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received during the year, advance rents included. Security deposits are not includible in income if they do not apply toward rent.The transfer of property does not create any taxable income. Bob receives a tax deduction for alimony 84. paid, and Alice receives income for the $2,000 per month. Child support is not tax deductible, nor is it includible in Alice’s income. Since the decree is silent on which spouse will take the tax deduction for the children, Alice, the custodial parent, is entitled to the deduction for both children.(a.) The Ryans do not have to report any of the $8,000 in life insurance proceeds on their 2010 return 85. because life insurance proceeds are excluded from gross income. (b.) The Ryans should report $400 in interest income for 2010. Both the interest on the life insurance policy’s accumulated dividends and interest on the income tax refund are included in gross income.(a.) Zelda must include $75 in interest as taxable income. Both the interest on the insurance dividends left 86. on deposit with North American and the interest on the state income tax refund are taxable. (b.) The $875 dividend from the U.S. corporation received on January 2, 2010, is included in 2010 income. (c.) “Other Income” includes the $2,400.