Rule: IRC Sections 71, 62, and 215 control the taxation of alimony. Payments for the support of a spouse (alimony) are income to the spouse receiving the payments and are deductible to arrive at adjusted gross income (AGI) by the spouse making the payments. To be alimony:

1. Payments must be legally required pursuant to a written divorce or separation agreement,

2. Payments must be in cash or its equivalent.

3. Payments cannot extend beyond the death of the payee-spouse,

4. Payments cannot be made to members of the same household.

5. Payments must not be designated as anything other than alimony, and

6. The spouses may not file a joint tax return.

Choice "b" is correct. Alimony received is definitely considered part of income and of adjusted gross income.

Choice "a" is incorrect. Compensation for injuries or sickness is excluded from income and thus adjusted gross income.

Choice "c" is incorrect. The rental value of parsonages (furnished by churches or synagogues) is excluded from the income of a minister and thus that minister's adjusted gross income.

Choice "d" is incorrect. A scholarship for tuition is excluded from income and thus adjusted gross income. There are certainly limits or restrictions such as the student has to be a degree-seeking student and amounts must actually be spent on tuition, fees, books, and supplies, but, as a general statement, the amount is excluded.