Question

Bob and Alice Marshall were divorced on March 1, 2018. The following transactions are the terms of the decree:
(a.) Alice will transfer title of the family home to Bob. The house has a fair market value of $80,000.
(b.) Both children will live with Alice.
(c.) Bob will give Alice $2,000 per month for alimony. Also, he is to give Alice $600 per month for child support.
How much (in total) of these amounts will Alice include as income on her 2018 tax return?

Answer 1

Solution:

(a) In the first transaction, the transfer of property does not create or conclude to taxable income.

(b) N/A

(c) Bob will receive a tax deduction for alimony paid. Also, Alice will receive income of $2,000 per month. Child support is not tax deductible nor it will be included in Alice's income. Since, Alice is the Custodial parent, she is entitled to the deduction for both the children.