Steve and Laura were divorced in 2008. Laura pays Steve alimony of $1,200 a month. The payment amount was agreed upon in the decree of divorce. To save money, Steve and Laura still live together. Are the alimony payments that Steve receives in 2014 includable in his income? Can Laura take a deduction for alimony paid?
A) Yes, the payments meet all alimony payment requirements.
B) Yes, alimony is always taxable.
C) No, only some of it is tax-exempt because Laura pays Steve too much alimony.
D) No, since Steve and Laura still live together, the payments are not considered alimony.
E) Yes, alimony payments are not tax-exempt.
Correct Answer:
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