Carolyn, who earns $400,000, is required to pay John, her ex-husband, $200,000 as part of the property settlement as a result of their divorce agreement which was executed in 2018. In turn, John transfers stock worth $50,000 to Carolyn. What is the amount of Carolyn's adjusted gross income in 2018?
A) $200,000
B) $250,000
C) $400,000
D) $450,000
C) $400,000
Neither the transfer of cash to John nor the transfer of stock to Carolyn are taxable events. Thus, only the $400,000 salary is included in Carolyn's adjusted gross income.
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