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 party who receives the benefits of income and thus is nondeductible to the party earning that income (Cussen, Investopedia.com). In this regard, Nells crude income and thus her taxable income would be increased by that amount as Nell is receiving the benefits of Kirbys income. 3) Out of $900, completely the amount of $600 is considered as alimony. This is because this amount cant be declared as child plunk for since continuation of this amount is not pertinent to any contingency related to child in term 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 consequenc e to any of the party neither of the party would jazz 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.