Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 54-53

1954-1 C.B. 156

Sec. 871

Sec. 1441

Full Text

Rev. Rul. 54-53

An individual who is not a United States citizen and who resides in Sweden receives periodic alimony payments from an intervivos trust established in the United States by her former husband for the purpose of making the payments. Such payments are taxable by the Swedish authorities under the revenue laws of that country. Such payments also constitute fixed or determinable annual or periodical income subject to the United States income tax. See Girard Trust Corn Exchange Bank, as trustee of a trust under deed of Albert R. Gallatin Welsh dated March 19, 1935 v. Commissioner , 194 Fed.(2d) 708, certiorari denied 344 U.S. 821. Held , periodic alimony payments are not exempt from United States income tax under any of the provisions of the tax convention and protocol between the United States and Sweden, proclaimed by the President of the United States December 12, 1939, effective January 1, 1940. See T.D. 4975, C.B. 1940-2, 43. Accordingly, the alimony payments are subject to United States income tax and to the withholding of such tax at source at the rate of 30 percent. See sections 211(a)(1)(A) and 143(b) of the Internal Revenue Code. Further, Article XX of the convention, provides in part that where action of the competent authorities of the United States and Sweden has resulted or may result in double taxation in respect of any taxes to which the convention relates, such authorities may agree to an equitable avoidance of double taxation. However, such article does not refer to a case where the reason for the double taxation of income is due to the differences in the systems of taxation in the two countries.