Deck 9: Investigation in a Law Office

Question 1

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

Answer 1

False

Question 2

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:

A) $200,000.
B) $250,000.
C) $260,000.
D) $150,000.

Answer 2

B

Question 3

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

Answer 3

False

Question 4

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

Question 5

List the seven requirements for deductible alimony.

Question 6

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

Question 7

Alimony is not deductible if paid and received by divorced parties living in the same home after the one-month grace period.

Question 8

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:

A) $50,000.
B) $260,000.
C) $10,000.
D) $150,000.

Question 9

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

Question 10

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

Question 11

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 12

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

Question 13

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

Question 14

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 15

Alimony is deductible by the recipient.

Question 16

What is recapture?

Question 17

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

Question 18

A contingency is an event that will occur.

Question 19

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 20

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

Question 21

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 22

When is appreciation realized?

Question 23

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 24

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.

Question 25

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 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
29. improper alimony deduction
30. the result after allowable deductions
31. together and individually
32. not liable for errors on tax return
33. one of the requirements for deductible alimony
34. before the outcome of the litigation is known
35. the result before allowable deductions
36. something that may or may not occur
37. formal document
38. occurs within one year after a marriage ends

Question 27

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

Question 28

What is fair market value?

Question 29

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.