Ralph and Renee Are Negotiating a Divorce Settlement That Will

Multiple Choice

Ralph and Renee are negotiating a divorce settlement that will be finalized in 2018. Renee has an option of taking a property settlement of $100,000 or alimony payments of $12,000 per year for 10 years. Without considering the time value of money, which of the following statements is true?
I.If Renee expects that she will be in the 32% marginal tax bracket, she should take the property settlement of $100,000.
II.If Renee expects that she will be in the 32% marginal tax bracket, she should take the alimony of $12,000 per year for 10 years.
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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.