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?

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?

Mary Ann pays the costs for her Aunt Hazel to live in a nursing home. Aunt Hazel receives Social Security benefits of $7,000 a year which are turned over to the nursing home. Mary Ann pays the remaining cost of $33,000. Hazel has no other income. Mary Ann visits Hazel twice a week and meets with doctors and nurses regarding Hazel's medical care. What tax issues should Mary Ann consider?

Mary Ann pays the costs for her Aunt Hazel to live in a nursing home. Aunt Hazel receives Social Security benefits of $7,000 a year which are turned over to the nursing home. Mary Ann pays the remaining cost of $33,000. Hazel has no other income. Mary Ann visits Hazel twice a week and meets with doctors and nurses regarding Hazel's medical care. What tax issues should Mary Ann consider?

Answer: Can Mary Ann file as head of household? Would Mary Ann be able to claim Hazel as a dependent?

Foreign exchange student Yung lives with Harold and Betty while he studies in the US. He moved into their home January 5, 2011 and has resided with them for the remainder of the year. Yung does not pay anything for his room and board. Harold and Betty provide all of Yung's meals. Yung receives a scholarship to pay for his tuition, books and fees. He works on campus, earning $4,000 a year. What tax issues should Harold and Betty consider?

Foreign exchange student Yung lives with Harold and Betty while he studies in the US. He moved into their home January 5, 2011 and has resided with them for the remainder of the year. Yung does not pay anything for his room and board. Harold and Betty provide all of Yung's meals. Yung receives a scholarship to pay for his tuition, books and fees. He works on campus, earning $4,000 a year. What tax issues should Harold and Betty consider?

Answer: Can Harold and Betty claim Yung as a dependent? Does he meet the requirements for a qualified dependent? Do they provide more than half of Yung's support? Does Yung receive amounts from home that he uses for his support?

Alexis and Terry have been married five years and file joint tax returns. Alexis began embezzling funds from her employer during the third year of their marriage. Last year, Alexis suddenly left the country and Terry does not know where she is. In the current year, Terry learned that the IRS had assessed him $27,000 in unpaid taxes due to Alexis's embezzlement. What tax issue(s) are present in Terry's situation? What questions would you ask Terry to determine his appropriate response to the IRS?

Alexis and Terry have been married five years and file joint tax returns. Alexis began embezzling funds from her employer during the third year of their marriage. Last year, Alexis suddenly left the country and Terry does not know where she is. In the current year, Terry learned that the IRS had assessed him $27,000 in unpaid taxes due to Alexis's embezzlement. What tax issue(s) are present in Terry's situation? What questions would you ask Terry to determine his appropriate response to the IRS?

Answer: Is Terry eligible for innocent spouse relief? Did Terry benefit financially from Alexis's embezzlement? Did Terry have reason to know of the embezzlement?