Former American Idol host challenges IRS denial of $280,000 alimony deduction

Randy D. Jackson v. Commissioner. United States Tax Court. No. 3722-26.

The disagreement revolves around whether Jackson’s divorce agreement is subject to the previous tax rules for alimony. While Congress removed the alimony deduction starting in 2019, older agreements could still qualify for the deduction if they weren’t later changed.

Holding

Randy Jackson filed a Tax Court petition to challenge an IRS notice that denied his $280,000 alimony deduction for 2022 and added a §6662(a) accuracy-related penalty.

Why It Matters

• The case highlights continuing disputes over the Tax Cuts and Jobs Act's elimination of the alimony deduction for post-2018 divorce agreements.

• The factual issue is narrow but important: whether the marital settlement agreement was executed before January 1, 2019, and remained unmodified afterward.

• The petition shows how IRS examinations continue to scrutinize older divorce agreements that contain stepped-up support obligations beginning after 2018.

• The dispute appears procedural rather than novel. The taxpayer claims he already provided the operative agreement and bank records substantiating payment. Humans and institutions both excel at losing documents while insisting they never existed. Civilization marches on.

Key Facts

• Jackson and his former spouse, Erika Jackson, dissolved their marriage under a California stipulated judgment entered on December 27, 2018.

• The marital settlement agreement required Jackson to pay spousal support beginning January 1, 2018.

• The agreement increased the support obligation beginning January 1, 2022.

• Jackson alleges he paid $280,000 of spousal support during 2022.

• The petition states the agreement “was neither amended nor modified” after execution in 2018.

• The IRS issued an audit letter in April 2025 stating that alimony paid under agreements executed after December 31, 2018, or agreements modified afterward, is not deductible.

• The IRS later issued a notice of deficiency asserting $103,600 in additional tax and a $20,720 accuracy-related penalty.

Statutory or Regulatory Framework

• Before the Tax Cuts and Jobs Act, alimony generally was deductible by the payor under former §215 and includible in income by the recipient under former §71.

• The Tax Cuts and Jobs Act repealed the deduction for divorce or separation instruments executed after December 31, 2018.

• Pre-2019 agreements can remain grandfathered into the old rules unless later modified and the modification expressly adopts the new treatment.

• §6662(a) imposes a 20% accuracy-related penalty for certain underpayments, including negligence or substantial understatement of income tax.

• §7491(a) can shift the burden of proof to the IRS if the taxpayer introduces credible evidence and satisfies substantiation and recordkeeping requirements.

Arguments

Taxpayer argued:

• The marital settlement agreement was executed in 2018 before the statutory cutoff date.

• The agreement was never amended or modified after execution.

• The increased support obligation beginning in 2022 arose from the original agreement itself, not from a later modification.

• Jackson substantiated payment through bank records and ACH transfer documentation.

• The accuracy-related penalty should not apply.

Government argued:

• The IRS examination correspondence stated that alimony paid under agreements executed after December 31, 2018, or modified after that date, is nondeductible.

• The notice of deficiency disallowed the deduction and imposed a §6662(a) penalty.

Court’s Reasoning

The Tax Court has not yet issued a substantive opinion. The filing only reflects the taxpayer’s allegations and requested relief. Still, the petition frames the likely issues the Court will evaluate:

• Whether the operative divorce instrument qualifies for grandfathered treatment under pre-2019 alimony rules.

• Whether the 2022 increase in support obligations was built into the original agreement or resulted from a later modification.

• Whether the taxpayer adequately substantiated actual payment of the support amounts claimed.

• Whether the IRS properly applied the accuracy-related penalty.

• Whether the taxpayer satisfied the requirements for burden shifting under §7491(a).

Result

The case is still pending in the United States Tax Court. Jackson is asking the Court to reverse the tax and penalty fully.

The Takeaway

Most current alimony deduction disputes involve agreements made before 2019. This case shows that taxpayers must prove when the agreement was signed and that it was not changed later in a way that would trigger the new rules. An increase in support does not end the old treatment if it was already part of the original agreement. Small details in these agreements can have big tax effects. People created romance, divorce, and complex tax laws. It’s quite something.

List of Citations

• §215 (pre-TCJA) — formerly allowed deductions for qualifying alimony payments.

• §71 (pre-TCJA) — formerly required recipients to include alimony in income.

• Tax Cuts and Jobs Act of 2017 — repealed alimony deductions for post-2018 divorce instruments.

• §6662(a) — imposes accuracy-related penalties.

• §7491(a) — governs burden shifting when taxpayers provide credible evidence.