Tim and Janet were divorced. Their only marital property was a personal residence with a value of $100,000 and cost of $40,000. Under the terms of the divorce agreement, Janet would receive the house and Tim would be the custodial parent for their son. Janet would pay Tim $10,000 each year for 10 years, or until Tims death, the amount would decrease by $4,000 when their son turned 18. Tim and Janet lived apart when the payments were made to Tim. The divorce agreement did not contain the word alimony. Which of the following is true?

A) Tim must recognize an $80,000 [($100,000 - 20,000) 1/2($40,000)] gain on the sale of his interest in the house.

B) Tim does not recognize any income from the above transactions.

C) Janet is allowed to deduct $10,000 each year for alimony paid.

D) Tim must report $6,000 a year as alimony income.