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24 August, 14:38

John and Mary were divorced in 2017. The divorce decree (executed 6/30/2017) provides that John pay alimony of $10K per year, to be reduced by 20% of on their child's 18th birthday. During the CY, the $10K was paid in the following way: John paid $7K directly to Mary and $3K to Spring College for Mary's tuition. What amount of these payments should be reported as income for Mary's CY income tax return?

A. $5,600

B. $8,000

C. $8,600

D. $10,000

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Answers (1)
  1. 24 August, 14:47
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    correct answer is B. $8,000

    Explanation:

    given data

    John pay alimony = $10000 per year

    reduced on child's 18th birthday = 20%

    paid directly = $7000

    paid Spring College for tuition = $3000

    solution

    as here he paid to divorce agreement before 31/12/2018 and that would be income to mary while their child support not

    and fund amount qualify as child support only on these condition

    any specific amount fix

    paid solely for support minor child

    it payable by the decree or agreement

    so here reduced on child's 18th birthday

    so qualify as child support = 20% of $10000 = $2000

    so remaining $8000 is alomony and that will be income to Mary

    so here correct answer is B. $8,000
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