Under the terms of a divorce agreement dated January 1, 2018, Edmond was to pay his wife Donna $3,000 per month in alimony and $500 per month in child support. Payments began on January 1, 2018. In addition, Donna received the family residence with a cost basis of $210,000 and a fair market value of $260,000.a.What is the amount that Donna must include in income for the twelve-month period ended December 31, 2018?b.What is the basis in the home which Donna received as a result of the divorce?
What will be an ideal response?
| a. | Alimony, which is taxable to Donna and must be included in income, is $3,000 per month × 12 |
| b. | The basis in the home received in the property settlement (which is not taxable) is $210,000, the |
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