Taxes-by-Rocky
Level 7

Assuming that the funds used to make the "alimony payment" were the same as those directed to the Section 125 plan, I still think I would argue that the taxpayer had no basis in the "funds" since he never received (had control over) the funds in the first place (but for, perhaps, a plan election).  Looked at another way (using the court's apparent logic), it's about the equivalent of something that might fall under the anticipatory assignment of income doctrine......and step transaction doctrine....just saying..

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