Assuming the payments are considered alimony, the entire amount would be taxable to the recipient in the year received.
I think that, by relieving the spouse of future responsibility, there is a chance that the payment would not be considered alimony. That's why we are suggesting you follow up with a CPA, enrolled agent, or tax attorney.
The payor and the recipient have the option, of declaring in the written settlement, that the payment is "not alimony" and is not deductible by the payor and is not income to the recipient. If you want it to not be alimony, put that clearly in writing. However, if you want the settlement to be alimony, and to be deductible by the payor, then it has to be equally taxable to the recipient, and that's where you may want specialist advice.
