| Author |
|
lauritta
Contributor
Joined: 02 Jan 2011
Online Status: Offline
Posts: 83
|
| Posted: 14 Jan 2012 at 18:04 | IP Logged
|
|
|
Alimony payments in year 1: $40,000
Alimony payments in year 2: $24,000
Alimony payments in year 3: $12,000
• The excess payments in year 2 are $9,000 [$24,000 - $15,000].
• The excess payments in year 1 are $11,500, calculated as follows:
$40,000 – [$15,000 + [($24,000 - $9,000) + $12,000]/2]
$40,000 – [$15,000 + [($15,000 +$12,000)/2]
$40,000 – [$15,000 + ($27,000/2)
$40,000 – [$15,000 + $13,500]
$40,000 – $28,500
$11,500
• The amount of the recapture in the third year is, therefore, $20,500 [$11,500 + $9,000].
Could you please explain why do we have to add $9000 to the answer? Thank you!
__________________
FAR - passed
REG - passed
AUD -
Wiley, some lectures from Becker
|
| Back to Top |
|
| |
DETERMINATION
Contributor
Joined: 06 Sep 2010
Online Status: Offline
Posts: 96
|
| Posted: 14 Jan 2012 at 21:53 | IP Logged
|
|
|
Because $11,500 is the recapture from Year 1 and $9,000 is the recapture from year 2 Example:
| Recapture scenario |
Formulas for Y1 |
year 1 |
Formulas for y2 |
year 2 |
Formulas for y3 |
year 3 |
Look back to prior years from here and report in this year |
| Year |
|
2009 |
|
2010 |
|
2011 |
| Alimony payments |
|
40,000 |
|
24,000 |
|
12,000 |
| Amount recaptured |
40,000-15,000-13,500= |
(11,500) |
24,000-15,000= |
(9,000) |
(11,500)+ (9,000) = |
(20,500) |
| Net Alimony payment |
|
28,500 |
|
15,000 |
|
n/a |
| Average payment |
|
n/a |
(15000+12000)/2 |
13,500 |
|
n/a |
| Notes: |
|
|
|
|
|
|
| $13,500 = Avg of 2010 & 2011 payments after reducing the $24,000 2010 payment by the $9,000 of recapture for 2010 |
|
|
|
|
|
|
| $15,000 = Statutory exclusion |
|
|
|
|
|
|
Then See Wiley (2012) pg 423 Item 8.b.(1) and (2) for the reasons why we recapture in the 3rd year for the two preceding years for the theory part of your question. Hope this helps.
__________________
AUD 77
FAR 78
BEC 81
REG 8/30/12 - 80
Studying with Yaeger/Wiley/Gleim/Ninja Notes
CIA [passed all 4 parts 5/2007]
STUDIED WITH GLEIM
|
| Back to Top |
|
| |
lauritta
Contributor
Joined: 02 Jan 2011
Online Status: Offline
Posts: 83
|
| Posted: 14 Jan 2012 at 22:26 | IP Logged
|
|
|
Thank you so much for your detailed explanations! It is very helpful. Could you show what amounts will go on the tax return? How will it look like?
Form 1040 line 11 and line 31a (for both parties), where does the recapture go?
__________________
FAR - passed
REG - passed
AUD -
Wiley, some lectures from Becker
|
| Back to Top |
|
| |
DETERMINATION
Contributor
Joined: 06 Sep 2010
Online Status: Offline
Posts: 96
|
| Posted: 14 Jan 2012 at 23:18 | IP Logged
|
|
|
Including the recapture in income. If you must include a recapture amount in income, show it on Form 1040, line 11 (“ Alimony received”). Cross out “ received” and enter “ recapture.” On the dotted line next to the amount, enter your spouse's last name and social security number.
[So person who should've paid more alimony enters the $20,500 here (line 11)]
Deducting the recapture. If you can deduct a recapture amount, show it on Form 1040, line 31a (“ Alimony paid”). Cross out “ paid” and enter “ recapture.” In the space provided, enter your spouse's social security number. [Person who should've received more alimony enters the $20,500 recapture here]
__________________
AUD 77
FAR 78
BEC 81
REG 8/30/12 - 80
Studying with Yaeger/Wiley/Gleim/Ninja Notes
CIA [passed all 4 parts 5/2007]
STUDIED WITH GLEIM
|
| Back to Top |
|
| |
perniva
Contributor
Joined: 05 Sep 2011
Location: United States
Online Status: Offline
Posts: 55
|
| Posted: 16 Jan 2012 at 09:33 | IP Logged
|
|
|
A little confused...
So if the "husband" has to recapture the $20,500 - he includes that in Income because he over-deducted-for-AGI in the prior years? (got a tax benefit)
Does the "husband" making the year 3 $12,000 get to "deduct-for-AGI" the $12,000?
__________________
FAR 05/29/2011 #82
AUD 08/31/2011 #86
REG 11/29/2011 #72
REG 01/17/2012 #89
BEC 02/29/2012 #75
Becker 2011
TEXAS
|
| Back to Top |
|
| |
|
|
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: Alimony recapture
Topic Closed)
