QuestionDavid White has filed a petition for divorce from his spouse, Anna,… David White has filed a petition for divorce from his spouse, Anna, on the ground of infidelity. It is however unlikely this will be a factor in the court’s granting of the petition. In other words, the divorce will likely be granted on the grounds of irreconcilable differences. The couple has one child, Bobby, who is eight years old. David earns over $100,000 per year (in salary), and Anna only works part time earning about $15,000 per year. The couple has been married for nine years.David has requested you, as his accountant, to provide advice on the tax implications of any and all payments he may be required to make as a result of the dissolution of his marriage. Be sure to address the different types of payments that arise from a divorce: property settlement, alimony and child support. Also address the specific aspects of how the retirement plan assets held in David’s name will be addressed, which are sizeable. He has also inquired about the legal fees he will pay his attorney.Finally, David is seeking a recommendation on the optimal tax strategy if it can be negotiated, in regard to the above-mentioned payments he will incur.Prepare a tax memo for the client using the IRAC method addressing the client’s request and prepare an appropriate recommendation.LawSocial ScienceTax law
