Exam 11: Tax Consequences of Separation and Divorce

A contingency is an event that will occur.

Alimony is not deductible if divorced parties are living in the same home after the one-month grace period.

Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's realized gain is:

Match each numbered entry with the most relevant lettered entry below -not liable for errors on tax return

Match each numbered entry with the most relevant lettered entry below -improper alimony deduction

Alimony is deductible by the recipient.

Match each numbered entry with the most relevant lettered entry below -the result before allowable deductions

What is recapture?

What are the tax consequences of property division to the transferor and transferee?

To tax effect a clause is to pay the taxes called for in that clause.

An instrument is a formal written document that gives expression to or embodies a legal act or agreement (e.g., contract, will).

Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's adjusted basis is:

Ex-spouses are jointly and severally liable for taxes due on a joint return unless the innocent spouse rule applies.

Recapture is the recalculation of a tax liability in order to add a deduction (or other tax benefit) to which the taxpayer was entitled.

A reduction in a payment will be treated as child support (regardless of how it is labeled by the parties) if the reduction will occur upon the happening of a relating to a child.

When is appreciation realized?

Match each numbered entry with the most relevant lettered entry below -formal document

What is fair market value?

Match each numbered entry with the most relevant lettered entry below -together and individually

For an alimony payment to be deductible, there must be no obligation to make the payment (in cash or other property) after the of the recipient.