 Looking at our income tax formula, we are once again focused on line one that being income remembering that the first half of the income tax equation is in essence a strange income statement where we have income minus the equivalent of expenses those being the deduction gets us to the equivalent of net income in this case taxable income our objective being the opposite of the normal objective we want the bottom line taxable income to be as low as possible so when focused on the income line then the question is is this thing income and if it is do I have to include it as taxable income or is it exempt we're applying that thought process to alimony now so alimony is alimony one of those kind of weird situations there's made a change to the tax law fairly recently so you want to make sure that you keep that in mind because there's kind of like a cutoff date type of situation when we're thinking about alimony we're thinking about a situation where there is a separation married couple typically separating a divorce taking place and then possibly one spouse paying the other spouse now typically in that kind of scenario we have two categories of the type of payments that might go from one ex spouse to another ex spouse one being child support the other being alimony now it used to be that those kind of characterizations were quite important from a tax perspective even though it's still just one money going from one spouse to the other because there could be tax implications and like with any other kind of transaction the person receiving the money then of course would have the question do I have to include it in income or not and obviously the they would like to be able to say no I don't want to have to include it in income I want to have the money but not have to include it in income and on the payer side of things you have a situation where they're saying I do want to include it in income because I want to be able to deduct it on the payer side of things so that's the the general the general theory and it used to be that if it was categorized as alimony then it's something that you don't have I mean that you would have to include an income if you received it and you would get a deduction for it but if it was child support then the you would not have to record it as income even though you received child support and the payer would not get the benefit of recording it as a deduction now you might look at this and say well the tax code is favoring one side of the transaction or another side of the transaction but it's also kind of just the situation that when the tax code gets more complicated then when you when you fill out the divorce paperwork and whatnot and try to come to an agreement that's going to be something that both sides can agree to then obviously the tax code whatever the tax code is in a perfect world if you had all the information you would just work that into your agreement so to me it seems like you would kind of like to make it kind of easy on the tax code and that the tax code is not going to make a more complex situation you want to make it you know so the tax code is not making things more complex than it could so that when you make the agreement both sides have the information necessary to come to an agreement that both sides can understand and and put into practice and I think that's kind of what they did with the new law where they basically said we're not going to have this differential tax treatment we're kind of trying to take the taxes out of it however if you made the contract before that new change took place then you can't really do that retroactively because the the the old laws are what was what the contract was based on so that's kind of the scenario that we're in all right so this would be on the first page of the tax return going into line eight other income from schedule one and then here is the schedule one if you had to include the alimony then it would be here the alimony that has been uh received notice down below they got the date of the original original divorce or separation agreement that's going to be necessary because you've got this cutoff date now and you would expect that if the agreement was after the cutoff date that you wouldn't have anything recorded as income if it was prior to the cutoff date and your agreement was made based on the prior tax laws then you would think that you might have the income that's the general rule