Exercise 10-1 (Algorithmic) (LO. 1)

Casper and Cecile divorced in 2018. As part of the divorce settlement, Casper transferred stock to Cecile. Casper purchased the stock for $157,500, and it had a market value of $252,000 on the date of the transfer. Cecile sold the stock for $220,500 a month after receiving it. In addition Casper is required to pay Cecile $7,875 a month in alimony. He made five payments to her during the year.

What are the tax consequences for Casper and Cecile regarding these transactions?

If an amount is zero, enter "$0".

a. How much gain or loss does Casper recognize on the transfer of the stock? $

b. Does Casper receive a deduction for the $39,375 alimony paid?

c. How much income does Cecile have from the $39,375 alimony received? $

d. When Cecile sells the stock, how much gain or loss does she report? Cecile will report a of $.