B is corrent. Alimony recapture may occur if alimony payments sharply decline in the second and third years that payments are made. The payor must report the recaptured alimony as gross income in the third year, and the payee is allowed a deduction for the same amount. Recapture for the second year occurs to the extent that the alimony paid in the second year ($25,000) exceeds the third year alimony by more than $15,000 ($0 + $15,000), or $10,000. Recapture for the first year occurs to the extent that the alimony paid in the first year ($60,000) exceeds the average alimony paid in the second year (reduced by the recapture for that year) and third year by more than $15,000. In this case, recapture for the first year amounts to $37,500, computed as follows:
A is incorrect. The alimony recapture totals $47,500.
A is incorrect. The alimony recapture totals $47,500.
D is incorrect. The alimony recapture totals $47,500.
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