Sonya and Butch divorce during 2018. Their 2018 divorce agreement requires Sonya to pay Butch alimony of $2,500 monthly. When their son, Bubba, attains the earliest of either the age 23 or graduates from college, the payments will cease.
I.Butch must recognize gross income of $2,500 monthly.
II.Sonya may deduct $2,500 monthly from her gross income.
III.Butch will not recognize any gross income due to the payments.

Question

Sonya and Butch divorce during 2018. Their 2018 divorce agreement requires Sonya to pay Butch alimony of $2,500 monthly. When their son, Bubba, attains the earliest of either the age 23 or graduates from college, the payments will cease.
I.Butch must recognize gross income of $2,500 monthly.
II.Sonya may deduct $2,500 monthly from her gross income.
III.Butch will not recognize any gross income due to the payments.
​

Quizplus · Accepted Answer

Under the Tax Cuts and Jobs Act, for divorce agreements executed after December 31, 2018, alimony payments are not deductible by the payer and are not included in the recipient's gross income. Since the divorce occurred in 2018, Butch will not recognize any gross income from the payments.

Sonya and Butch Divorce During 2018