Part 1 Income: Wages, Interest, Dividends and Other Income question: divorce decree executed

Part 1Income: Wages, Interest, Dividends and Other Income

Under a divorce decree executed in 2017 and never modified, Al pays Bea $2,000 a month of alimony. How are the 2025 payments treated?

A Deductible by Al and taxable to Bea
B Taxable to Bea but not deductible by Al
C Neither deductible by Al nor taxable to Bea
D Deductible by Al but not taxable to Bea

Show the answer and explanation

Answer: A. Deductible by Al and taxable to Bea

Alimony paid under a divorce or separation instrument executed before 2019 remains deductible by the payer (adjustment to income) and taxable to the recipient, unless a later modification expressly adopts the new rules. For instruments executed after 2018, alimony is neither deductible nor taxable. The rule depends on the instrument's date, not the year of payment. Source: IRC 71 and 215 (pre-2019 instruments); TCJA sec. 11051; Pub. 504 (2025). Tax year: 2025 (law as of 31 Dec 2025).

Common mistake

Applying the post-2018 rule to every alimony payment made today.

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Original study material mapped to the public IRS SEE content outlines; not a real exam question.Not affiliated with or endorsed by the IRS or PSI. Verify figures and rules against current guidance before relying on them.