Under the terms of a divorce agreement, Lanny was to pay his wife Joyce $2,000 per month in alimony and $500 per month in child support. For a twelve-month period, Lanny can deduct from gross income (and Joyce must include in gross income):
A)$0.
B)$6,000.
C)$24,000.
D)$30,000.
E)None of these.

Question

Quizplus · Accepted Answer

Lanny can deduct the alimony payment of $2,000 per month, which gives a total of $24,000 for the year. Joyce must include this amount in her gross income. However, the child support payment of $500 per month is not deductible by Lanny and is not included in Joyce's gross income. Therefore, the total amount that Lanny can deduct and Joyce must include in gross income for the year is $24,000.

Under the Terms of a Divorce Agreement, Lanny Was to Pay