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.
​

• 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.

---

Definitions:

Addicted Smokers

Individuals who have developed a physical and psychological dependence on nicotine found in cigarettes and find it difficult to quit smoking.

Quitting

The act of stopping or giving up a habit or activity, often used in the context of cessation of smoking or substance use.

Inaccurate Estimates

Faulty calculations or judgments about the magnitude or frequency of a particular event or phenomenon.

Short Run

A time period in economic analysis during which at least one input is fixed, affecting the operation of firms and markets.