CFP

AAA

Tax Implications of Special Circumstances - Sample Questions 1 - 6

1. Which of the following would qualify as alimony payments to an ex-spouse if directed by the divorce decree?

I. Payment of the rent for the ex-spouse.
II. Payment of life insurance premiums on a policy owned by the ex-spouse, but on the life of the payer.
III. Payment of SUV payments for a truck owned by the payer, but being used by the ex-spouse.
IV. Payment of mortgage payments for a house owned by the payer, where the ex-spouse is living in the home.

A) I only
B)
I and II only
C)
I, II and III
D) I, II, III and IV

2. Which of the following is a TRUE statement?

A) Child support received is taxable to the recipient.
B)
Separated parents can file a joint return and claim the alimony deduction.
C)
Child support payments are non-deductible.
D) Alimony is non-taxable to the recipient.


3. A divorce and separation agreement instructs Tammy to give her ex-husband (Jim) $200,000 worth of stock with a cost basis of $70,000. All of the following statements are false EXCEPT:

A) Jim will have a cost basis of $200,000 in the stock.
B) Tammy can deduct 50% or $100,000 as a loss on her tax return.
C) If Jim sells the stock in six months for $220,000, he will have a $150,000 gain.
D)
If Jim sells the stock immediately and gets $200,000, he will have no gain.

4. Gus and Ingrid are getting a divorce, and they agreed amicably to split the IRA and 401(k) plan belonging to Gus in a 50/50 split arrangement. The proper court issued document to notify the plan administrator and IRA custodian of this ruling is which of the following:

A) Divorce decree
B)
Order to distribute assets
C)
Form 1099-R
D) Qualified Domestic Relations Order


5. All of the following are "Community Property" states EXCEPT:

A) Utah
B) Wisconsin
C) Idaho
D)
Texas

6. Ronald and Rose (husband and wife), owned a jointly titled home together in a common law state. They paid $80,000 for the home, and made $10,000 in capital improvements over the years. Ronald dies and Rose is now left with maintaining the home. The FMV of the home at Ronald's death was $400,000. What is Rose's new adjusted cost basis in the home?

A) $90,000
B)
$200,000
C)
$245,000
D) $400,000


What would be the answer if they lived in California (a community property state)?

Answer Key
comments powered by Disqus
Related Articles
  1. Another Sound Lesson In Risk Management
    Investing News

    Another Sound Lesson In Risk Management

  2. Choosing The Right ETF Index To Reach ...
    Investing News

    Choosing The Right ETF Index To Reach ...

  3. Using Normal Distribution Formula To ...
    Investing Basics

    Using Normal Distribution Formula To ...

  4. Hypothesis Testing in Finance: Concept ...
    Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept ...

  5. Top 6 Ways To Recession-Proof Your Job
    Personal Finance

    Top 6 Ways To Recession-Proof Your Job

Trading Center