Travis and Andrea Were Divorced

question 46

Multiple Choice

Travis and Andrea were divorced. Their only marital property consisted of a personal residence (fair market value of $400,000, cost of $200,000) , and publicly-traded stocks (fair market value of $800,000, cost basis of $500,000) . Under the terms of the divorce agreement, Andrea received the personal residence and Travis received the stocks. In addition, Andrea was to receive $50,000 for eight years. I.
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If the $50,000 annual payments are to be made to Andrea or her estate (if she dies before the end of the eight years) , the payments will qualify as alimony.
II)
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Andrea has a taxable gain from an exchange of her one-half interest in the stocks for Travis' one-half interest in the house and cash.
III)
If Travis sells the stocks for $900,000, he must recognize a $400,000 gain.

• A)Only III is true.
• B)Only I and III are true.
• C)Only I and II are true.
• D)I, II, and III are true.
• E)None of these are true.

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