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Dick and Jane Divorced in 2017

question 44

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Dick and Jane divorced in 2017. At the time of the divorce, Dick had a lawsuit pending. He had filed suit against a former employer for overtime pay. As part of a divorce agreement, Dick agreed to pay Jane one-half of the proceeds from the lawsuit. In 2019, Dick collected $250,000 from the former employer and paid Jane $125,000. What are the tax consequences from Dick's receiving the $250,000 and then paying Jane the $125,000?


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