Tim and Janet Were Divorced

question 32

Multiple Choice

Tim and Janet were divorced.Their only marital property was a personal residence with a value of $100,000 and cost of $40,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $10,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."

• A)Tim must recognize a $30,000 [$50,000 - 1/2($40,000)] gain on the sale of his interest in the house.
• B)Tim does not recognize any income from the above transactions.
• C)Janet is allowed to deduct $10,000 each year for alimony paid.
• D)Janet is not allowed any alimony deductions.
• E)None of the above.

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Definitions:

Locked Rotor Current

The current drawn by an electric motor when the rotor is not turning and power is applied, typically higher than the running current.

Supply Voltage

The electrical potential difference provided to power an electronic circuit or device.

Synchronous Speed

The speed at which the magnetic field in an AC motor rotates, directly related to the frequency of the power supply and the number of poles in the motor.

Alternating Current Frequency

The number of cycles per second in an alternating current (AC) waveform, typically measured in hertz (Hz).