Answer the following questions:

a. Under a 2017 divorce agreement, Joan is required to pay her ex-husband, Bill, $700 a month until their daughter is 18 years of age. At that time, the required payments are reduced to $450 per month.

1. How much of each $700 payment may be deducted as alimony by Joan?

$_________.

2. How much of each $700 payment must be included in Bill’s taxable income?

$_________.

3. How much would be deductible/included if the divorce agreement were dated 2019?

$_________.

b. Under the terms of a property settlement executed during 2018, Jane transferred property worth $450,000 to her ex-husband, Tom. The property has a tax basis to Jane of $425,000.

1. How much taxable gain must be recognized by Jane at the time of the transfer?

$_________.

2. What is the amount of Tom’s tax basis in the property he received from Jane?

$_________.