Waldo and Fern Are Negotiating a Divorce Settlement

Multiple Choice

Waldo and Fern are negotiating a divorce settlement. Waldo has offered to pay Fern $12,000 each year for a guaranteed 10 years. What are the tax implications of this proposition?
I.Since the payments are periodic and in cash, the payments qualify as alimony.
II.If the payments qualify as child support, Fern recognizes gross income and Waldo has a deduction from Adjusted Gross Income.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.