Nell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2023. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement? Question Content Area a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000. The transfer of is a nontaxable event. Nell's basis for the stock is $fill in the blank 633301f7907bfc5_2. Kirby's basis in the house is $fill in the blank 633301f7907bfc5_3. Question Content Area b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate. , the payments are neither included in Nell’s gross income nor deductible by Kirby since they are pursuant to a divorce agreement reached after 2018. Question Content Area c. Nell is to have custody of their 12-year-old son, Bobby. She is to receive $1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only $300 per month for the remainder of her life. The monthly payments are considered . , the payments are excluded from Nell's gross income as they are received by her, and Kirby may not deduct the payments. Question Content Area d. How would the answer to part (b) change if the divorce had been finalized in 2017? Even if the divorce were settled in 2017, the cash payments of $fill in the blank 6ebcaffa7fbe034_1 per month as alimony because they cease upon Nell’s death. Therefore, the payments would still be excluded from Nell’s gross income and by Kirby.
Nell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2023. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement?
Question Content Area
a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000.
The transfer of
is a nontaxable event.
Nell's basis for the stock is $fill in the blank 633301f7907bfc5_2.
Kirby's basis in the house is $fill in the blank 633301f7907bfc5_3.
Question Content Area
b. Nell will receive $1,000 per month for 120 months. If she dies before receiving all 120 payments, the remaining payments will be made to her estate.
, the payments are neither included in Nell’s gross income nor deductible by Kirby since they are pursuant to a divorce agreement reached after 2018.
Question Content Area
c. Nell is to have custody of their 12-year-old son, Bobby. She is to receive $1,200 per month until Bobby (1) dies or (2) attains age 21 (whichever occurs first). After either of these events occurs, Nell will receive only $300 per month for the remainder of her life.
The monthly payments are considered
.
, the payments are excluded from Nell's gross income as they are received by her, and Kirby may not deduct the payments.
Question Content Area
d. How would the answer to part (b) change if the divorce had been finalized in 2017?
Even if the divorce were settled in 2017, the cash payments of $fill in the blank 6ebcaffa7fbe034_1 per month
as alimony because they
cease upon Nell’s death. Therefore, the payments would still be excluded from Nell’s gross income and
by Kirby.
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