Intuit Academy Tax Practice Exam 2026 - Free Tax Practice Questions and Study Guide

For agreements finalized before 2019, alimony payments are treated as taxable income for the recipient and deductible for the payer. This treatment aligns with the tax laws in effect before the Tax Cuts and Jobs Act (TCJA), which implemented changes starting in 2019.

Prior to these changes, the payer could deduct the alimony payments on their tax return, which reduced their taxable income. Conversely, the recipient was required to report these payments as income, leading to a higher taxable income for them. This arrangement was established to balance the impact of these payments on both parties' financial situations.

The other choices do not accurately reflect the tax treatment of alimony agreements finalized before 2019. Non-taxable treatment for both parties, deductions only for the payer without taxable income for the recipient, and implications of being taxable for the payer were all invalid under the prior tax framework. Hence, option B properly captures the tax implications during that period.