, you have executed him!!!!

Sincerely,

Just A barking dog. (JABD)