Under a divorce agreement executed in the current year, an ex-wife receives from her former husband cash of $25,000 per year for eight years. The agreement does not explicitly state that the payments are excludable from gross income.
a. Does the ex-wife have gross income? If so, how much?
b. Is the former husband entitled to a deduction? If so, is it for or from AGI?
Refer only to the IRC in answering this question. Start with Sec. 71.