Deck 11: Tax Consequences of Separation and Divorce

Question 1

What are the tax consequences of alimony to the payor and payee?

Answer 1

The payor can deduct alimony payments. The payee must report it as income and pay taxes on it.

Question 2

Deductible alimony can include stock transferred for the use of support.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000.

A)Sam's basis is $150,000
B)Sam's basis is $260,000
C)The appreciation is $60,000
D)The appreciation is $50,000

Question 5

Alimony is deductible by the recipient.

Question 6

The payment of alimony is added to the payor's adjusted gross income.

Question 7

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

Question 8

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

Question 9

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:

Question 10

Name some "alimony" payments tied to contingencies that relate to a child and that, therefore, are nondeductible.

Question 11

The price that can be obtained for property by a willing buyer and willing seller is called:

A)basis
B)fair market value
C)adjusted basis
D)appreciation

Question 12

What is recapture?

Question 13

List the seven requirements for deductible alimony.

Question 14

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

Question 15

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

Question 16

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

Question 17

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:

Question 18

Alimony payments not made directly to a spouse cannot be deductible.

Question 19

What are the tax consequences of child support to the payor and payee?

Question 20

A contingency is an event that will occur.

Question 21

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
not liable for errors on tax return

Question 22

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
formal document

Question 23

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
improper alimony deduction

Question 24

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
together and individually

Question 25

To effect a clause in an agreement is to determine the tax consequences of that clause.

Question 26

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
something that may or may not occur

Question 27

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
the result before allowable deductions

Question 28

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
occurs within one year after a marriage ends

Question 29

When is appreciation realized?

Question 30

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.

Question 31

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.

Question 32

To load means to make substantial "alimony" payments shortly after the separation or divorce in an attempt to disguise nondeductible property division as deductible alimony.

Question 33

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
the result after allowable deductions

Question 34

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
before the outcome of the litigation is known

Question 35

In a property division as part of a divorce, the basis of the property in the hands of the transferee is the same as the basis of the property in the hands of the .

Question 36

Match each numbered entry with the most relevant lettered entry below
a.contingency
b.incident to divorce
c.must be recaptured
d.instrument
e.adjusted gross income
f.joint and several
g.gross income
h.innocent spouse
i.not living in the same household
j.pendente lite
one of the requirements for deductible alimony

Question 37

What is fair market value?

Question 38

Because alimony is deductible, but child-support and property-division payments are not, attempts are sometimes made to child-support or property-division payments as alimony.