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Dick and Jane Are Divorced in 2010

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Essay

Dick and Jane are divorced in 2010.At the time of the divorce,Dick had a lawsuit pending.He had filed suit against a former employer for overtime pay.As part of a divorce agreement,Dick agreed to pay Jane one-half of the proceeds from the lawsuit.In 2011,Dick collected $250,000 from the former employer and paid Jane $125,000.What are the tax consequences for Dick receiving the $250,000 and then paying Jane the $125,000?


Definitions:

Successive Concessions

A negotiation strategy where each party makes gradual concessions to reach an agreement.

Resistance Point

The price beyond which a negotiator is unwilling to go during a negotiation.

Fatigue Point

The moment at which physical or mental weariness reduces effectiveness or the ability to continue.

Distributive Bargainers

Negotiators who view the process as a fixed pie where any gain by one party is made at the expense of the other, promoting competitive tactics.

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