Question: Mr. and Mrs. TB are going through an amicable divorce. Mrs. TB, who is a full-time homemaker, will have custody of their two children, ages

Mr. and Mrs. TB are going through an amicable divorce. Mrs. TB, who is a full-time homemaker, will have custody of their two children, ages 2 and 4. She suggested that Mr. TB pay $4,000 child support each month. He countered by offering to pay $1,600 child support and $3,000 alimony each month if he can claim their two children as dependents. In either case, Mrs. TB will qualify as a head of house-hold. Mr. TB’s taxable income averages $150,000, putting him in the 28 percent marginal tax bracket.
a. Compute Mr. TB’s annual after-tax cost and Mrs. TB’s annual after-tax cash ﬂow if he pays her $4,000 monthly child support and she claims their children as dependents.
b. Compute Mr. TB’s annual after-tax cost and Mrs. TB’s annual after-tax cash ﬂow if she accepts his counterproposal.

Step by Step Solution

★★★★★

3.34 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Mr TBs annual aftertax cost of the nondeductible child support payments is 48000 Mrs TBs afte... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

576-L-B-L-T-L (2373).docx

120 KBs Word File

Students Have Also Explored These Related Business Law Questions!

Mr. and Mrs. Gresko started Gresko Toys in the early 1 960s. Initially, the company was small and few toys were produced. The talent and skills of Mr. Gresko were by far the major assets of the...

Mr. and Mrs. Holowaty, a Canadian couple, stopped at McDonald's for breakfast while traveling through Rochester, Minnesota. Mr. Holowaty purchased a cup of coffee containing the warnings "HOT!" and...

Mr. and Mrs. CS operate a hardware store in a jurisdiction that levies both a sales tax on retail sales of tangible personality and an annual personal property tax on business tangibles. The personal...

Comprehensive Income Tax Course: Module 1 4. Randy turned 16 last year and had his first summer job. Even though his parents are claiming him as a dependent he wants to file a return in order to get...

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

Issue Recognition Problems Identify the tax issue or issues suggested by the following situations and state each issue in the form of a question. Mr. and Mrs. TB have an 11-year-old child. The couple...

Mr. and Mrs. TB have an 11-year-old child. The couple is divorced, and Mrs. TB has sole custody of the child. However, Mr. TB pays his former wife $1,200 child support each month. Identify the tax...

TB ES Qu. 08-156 (Static) During all of 2021, Mr. and Mrs. Clay... During all of 2021, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of...

4G 15:00 E . Background You are a tax consultant and practitioner at a tax firm in Johannesburg. Your manager has requested you to assist with a client's tax calculation for the year ending 28...

2006 National Institute of Standards and Technology Technology Administration Department of Commerce Baldrige National Quality Program Arroyo Fresco Community Health Center Case Study 2006 National...

1. Suzanne Howard and Donald Peterson phased in permanent cross-functional teams in Wichita. What types of teams are the problem chats and SPITS groups? What stage or stages of team development did...

Use the RIA Checkpoint Citator 2nd to evaluate the 2002 Gwendolyn A. Ewing Tax Court case. a. What is its citation and what tax issues does the case address? b. What is the cases direct judicial...

Clyde had worked for many years as the chief executive of Red Industries, Inc., and had been a major shareholder. Clyde and the company had a falling out, and Clyde was terminated. Clyde and Red...

Stacey is a suspect in an embezzlement investigation. The police believe that she has hidden evidence in her neighbors house, without the neighbors consent. The neighbor will not consent to a search....

On October 21 of the current year, David receives stock of Western Corporation as a gift from his grandfather, who acquired the stock on January 20, 1995. Under what conditions would Davids holding...

The Michigan Corporation owns 20% of the Wolverine Corporation. The Wolverine stock was acquired eight years ago to ensure a steady supply of raw materials. Michigan also owns 30% of Spartan...

On December 31, 2014, Phil purchased $20,000 of newly issued bonds of Texas Corporation for $16,568. The bonds are dated December 31, 2014. The bonds are 9%, 10-year bonds paying interest...

2. Suppose Cisco Systems, Corp. is expected to pay a dividend next year of $1.15 per share. Sales and profits are expected to grow at a rate of 15% for the following two years and then at 6% per year...

2. Use the T table to compute the following. If you can't find an exact answer, give a range. (a) For a T curve on 11 df, the chance of landing to the left of 1.80 is about how much? (b) For a T...

Schwert Corp. shows the following information on its 2017 income statement: sales = $390,000; costs = $295,000; other expenses = $7,900; depreciation expense = $19,900; interest expense = $14,600;...