Larry and Lynn obtain a divorce in the current year. Under the terms of the divorce, Lynn receives possession of their home for five years and custody of their daughter, Laura. Larry had inherited the home and must pay all of the costs of its maintenance, taxes and insurance, as well as $12,000 in child support a year. Larry lives in an apartment. What tax issues should Larry and Lynn consider?
Answer: Is Larry's payment of the expenses related to the home considered alimony, and thereby deductible by him and income to Lynn? Is Larry providing a home for a dependent so that he could be able to file head of household? Have Larry and Lynn reached an agreement as to who receives the dependency exemption for Laura?