Question

Under the terms of a divorce agreement entered into in 2017, Kim was to pay her husband Tom $7,000 per month in alimony. Kim’s payments will be reduced to $3,000 per month when their 9 year-old son becomes 21. The husband has custody of their son. For a twelve-month period, Kim can deduct from gross income (and Tom must include in gross income):___________
A) 60,000
B) 48,000
C) 36,000
D) $0
E) None of these

Answer 1

Answer: C) $36,000

Explanation:

Only alimony payments for the year may be deducted from gross income. Child support may not.

After the child turns 21, Kim pays $3,000 only which means that $3,000 was the alimony amount net of child support.

The yearly deduction is;

= 3,000 * 12

= $36,000