QI:4-26
Are partners and proprietors at a disadvantage with respect to fringe benefits? Explain
PI:4-33
Requirements
In which of the following situations would the taxpayer realize taxable income?
a.
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A mechanic performs work on his own automobile. The mechanic would have charged a customer $400 for doing the same work.
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b.
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A mechanic repairs his neighbor's personal automobile. In exchange, the neighbor, an accountant, agrees to prepare the mechanic's tax return. The services performed are each worth $200.
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c.
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A mechanic repairs his daughter's automobile without any charge.
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PI:4-34
Requirement
Which of the following would be includable in gross income?
a.
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Alice appeared on a TV quiz show and received a prize of $5,000.
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b.
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Bart received $500 from his employer because he developed an idea that reduced the employer's production costs.
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c.
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Chuck borrowed $500 from his mother in order to finance his last year in college. Upon his graduation, Chuck's mother told him he did not have to repay the $500. She intended the $500 to be a graduation present.
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PI:4-39
Requirement
For each of the following, indicate whether the amount is taxable:
a.
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Peggy won $4,000 in the state lottery.
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b.
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Jane won a $500 prize for her entry in a poetry contest.
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c.
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Linda was awarded $2,000 when she was selected as "Teacher of the Year" by the local school district.
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PI:4-40
Consider the following scenarios:
a.
Louis
was given a
$ 4 comma 000
tuition scholarship to attend
Valley
Law School. In addition,
Valley
paid
Louis
$ 7 comma 000
per year to work part-time in the campus bookstore.
Requirement
For each scenario, indicate the amount that must be included in the taxpayer's gross income.
PI:4-46
Al flies for AAA Airlines. AAA provides its employees with several fringe benefits. Al and his family are allowed to fly on a space-available basis on AAA Airline. Tickets used by Al and his family during the year are worth $2,000. AAA paid for a subscription to two magazines published for pilots. The subscriptions totaled $80. The airline paid for Al's meals and lodging while he was away from home overnight in connection with his job. Such meals and lodging cost AAA $10,000. Although Al could not eat while flying, he was allowed to drink coffee provided by the airline. The coffee was worth about $50. AAA provided Al with free parking, which is valued at $100 per month. The airline treated Al and his family to a one-week all-expenses-paid vacation at a resort near his home. This benefit was awarded because of Al's outstanding safety record. The value of the vacation was $2,300.
Requirement
Which of these benefits are taxable to Al?
PI:4-53
Requirements
Determine whether the following items represent taxable income.
a.
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As the result of an age discrimination suit, Pat received a cash settlement of $40,000. One-half of the settlement represented wages lost by Pat as a result of the discrimination and the balance represented an award based on personal injury.
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b.
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Matt sued the local newspaper for a story that reported he was affiliated with organized crime. The court awarded him $50,000 of libel damages.
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c.
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Pam was injured in an automobile accident and received $10,000 from an employer sponsored disability policy. In addition, her employer-financed medical insurance policy reimbursed her for $15,000 of medical expenses.
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