Waldo and Fern Are Negotiating a Divorce Settlement

question 124

Multiple Choice

Waldo and Fern are negotiating a divorce settlement. Waldo has offered to pay Fern $12,000 each year for a guaranteed 10 years. What are the tax implications of this proposition?
I.Since the payments are periodic and in cash, the payments qualify as alimony.
II.If the payments qualify as child support, Fern recognizes gross income and Waldo has a deduction from Adjusted Gross Income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

Recognize the conditions under which a defense of self-defense is legally justified.

Identify conditions for medical procedures not to be classified as battery.

Understand the concept and characteristics of common resources.

Recognize the difference between common resources and private resources and their impact on resource allocation.

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Definitions:

Accredited Investor

An individual or entity recognized as having the financial sophistication and capacity to bear the risk of investment opportunities that demand less regulatory disclosure.

Securities

Tradable financial assets including stocks, bonds, and options, which represent an investment and a means for entities to raise capital.

Sarbanes-Oxley Act

U.S. legislation enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.

Accounting Standards

Rules and guidelines set by governing bodies that determine how financial transactions and statements are recorded and reported.