Question

Your client was born on Nov 28, 1945. This client must take his first required minimum distribution from an IRA no later than  

		a. April 1, 2017
		b. April 1, 2016
		c. May 28, 2016
		d. November 28, 2016

Look on the 2017 Form 1040 (in Ch 3 of the textbook). Alimony received is included in the income section of the return. Alimony paid is included in the Adjusted Gross Income portion of the return. Which statement is true regarding the Form 1040 for 2018?

	a.	Alimony paid will still be a deductible item, so it should be a line item for adjusted gross income, but alimony received will not be an inclusion item, so it will not have a line item in the income section.
	b.	Alimony received will still be an inclusion item, so it should be a line item for income, but alimony paid will not be a deduction for adjusted gross income, so it will not have a line item in that section.
	c.	Alimony received should still be a line item in the income section of the return. Alimony paid should still be included as a line item in the Adjusted Gross Income portion of the return.
	d.	Alimony will not have separate line items on the 2018 Form 1040 because TCJA 2017 suspended it as an inclusion item and as a deduction item.

Answer 1

Solution:

1. a. April 1, 2017.

Explanation: First RMD must be taken by April 1 of the year, after the client turn 70.5 years. In the given question Client is born on Nov, 28 1945 so he will turn to 70.5 years on 28th May 2016. RMD must be start from the 1st April of the year client turn 70.5 years i.e. April 1, 2017.

2.

C. Alimony received should still be a line item in the income section of the return. Alimony paid should still be included as a line item in the Adjusted Gross Income portion of the return. Explanation : Alimony paid is deductible expense for the payer and Alimony received is required to be added to the income of the receipient. So, for the year 2018 this tax treatment is applicable. However, TCJA states that such income and expenditure will not be added or deducted from the income or expennse of the assesee but point for consideration is this rule applicable on divorce executed aor modified after 31st December, 2018 which is irrelevant as if now.