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Marisa and Kurt Divorced in 2013

question 109

Essay

Marisa and Kurt divorced in 2013.Under the terms of the divorce agreement,Marisa was to pay Kurt $110,000 in 2013 and $60,000 each year following until Kurt's death or remarriage.What must Kurt report on his tax return for 2015 regarding these transactions?


Definitions:

Net Present Value

A calculation used to assess the profitability of an investment, measuring the difference between the present value of cash inflows and outflows over a period of time.

Payback Period

The time required for the return on an investment to repay the sum of the original investment.

Annual After-Tax Net Income

The amount of money a company earns in one year after all expenses and taxes have been deducted.

Profitability Index

A calculation that measures the relative profitability of an investment by dividing the present value of its future cash flows by the initial investment cost.

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