Under the Terms of a Divorce Agreement, Lanny Was to Pay

question 28

Multiple Choice

Under the terms of a divorce agreement, Lanny was to pay his wife Joyce $2,000 per month in alimony and $500 per month in child support. For a twelve-month period, Lanny can deduct from gross income (and Joyce must include in gross income) :

• A)$0.
• B)$6,000.
• C)$24,000.
• D)$30,000.
• E)None of these.

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Definitions:

Common Shares Outstanding

The total number of shares of common stock currently held by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders.

Additional Paid-In Capital

The excess of the amount paid by investors over the par value of a stock during equity issuance.

Hazardous Substances

Materials that can pose a risk to human health or the environment when not properly managed, including toxic, corrosive, or flammable chemicals.