@ Melans:
Tim and Nicole Wendler were divorced in 2011. Under the terms of their divorce decree, Tim paid alimony to Nicole at the rate of $60,000 in 2011, $25,000 in 2012, and nothing in 2013. What amount of alimony recapture must be included in Tim’s gross income for 2013?
$0
$10,000
$35,000
$47,500
Formula for this ALIMONY RECAP:
R3 = R1 + R2
R2 = P2 – (P3 + 15,000)
R1 = P1 – [ (P2 – R2 + P3)/2 + 15,000]
Shortcut for Year 3 Recapture = P1 + P2 – 2P3 – 37,500
2nd year alimony – (3rd year alimony +15,000) = 3rd year recap
1 yr. alimony – [(2nd yr alimony – 3rd year recap + 3rd yr alimony)/2] – 15,000 = 2nd year recap
3rd year recap + 2nd year recap = total recap as gross income in year 3
2nd year recapture: 25,000″2nd year alimony” – (0″3rd year alimony” + 15,000) = 10,000
1st year recapture: 60,000″1st year alimony” – ([25,000 – 10,000″2nd year recapture” + 0] / 2) + 15,000 = 37,500
Total recapture would be: 10,000″2nd year recapture” + 37,500″1st year recapture” = 47,500
ALIMONY RECAP RULE:
The rule applies when the payments decrease or terminate during the first three calendars years post-divorce and:
1.) The total payments made in the third year decrease by $15,000 or more from the payments made in the second year; (or)
2.) The payments made in the second year and the third year are substantially less than the payments made in the first year.
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