Question

Which of the following would best improve the tax position of a divorcing husband who will be required to contribute toward the support of his ex-wife? The divorce will occur in 2020.

a. Pay her alimony

b. A large property settlement with the ex-wife

c. Voluntary cash payments to the ex-wife

d. Transfer assets to ex-wife before divorce or separation

e. None of the above

Answer 1

Payment of alimony or voluntry cash payment is not deductible from taxable income. So no
tax benefits looking in this for a divorsed husband.
Transfer of assets to ex-wife before divorsed is not deductible to husband but is exempted
to ex-wife from tax. So no direct benefit to husband but give good support to wife without
tax.
Property settlement with ex-wife is taxable in hand of wife post divorsed.
So, correct option is (d) Transfer assets to ex-wife before divorse or sepration.