Under the terms of a divorce agreement entered into in 2017, Lanny was to pay his wife Joyce $2,000 per month in alimony and $500 per month in child support.For a 12-month period, Lanny can deduct from gross income (and Joyce must include in gross income):
A)$0.
B)$6,000.
C)$24,000.
D)$30,000.
E)None of these.

Question

Quizplus · Accepted Answer

Lanny can deduct the $2,000 per month in alimony payments for a total of $24,000 for the 12-month period. Joyce must include this same $24,000 in her gross income. The $500 per month in child support payments are not deductible for Lanny and not taxable for Joyce, so they have no impact on the overall calculation. Therefore, the correct answer is $24,000.

Under the Terms of a Divorce Agreement Entered into in 2017