Chapter 3 - Gross Income Inclusions Flashcards
Alimony is an “above the line” tax deduction for the…
payer.
Alimony is included in the gross income of the _____________ to the alimony income.
recipient
In order for a payment to be considered alimony, there has to be a…
written agreement between both parties.
In order for a payment to be considered alimony, it has to be made in…
cash payments. An exchange of property is not considered alimony.
Can ex-spouses live together or file a joint tax return for payments to be considered alimony?
No
Alimony payments can not continue beyond the recipients…
death.
Can child support payments be considered alimony?
No. Payments are not designated as child support.
Alimony payments will be considered “excess” if they violate the…
front loading rules.
With respect to alimony payments, front-loading rules are triggered if there is a drop of more than ____________ in alimony in either the second or the third year after a divorce.
$15,000
A recapture occurs only in the _______ year the alimony payment is made.
third
What is the recapture formula for excess alimony payments?
Income = (Year1 + Year2) - (2 x Year3) - $37,500
If you transfer a life insurance policy to Kristen after a divorce, you will ______ receive a deduction and Kristen will ______ be taxed on the policy.
not
Why? Because the transfer is considered a property settlement.
If you transfer a life insurance policy to Kristen after a divorce and you continue to pay the premiums on the life policy, then…
you will be able to deduct that money as alimony on your taxes.
What is the “only” way you can get a deduction for the premiums you pay on a life insurance policy?
If I transfer ownership to Kristen.
Child-support payments are ________ deductible by the paying father.
never
Excess alimony payments are never done using…
pro rata.
The interest portion of an annuity payment is taxed as…
ordinary income.
The “return of capital” (your own money) portion of an annuity payment is given…
tax-free.