Under the Terms of a Divorce Agreement Entered into in 2017

question 73

Multiple Choice

Under the terms of a divorce agreement entered into in 2017, Ron is to pay his former wife Jill $10,000 per month. The payments are to be reduced to $7,000 per month when their 15-year old child reaches age 18.During the current year, Ron paid $120,000 under the agreement.Assuming all of the other conditions for alimony are satisfied, Ron can deduct from gross income (and Jill must include in gross income) as alimony:

• A)$120,000.
• B)$84,000.
• C)$36,000.
• D)$0.
• E)None of these is correct.

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Definitions:

Financial Institution

An establishment that focuses on dealing with financial transactions, such as investments, loans, and deposits.

Security Interest

A legal claim or right granted over assets as collateral for the performance of an obligation or repayment of a debt.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the buyer assumes the risk for the quality and condition of goods purchased unless they are protected by warranty.

Disclosures

The act of making known to the public or to relevant parties important information, often related to financial data or operational details, required by law or regulation.