You are the tax manager of Maximus & Smith CPA and have asked the two tax interns to prepare a research memo regarding the same client. You provided each the same information about the client and are using this assignment as one of the indicators to help you decide which one to recommend for a full-time position. Review the following two research memos addressing the same question.

Prepare the feedback you would offer each intern including what changes you would make if any to each memo in order to improve it.

Facts

Memo to file

Ben and Jennifer were divorced two years ago and the decree stated that Ben was to make monthly payments to Jen. The court designated $500 a month as alimony and $600 per month as child support. Ben was unemployed for a quarter of the year and paid Jen $ 9,900 during the time he was employed. He said $5,400 was for child support and $4,500 was alimony. In addition, Ben transferred home theatre equipment to Jen with a FMW of $ 3,300 and a basis of $6,000 in exchange for her promise not to pursue any claim against him for unpaid child support and alimony. During his three months of unemployment Ben collected $3,000 of unemployment benefits. He earned $72,000 in salary for the nine-month period of employment.

Issue and Conclusion

Can Jennifer accept the home theatre equipment as payment for the unpaid child support and alimony?

Yes, if she agrees with the method of payment then it is possible.

Analysis of conclusion

A former spouse can agree to receive property as a form of alimony payment over a written agreement of promise. If Jennifer is comfortable with the offer and does not plan to pursue any claim, she can use the written agreement as proof to the IRS the method of payment.

Issue and conclusion

What if Jennifer were to disagree with that offer and decided that Ben made more than enough money over the year to give her the remaining unpaid child support and alimony. Would it be possible to pursue any claim against him?

Yes, because his income is above the threshold and being unemployed for 3 months does not give him the right to not pay.

Analysis of conclusion

Alimony is calculated based on the spouse ability to pay and the need of the depending spouse. Since Ben made $72,000 in salary for that year, he therefore qualify to pay the unpaid amount.

Issue and conclusion

Can Ben decided what portion of the money is child support and what is alimony? No Analysis of conclusion

If payment are required for both alimony and child support by the court decree, then payments are first applied to child support and the remaining is alimony. The law says that when a minor child is involve in a divorce, the need of the child come first over all else. Therefore Ben did not have the authority to decide what portion of the money goes to what.