Charles and Camilla Got Divorced in 2018

question 27

Multiple Choice

Charles and Camilla got divorced in 2018.Under the terms of the decree Charles pays Camilla $50,000 in cash in each of the next five years (or until Camilla's death or remarriage) .In addition,Charles will transfer a castle worth $2,000,000 to Camilla and pay $12,000 per year to support their son,Clyde,until he turns 19 years old.What amount (if any) is included in Camilla's gross income this year?

• A)$2,062,000
• B)$12,000
• C)$50,000
• D)$2,050,000
• E)None of the payments are included in gross income

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Definitions:

Profit

The financial gain made in a transaction or operation, calculated as total revenues minus total costs.

Production Function

A mathematical relationship expressing the amount of output generated from different amounts of inputs.

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Commodity

A fundamental merchandise in commerce that can be swapped with other merchandise of a similar nature.