ACCT M50 PRINCIPLES OF INCOME TAXATION PRACTICE EXAM | FREE SOLVED ANSWERS
Under a divorce decree executed in 2024, Duron is required to pay $800 of alimony and $400 of child support each month for the next 10 years. In addition, Duron makes a voluntary payment of $200 per month. How much of the total monthly payments are deductible by Duron in 2024?
Under a divorce decree executed in 2024, Duron is required to pay $800 of alimony and $400 of child support each month for the next 10 years. In addition, Duron makes a voluntary payment of $200 per month. How much of the total monthly payments are deductible by Duron in 2024?
Multiple Choice
- a. $0
- b. $200
- c. $400
- d. $800
Correct Answer: A. $0
Explanation: Deductibility of Alimony and Child Support in 2024
Step 1: Understand the rules for alimony and child support deductibility.
For divorce or separation agreements executed after December 31, 2018, alimony payments are not deductible by the payer, and they are not includible in the gross income of the recipient. Child support payments have historically never been deductible by the payer. Voluntary payments not outlined in the divorce decree are also not deductible.
Step 2: Identify the payments made by Duron.
Duron makes the following payments:
- Alimony: $800 per month (as required by the decree)
- Child support: $400 per month (as required by the decree)
- Voluntary payment: $200 per month (not required by the decree)
Step 3: Determine which payments are deductible.
Based on the rules for divorce decrees executed in 2024 (after December 31, 2018), none of the alimony payments are deductible. Child support payments are also not deductible. Voluntary payments are not deductible as they are not part of a legally binding agreement for tax purposes.
Answer:
The correct answer is (a) $0.
ACCT M50 PRINCIPLES OF INCOME TAXATION PRACTICE EXAM FREE SOLVED ANSWERS