Tim and Janet were divorced.Their only marital property was a personal residence with a value of $100,000 and cost of $40,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $10,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."
A)Tim must recognize a $30,000 [$50,000 - 1/2($40,000)] gain on the sale of his interest in the house.
B)Tim does not recognize any income from the above transactions.
C)Janet is allowed to deduct $10,000 each year for alimony paid.
D)Janet is not allowed any alimony deductions.
E)None of the above.

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The Answer of Tim and Janet were divorced.Their only marital property was a personal residence with a value of $100,000 and cost of $40,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $10,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."
A)Tim must recognize a $30,000 [$50,000 - 1/2($40,000)] gain on the sale of his interest in the house.
B)Tim does not recognize any income from the above transactions.
C)Janet is allowed to deduct $10,000 each year for alimony paid.
D)Janet is not allowed any alimony deductions.
E)None of the above.

Tim and Janet Were Divorced