In the case of Commissioner of Internal Revenue v. Lester (1960), the U.S Supreme Court ruled on whether alimony payments were considered taxable income under Section 22(k) of the Internal Revenue Code. The respondent, Mr. Lester, had been making periodic payments to his ex-wife as part of a divorce settlement but did not include these in his gross income for tax purposes. The IRS argued that these should be included as they fell within the definition provided by Section 22(k). However, Mr. Lester contended that since there was no legal obligation for him to continue making these payments upon his ex-wife's death, they did not meet all conditions stipulated in Section 22(k) and thus should not be taxed. The Supreme Court sided with Mr.Lester stating that all conditions outlined in section 22(k) must be met for such payments to qualify as taxable income - including an obligation to continue payment after death which was absent from this agreement between parties involved here.

In the dissenting opinion for Commissioner of Internal Revenue v. Lester, Justice Whittaker disagreed with the majority's interpretation of Section 22(k) of the Internal Revenue Code. He argued that alimony payments should not be considered income to the recipient unless they are specifically designated as such in a divorce decree or written agreement between parties. According to him, this was necessary because it would prevent unfair taxation on individuals who receive these payments without any control over their amount or frequency. Furthermore, he emphasized that Congress intended for alimony payments to be treated differently from other forms of income and thus should not be subject to tax under general principles applicable to ordinary income items. Therefore, he believed that the Court’s decision contradicted legislative intent and unfairly burdened divorced individuals receiving alimony.