Question
I am using the federal taxation 2018 edition
1. Alimony. As a result of their divorce, Fred agreed to pay alimony to Tammy of $20,000 per year. The payments are to cease
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Answer #1

(a)

If the divorce is covered by prior law (divorce completed before 31st December 2018) then the $20,000 will be a AGI deduction for Fred and the same is taxable in hands of Tammy

(b)

If the divorce is covered by New law (divorce completed after 31st December 2018) then the $20,000 payment will not be allowable for AGI deduction to Fred and also not taxed in the hands of Tammy

(c)

Tammy's basis in the residence will be sane as the basis of Fred in that residence before transfer

So Basis is $100,000

(d)

Tax advisor helps in understanding the after tax implications on both the parties of divorce.

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