Question

Exercise 4-23 (Algorithmic) (LO. 4) Casper and Cecile divorced in 2018. As part of the divorce settlement, Casper transferred stock to Cecile. Casper purchased the stock for $192,500, and it had a market value of $308,000 on the date of the transfer. Cecile sold the stock for $269,500 a month after receiving it. In addition Casper is required to pay Cecile $9,625 a month in alimony. He made five payments to her during the year. What are the tax consequences for Casper and Cecile regarding these transactions? If an amount is zero, enter "$0". a. How much gain or loss does Casper recognize on the transfer of the stock? b. Does Casper receive a deduction for the $48,125 alimony paid? c. How much income does Cecile have from the $48,125 alimony received? d. When Cecile sells the stock, how much does she report? Cecile will report a of $

Answer 1

a.)	Gain or loss of $ 0 , because Anything paid under alimony other than cash is not taxable .
b.)	Yes, Casper will receive deduction for the $ 48,125 alimony paid.
c.)	$ 48,125 . The alimony received from Casper is included in Cecile’s gross income
d.)	Cecile will report a Capital gain of $ 77,000 . ( 269,500 - 192,500 ).