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Will and Janine are divorced during the current year. Will is to have custody of their two children and will receive their house as part of the divorce settlement.
The house, which Will and Janine bought for $60,000, is worth $100,000. Janine is to receive one of their automobiles, for which they paid $21,000 and which is now worth $9,000. Will will get the other automobile, which cost $6,000 and is worth $2,000. Janine is to pay Will alimony of $900 per month. However, the alimony pay- ment is to be reduced by $200 per month as each child reaches age 18 or if a child should die or marry before reaching age 18. What are the tax effects of the divorce set- tlement for Will and Janine?
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