Travis and Andrea Were Divorced in 2016

question 104

Multiple Choice

Travis and Andrea were divorced in 2016. Their only marital property consisted of a personal residence fair market value of $400,000, cost of $200,000) , and publicly-traded stocks fair market value of $800,000, cost basis of $500,000) . Under the terms of the divorce agreement, Andrea received the personal residence and Travis received the stocks. In addition, Andrea was to receive $50,000 for eight years.
I. If the $50,000 annual payments are to be made to Andrea or her estate if she dies before the end of the eight years) , the payments will qualify as alimony.
II. Andrea has a taxable gain from an exchange of her one-half interest in the stocks for Travis' one-half interest in the house and cash.
III. If Travis sells the stocks for $900,000, he must recognize a $400,000 gain.

• A) Only III is true.
• B) Only I and III are true.
• C) Only I and II are true.
• D) I, II, and III are true.
• E) None of these are true.

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Definitions:

Insufficient Funds

Insufficient funds occur when an account does not have enough money to cover drafts against it, leading to a bounce check or declined transaction.

Adjusted Cash Balance

A financial statement figure that reflects the actual amount of cash available, adjusted for items like outstanding checks or deposits in transit.

Check Register

A record, usually part of a checkbook, that allows individuals or businesses to track their deposits and withdrawals.

Service Charge

A fee collected for services provided, which may relate to banking, hospitality, or utilities.