Question

1. Angelina and Brad divorced in 2018. Pursuant to a written order, Angelina agreed to pay Brad $50,000 per year for 10 years (or until Brad's death or remarriage) and $75,000 per year for their children, Shiloh, Vivian,and Knox.  What amount is included in Brad's taxable income in 2020?

	a.	$50,000
	b.	$75,000
	c.	$125,000
	d.	$0

Answer 1

The correct answer for the question is Option A - $50,000. Alimony payments include the amounts paid to the spouse under the Alimony agreement. Since the agreement was executed before 2019 and since Angelina has paid $50,000 to Brad during 2020 in pursuance to the agreement, this $50,000 will be included in the taxable income of Brad. As such, this is the correct answer.

Option B is incorrect as amounts paid towards Child support is generally not includeable in Alimony income and hence is not the correct answer.

Option C is incorrect as $125,000 is incorrect becaue amounts received as per Child support agreements do not constitute as Alimony payments. Hence, this option is not the correct answer.

Option D is incorrect as the amount of $50,000 received by Brad is considered as Taxable Income for Brad in 2020.

Please let me know if you have any questions via comments. All the best :) !