Jim and Nora,residents of a Community Property State,were Married in Early

question 122

Multiple Choice

Jim and Nora,residents of a community property state,were married in early 2009.Late in 2009 they separated,and in 2011 they were divorced.Each earned a salary,and they received income from community owned investments in all relevant years.They filed separate returns in 2009 and 2010.

• A) In 2010, Nora must report only her salary and one-half of the income from community property on her separate return.
• B) In 2010, Nora must report on her separate return one-half of the Jim and Nora salary and one-half of the community property income.
• C) In 2011, Nora must report on her separate return one-half of the Jim and Nora salary for the period they were married as well as one-half of the community property income and her income earned after the divorce.
• D) In 2011, Nora must report only her salary on her separate return.
• E) None of the above.

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Definitions:

Foreign Exchange

Foreign money needed to carry out international transactions.

Currency

A system of money in general use in a particular country, facilitating the exchange of goods and services.

Corporate Form

A legal structure for businesses characterized by limited liability for its shareholders, perpetual succession, and the potential to raise capital through the sale of stock.

Personal Liability

The legal responsibility individuals have to fulfill the obligations of debt or other legal responsibilities personally, risking personal assets.