Don and Cheryl have not been happy with their relationship for years. Now, their discontent has led to Cheryl filing for divorce. Cheryl has been immensely successful in her career as a corporate attorney in one of the largest firms in North America. Don is a struggling artist who, in his words, "Hasn't made it big, yet." Don has contributed to the marriage by taking care of household tasks so that Cheryl is able to focus on her career. Their teamwork seemed to have finally paid off: Cheryl became a partner in her law firm a few months ago. Cheryl's stress and long hours at work, though, have taken their toll on their marriage. The two live in a rented apartment in Manhattan on the east side of Central Park and, before Cheryl's final push for partnership, enjoyed a life that only a few dream about. Broadway was only a few blocks away, as was Times Square and Rockefeller Center. Once a week they would visit lower Manhattan and eat at Ho Yip, a little Chinese restaurant on Liberty Street. Those were the days they thought would never end. Their divorce will be finalized during 2018. Cheryl had no difficulty paying spousal support to Don, partly because of these good memories and partly because he, unlike she, had not yet achieved his dream. Although he had sold a few paintings that had fetched a considerable sum, the sales did not occur often enough for him to be fully self-sufficient. The focal issue of the divorce was the amount of support Cheryl would pay. Don enjoyed liv- ing in Manhattan because of the creativity its surroundings fostered, but Cheryl was not willing to pay what she believed would be an amount necessary for him to live there. Her words at the last meeting with the attorneys were, "I will not pay more than \($10,000\) per month."

Required

a. Determine the approximate amount Cheryl could pay and still only have to pay \($10,000\) per month (\($120,000\) yearly). Assume that her marginal federal income tax rate is 39.6 percent, and her New York state marginal income tax rate is 6.85 percent. Assume that Don's federal marginal income tax rate is 28 percent, and his New York state marginal income tax rate is 6.65 percent.

b. Explain, clearly and concisely, as though you were talking to a friend who does not understand the details of accounting and tax issues, your findings in part (a). 

c. Can this amount of alimony be modified in the future if Cheryl's and Don's situations change? Describe the factors that could cause a change to the future level of spousal support.

d. Would your answer to (a) change if their divorce was finalized in 2019?