[Oimie]

Bill and Hillary were divorced in Year 1. The divorce decree provides that Hillary pay alimony of 10,000 per year, to be reduced by 20% on their child’s 18th birthday. During year 5, Hillary paid 7,000 directly to Bill and 3,000 to UCLA for tuition for their child, who had turned 18 during year 4. What amount of these payments should b e reported as income in Bill’s year 5 income tax return?

A. 5,600

B. 8,000

C. 8,600

D. 10,000

Answer is 8,000. I do not understand why. The rule clearly states child support has priority over alimony. We cannot just reduce child support amount to increase alimony.

I came across another question which portrays this:

Smith, an individual, is required to pay Goode yearly alimony of 6,000 and yearly child support of 18,000. Smith paid Goode 20,000 in 2013. Smith’s 2013 W-2 income was 50,000. Considering only the foregoing facts, what should Smith’s adjust gross income be for 2013?

A. 30,000

B. 45,000

C. 48,000

D. 50,000

Answer is 48,000 because 50,000 – 2,000 of alimony that is deductible. Notice how out of the 20,000 paid, child support is covered entirely first before the remainder is allocated to alimony.

Can someone help clarify please? Thank you.

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016