Tax Planning Problem Assignment Example | Topics and Well Written Essays - 250 words

Tax Planning Problem - Assignment ExampleThis is because in case of alimony, tax is charged to the fellowship who receives the benefits of income and thus is nondeductible to the party earning that income (Cussen, Investopedia.com). In this regard, Nells gross income and thus her taxable income would be sum upd by that amount as Nell is receiving the benefits of Kirbys income. 3) Out of $900, only the amount of $600 is considered as alimony. This is because this amount cant be declared as child support since continuation of this amount is not pertinent to any contingency cogitate to child in terms of his death or attaining the age of maturity (Cussen, Investopedia.com). As a result, being alimony, this will reduce Kirbys taxable income and increase Nells taxable income, each by $600. On the other hand, the remaining $300, to be ceased after any contingency to the child, can be declared as child support and thus, not being alimony, wouldnt account for any tax-related consequence to any of the party neither of the party would recognize this amount in his / her taxable income. Works Cited Cussen MP. The Fundamentals of Spousal Support Taxation. Investopedia.com. Investopedia, n.d. Web. 3 Feb. 2011.