Topic 25 - Divorced or Separated Individuals

1. Look at the Form 1040 you prepared for Esther Wieder. What is the amount on Form 1040, Line 37?

A. $ 102,075.
B. $ 82,075.
C. $ 62,075. 
D. $ -0-.

2. Look at the Form 1040 you prepared for Esther Wieder. What is the amount on Form 1040, Line 73a?

A. $ -0-.
B. $ 6,443.
C. $ 1,443. 
D. $ 1,573.

3. Todd and Susan divorced on September 1, 2008. As part of the divorce decree, beginning in September, Todd was to make payments of $2,000 per month for the balance of the year to Susan's doctor for recent medical expenses; child support payments of $500 per month, and $1,500 a month for the mortgage payment on a jointly owned home. Susan and the children continue to live in the home. What is the amount that Todd can deduct as alimony for 2008?

A. $8,000.
B. $11,000.
C. $4,200.
D. $9,600.

4. Which of the following items may be considered alimony?

A. Noncash property settlement.
B. Payments you made under a written separation agreement for the mortgage and real estate taxes on a home you owned by yourself and in which your former spouse lived rent-free.
C. Payments made to a third party on behalf of the former spouse for the former spouse's medical expenses.
D. Payments that are your spouse's part of community income.

5. Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include

A. Voluntary payments that are not made under a divorce or separation instrument.
B. Payments for your spouse's medical expenses.
C. Payments for your spouse's housing costs (rent, utilities, etc.), taxes, tuition.
D. Premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy.

6. The term "divorce or separation instrument" means a decree of divorce or separate maintenance or a written instrument incident to that decree, a written separation agreement, or a decree or any type of court order requiring a spouse to make payments for support or maintenance of the other spouse.

True False

7. A property transfer is incident to your divorce if the transfer occurs within one year after the date your marriage ends, or is related to the ending of your marriage. If the property transfer is made under your original or modified divorce or separation instrument and the transfer occurs within 6 years after the date your marriage ends, then the property transfer is

A. Is not alimony.
B. Related to the ending of marriage.
C. Not related to the ending of marriage.
D. None of the above.

8. If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify, you

A. Cannot deduct any of the payments as alimony.
B. Can deduct one-half of the total payments as alimony.
C. You can deduct one-half of the total payments as child support.
D. None of the above.

9. If you must pay all the real estate taxes or insurance on a home held as tenants in common, you

A. Can deduct one-half of these payments as alimony.
B. Cannot deduct any of the payments as alimony.
C. You can tell your spouse that she does not need to report her half of these payments as alimony received.
D. None of the above.

10. Not all payments under a divorce or separation instrument are alimony. Alimony does not include

A. Child support.
B. Noncash property settlements.
C. Payments that are your spouse's part of community income.
D. Any of the above.

11. A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other. Which of the following is not one of the requirements that must be met.

A. The payment is in cash.
B. The instrument does not designate the payment as not alimony.
C. The spouses are not members of the same household at the time the payments are made only if they are legally separated under a decree of divorce or separate maintenance.
D. Must hold a valid divorce decree.

12. If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order

A. Does not qualify as alimony if you are members of the same household when the payments are made.
B. May qualify as alimony even if you are members of the same household when the payments are made.
C. Qualifies as alimony if spouse includes it in income.
D. None of the above.

13. If the transfer of property between former spouses is because of divorce, there is

A. No recognized gain or loss on the transfer of property between spouses.
B. There is recognized gain and it is considered alimony.
C. A gain if the transfer was in exchange for cash.
D. A gain if the transfer was in exchange for assumption of liability.

14. You and your spouse can designate that otherwise qualifying payments are not alimony. You do this by including a provision in you divorce or separation instrument that states that payments are not deductible as alimony by you and are excludable from your spouse's income. Your spouse can exclude the payments from income only if

A. He or she faxes a copy to the IRS and writes "Attention IRS district director" and tell him to designate the payments.
B. He or she calls the IRS to let them know that alimony does not need to be included.
C. He or she attaches a copy of the instrument designating the payments as not alimony to his or her return.
D. He or she does not do anything because as long as a credit is not taken then income does not need to be included.

15. A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument in not alimony. The designated amount or part may vary from time to time. Child support payments are

A. Taxable to the recipient.
B. Neither deductible by the payer nor taxable to the payee.
C. Deductible by the payer.
D. None of the above.

16. You must pay your former spouse $15,000 in cash each year for 10 years. The death of your spouse would not terminate these payments under state law. The $15,000 annual payments

A. Are alimony.
B. Are not alimony because the payments will not end upon former spouse's death.
C. Are alimony because they end at spouse's death.
D. None of the above.

17.  A contingency relates to your child if it depends on any event relating to that child. An event relating to your child is

A. A child becoming employed.
B. A child dying.
C. A child marrying.
D. Any of the above.

18. Your payments may be subject to the recapture rules if they

A. Decrease by more than $15,000 from the second year during the first three calendar years.
B. Decrease significantly in the 2nd or 3rd years from the alimony.
C. Decrease or terminate during the first five calendar years.
D. Either A or B above.

19. A payment will be treated as specifically designed as child support to the extent that the payment is reduced

A. On the happening of a contingency relating to your child.
B. At the time that can be clearly associated with the contingency.
C. Either A or B above.
D. None of the above.

20. The reason for a reduction or termination of alimony payments that can require a recapture is

A. A change in your divorce or separation instrument.
B. A failure to make timely payments.
C. A reduction in your ability to provide support or a reduction in your spouse's support needs.
D. Any of the above.

21. You are subject to the recapture rules in the third year if the alimony you pay in the third year decreases by more than

A. $10,000 from the second year.
B. $15,000 from the second year.
C. $5,000 from the second year.
D. $2,000 from the second year.

22. When you figure a decrease in alimony, do not include

A. Payments made under a temporary support order.
B. Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income.
C. Payments that decrease because of the death of either spouse or the re-marriage of the spouse receiving the payments before the end of the third year.
D. Any of the above.

23. Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include payments that are not made under a divorce or separation agreement.  Alimony

A. Is deductible by the payer.
B. Must be included in spouse's or former spouse's income.
C. Both A and B above.
D. None of the above.

24. You can deduct alimony you paid

A. Only if you itemize deductions on your return.
B. Whether or not you itemize deductions on your tax return.
C. On Form 1040A.
D. On Form 1040EZ.

25. When reporting alimony received, report it on

A. Line 11 of Form 1040.
B. Line 11 of Form 1040A.
C. Line 11 of Form 1040EZ.
D. Either A or B above.

26. If you are a U.S. citizen or resident and you pay alimony to a nonresident alien spouse, you may have to withhold income tax on each payment at a rate of

A. 15%.
B. 20%.
C. 25%.
D. 30%.

27. The following do not qualify as payment of alimony, except for

A. Transfers of services or property (including a debt instrument of a third party or an annuity contract).
B. Execution of a debt instrument by the payer.
C. The use of pager's property.
D. Cash, check and money orders payments.

28. A payment to or for a spouse under a divorce or separation instrument is alimony if

A. The spouses do not file a joint return with each other.
B. The instrument does not designate the payment as not alimony.
C. There is no liability to make any payment (in cash or in property) after death of the recipient spouse. 
D. All of the above.

29. If you get a final decree of divorce or separate maintenance by the end of your tax year, you

A. Cannot deduct contributions you make to your former spouse's traditional IRA.
B. Cannot deduct contributions to your own traditional IRA.
C. Can deduct contributions you make to your former spouse's traditional IRA.
D. Both A and B above.

30. Your transfer of property to your spouse or former spouse is not subject to gift tax if

A. It is made under a written agreement, and you are divorced within a specified period.
B. It does not qualify for the annual exclusion.
C. It is not made under a divorce decree.
D. It does not qualify for any marital deduction.