Explain how the payments would be treated for tax purpose

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Reference no: EM132635085 , Length: 7

Write a paper in which you analyze the following situation: Mark and Elizabeth are going through divorce proceedings and no longer live in the same house. Elizabeth is planning to pay Mark $45,000 per year for 6 years if Elizabeth can keep the car collection. The car collection cost them about $100,000, but the cars' value is now about $450,000. All of the couple's other property will be equally divided. For your paper, consider the following:

Question 1: Explain how the payments would be treated for tax purposes if Elizabeth's payments stop when Mark dies.

Question 2: Determine what would change in terms of taxes if Elizabeth sells the cars after 6 years.

Question 3: Calculate the tax (benefit) to Mark (Elizabeth) if the payments qualify as part of the alimony payments. Assume that Mark has a marginal tax rate of 20 percent, and ignore the time value of money. Support your paper with a minimum of three external resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.

Length: 5-7 pages, not including title and reference pages

Reference no: EM132635085

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