Under the alimony rules:
A) To determine whether a cash payment is alimony, one must consult the state laws that define alimony.
B) A person who receives a property division has experienced an increase in wealth and thus should be subject to tax.
C) Alimony paid per a 2015 divorce agreement is included in the gross income of the recipient of the payments.
D) A person who earns $90,000 and pays $20,000 in alimony per a divorce agreement entered into in 2019, is allowed to deduct the $20,000.
E) None of these.

Question

Quizplus · Accepted Answer

Under the tax laws effective before 2019, alimony payments were deductible by the payer and included in the recipient's gross income. However, for agreements entered into after December 31, 2018, alimony is neither deductible by the payer nor taxable to the recipient. Since the agreement in option C is from 2015, the old rules apply, making the alimony taxable to the recipient.

Under the Alimony Rules