Sonya and Butch Divorce During the Current Year

question 139

Multiple Choice

Sonya and Butch divorce during the current year.Their divorce agreement requires Sonya to pay Butch alimony of $2,500 monthly.When their son,Bubba,attains the earliest of either the age 23 or graduates from college,the payments will cease.
I.Butch must recognize gross income of $2,500 monthly.
II.Sonya may deduct $2,500 monthly from her gross income.
III.Butch will not recognize any gross income due to the payments.
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• A)Only statements I and II are correct.
• B)Only statement I is correct.
• C)Only statement II is correct.
• D)Only statement III is correct.