Under the Terms of a Divorce Agreement, Ron Is to Pay

Multiple Choice

Under the terms of a divorce agreement, Ron is to pay his former wife Jill $10,000 per month. The payments are to be reduced to $7,000 per month when their 15 year-old child reaches age 18. During the current year, Ron paid $120,000 under the agreement. Assuming all of the other conditions for alimony are satisfied, Ron can deduct from gross income (and Jill must include in gross income) as alimony:

A) $120,000.
B) $84,000.
C) $36,000.
D) $0.
E) None of these is correct.