Questions and Problems 231 Hillary gets divorced in 2016 and is required to pay her ex-spouse $200 per month until her son reaches 18 years of age in 7 years and $120 per month thereafter. How much of her 2017 payments are deductible as alimony? 8. LO 2.3 b. $2,400 c. $1,440 d. $960 9. Ivanka and Jared are divorced in the current year. As part of the divorce settlement, Ivanka transfers a plot of land in Long Island, NY to Jared. Ivanka's basis in the property was S20,000 and the market value of the property was $250,000 when ransferred. Jared holds the property through the end of the year and in hopes of building a residence on it. How much income do Ivanka and Jared recognize in the current year? a. $0 for Ivanka and $20,000 for Jared b. $230,000 for Ivanka and $20,000 for Jared c. $230,000 for Ivanka and $0 for Jared d. $0 for both Ivanka and Jared e. $0 for Ivanka and $250,000 for Jared 10. Which of the following prizes or awards is taxable? LO 2.4 a. Professional sports awards b. Prizes from a television game show c. Awards for superior performance on the job d. A one-acre lot received as a prize e. All of the above are taxable 11. Huihana receives a watch for achieving 20 years of employment with LO 2.4 The watch cost the employer $225 and has a market value of $250 on the date awarded. Huihana is in the highest tax bracket for single taxpayers. How much gross income will Huihana recognize on the receipt of the watch? a. $250 b. $200 c. $25 d. $0 e. $50 or $59.50 including the net investment income tax 12. A 64-year-old taxpayer retires this year and receives the first payment on an annu- ity that was purchased several years ago. The taxpayer's investment in the annuity is $97,500, and the annuity pays $1,000 per month for the remainder of the taxpayer's life. Based on TRS mortality tables, the taxpayer is expected to live another 20 years. If the taxpayer receives $4,000 in annuity payments in the current year, the nontaxable portion calculated using the simplified method is: LO 2.5 a. b. $1,500 c. $1,400 d. $4,000 e. None of the above 13. Amara has an annuity and over time has recovered her entire investment but it continues to pay her $450 per month. Amara should recognize how much of each monthly payment as gross income? Lo 2.5 al. b. Some amount greater than $450 c. Some amount between $0 and $450 d. $450