The Underlying Rationale for the Alimony Rules Is That

question 22

Multiple Choice

The underlying rationale for the alimony rules is that:

• A)The income should be taxed to the person with a claim of right to the income.
• B)The income should be taxed to the person who enjoys the benefits of the income.
• C)The fruit and tree metaphor should be rigorously applied.
• D)Alimony is a payment for the taxpayer's property and,therefore,it is taxed to the recipient.
• E)None of the above.

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Definitions:

Current Dollars

The value of money expressed in terms of the purchasing power at the time of reporting, not adjusted for inflation.

Discount

A reduction from the usual cost of something, often applied to promote sales or incentivize early payment.

Investment

Committing financial assets with the objective of receiving income or profit in return.

GIC

A Guaranteed Investment Certificate (GIC) is a Canadian investment that offers a guaranteed rate of return over a fixed period.