@Osidecompass… “I didn't see anything about this in Becker? Where was it discussed (if at all)? Are there any other topics to watch out for?”
I used Becker for my first shot at REG and never heard of it either… Phil Yaeger goes over it in his cram, and I would assume the full course as well. It is a complex issue that I would assume examiners would love to throw at you in their “difficult” level questions. This is one of my main beef's with Becker… they completely brush over this issue and it's perfectly fair game to be tested. Yaeger in his review course says he had a student come to him and tell him that he/she got a question on it and felt comfortable after his lecture.
@original poster… one way to look at alimony recapture is a lot like 1245 or 291 recapture from your 1231 assets. Over the last few years you have been taking depreciation deductions on those assets and therefore paid tax on lower income. When you sell it, you have to recapture those old expenses as income (ordinary) so that you don't get the expense benefit AND 1231 favorable treatment.
Same goes with the alimony. If you are paying alimony and like Jeff said, are front loading it, the Gov't says “not so fast my friend.” You will need to recapture.
A good thing to think about when studying for REG (mind you, this is advice from someone that failed it), remember that the Gov't always wants more than their fair share. For instance when determining our basis in inherited property for a loss, it's the lesser of FMV or rollover basis resulting in the smaller loss, and if it's sold for a gain, it's the rollover basis resulting in the bigger gain (in most cases). Same goes for alimony recapture.
I have to guess that since alimony is above the line with no limitations, it'd be a great place to over expense in years that you have high income… this helps even it out. That's purely my opinion, not anything I've read or seen in lectures.
BEC - Pass 10/2010
FAR - Pass 10/2010
AUD - Pass 11/2010
REG - Pass 05/2011
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