Mike and Karen Were Divorced

question 80

Multiple Choice

Mike and Karen were divorced.Their only marital property was a personal residence with a fair market value of $1.5 million and a cost of $575,000.Under the terms of the divorce agreement,Mike would receive the house and Mike would pay Karen $125,000 each year for 5 years,or until Karen's death,whichever should occur first.Mike and Karen were not living together when the payments were made by Mike.Mike paid the $625,000 to Karen over the five-year period.Mike's recognized gain from the transfer of the house to him is:

• A)$ 0.
• B)$ 575,000.
• C)$ 925,000.
• D)$1,500,000.

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Definitions:

Quartz

A very common rock-forming silicate mineral consisting of crystalline silica.

Feldspar

A very common rock-forming silicate mineral that is abundant in most igneous and metamorphic rocks and some sedimentary rocks.

Calcite

A common rock-forming calcium carbonate mineral occurring in limestone and a variety of water-related deposits.

Scratch Test

A method used in geology to determine the hardness or mineral composition of rock samples by scratching them with a harder material.