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Lanny and Shirley are recently divorced and do not live together. Shirley has custody of their child, Art, and Lanny pays Shirley $22,000 per year. All property was divided equally.
a.How much should Shirley include in income if Lanny's payments are made in cash but will cease if Shirley dies or remarries?
Amount to be included:
b.How much should Shirley include in income if $12,000 of Lanny's payments is designated as "nonalimony" in the divorce decree?
c.How much should Shirley include in income if Lanny's payments drop to $15,000 once Art reaches the age of 18?
What are the implications of your answer for the entrepreneurs, creditors, and the national economy?
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