Glenn and Vera Divorce During the Current Year

Multiple Choice

Glenn and Vera divorce during the current year.Per their divorce agreement,Glenn receives their former personal residence valued at $180,000 with a basis of $100,000.Also,Glenn will pay Vera $5,000 annually for eight years.If Vera dies before the end of the eight years,the balance of the payments is to be paid to Vera's estate in a lump sum.The couple has not lived together for the past two years.

A) Glenn can deduct $5,000 annually for alimony paid to Vera.
B) Vera can deduct $40,000 (1/2 of the unrealized gain on the house) .
C) Vera does not recognize any income from the property and/or cash transactions.
D) Vera must recognize $40,000 as a gain on the disposition of her interest in the house.
E) Vera must recognize all the cash received as alimony income.