Problem 2-8 (Algorithmic) Alimony (LO 2.3)

Answer the following questions, assuming that the related divorce agreements were executed during 2016.

If your answer is zero, enter "0".

a. Under a divorce agreement, Joan is required to pay her ex-husband, Bill, $3,055 a month until their daughter is 18 years of age. At that time, the required payments are reduced to $2,139 per month.

1. How much of each $3,055 payment may be deducted as alimony by Joan? $

2. How much of each $3,055 payment must be included in Bill's taxable income? $

b. Under the terms of a property settlement executed during 2016, Jane transferred property worth $366,300 to her ex-husband, Tom. The property has a tax basis to Jane of $293,040.

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? $