C is corrent. If a divorce agreement specifies both alimony and child support, but less is paid then required, then payments are first allocated to child support, with only the remainder in excess of required child support to be treated as alimony. Pursuant to Jones’s divorce agreement, $5,000 was to be paid each month, of which $2,000 was designated as child support, leaving a balance of $3,000 a month to be treated as alimony. However, during 2012, only $12,000 was paid to Jones by her former husband which was less than the $60,000 required by the divorce agreement. Since required child support payments totaled $2,000 x 12 = $24,000 for 2012, all $12,000 of the payments actually received by Jones during 2012 is treated as child support, with nothing remaining to be reported as alimony.
A is incorrect. Since total payments were less than the required child support, all payments are treated as child support and excluded from gross income.
B is incorrect. Since total payments were less than the required child support, all payments are treated as child support and excluded from gross income.
D is incorrect. Since total payments were less than the required child support, all payments are treated as child support and excluded from gross income.
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