Because Alimony Is Deductible, but Child-Support and Property-Division Payments Are

question 26

Short Answer

Because alimony is deductible, but child-support and property-division payments are not, attempts are sometimes made to child-support or property-division payments as alimony.

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Definitions:

Variable Costs

Expenses that fluctuate directly with the volume of production or sales, such as raw materials and direct labor costs.

Fixed Costs

Constant expenditures that do not change with the volume of production or sales, such as rent or salaries.

Contribution Margin Ratio

A measure expressing how a product's selling price exceeds variable costs, shown as a percentage of the sales price.

Fixed Expenses

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.