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Accounting 3220 Chapter 4

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There is no specific statutory exclusion for welfare benefits. Nevertheless, the IRS has ruled that such benefits aren’t taxable. Is this within the authority of the IRS? Most exclusions exist for just one of two reasons. What are those reasons? Give examples of exclusions that exist for every. If a present of property is manufactured, who is taxed on income made by the property?

How can interfamily presents reduce a family’s total tax responsibility? What role will intent play in identifying whether a transfer is a gift and for that reason not at the mercy of the income tax? Are tips received by employees from customers excludable from revenues as gifts? What is the tax need for the face amount of a full life insurance coverage? Define the word scholarship as it is utilized in Sec.

If a scholarship covers room and plank, could it be excludable? If an employer provides a scholarship to a worker who is on leave of absence, is that scholarship taxable? May be the amount paid with a college or university to students for services excludable from the students’ revenues? Answer the following questions relative to employer-financed medical and health, impairment, and life insurance programs. May employers deduct monthly premiums paid on employee insurance? Do employees have to include such monthly premiums in revenues? Are benefits paid to the employee contained in the employee’s gross income?

What conditions must be fulfilled if an employee is to exclude foods and lodging equipped by an company? Will be the same fringe benefits that exist to employees also available to self-employed individuals? If a worker takes a customer to lunch and discusses business, can the employee deduct 50% of the meal for both the customer and himself?

Are companions and proprietors at a disadvantage regarding fringe benefits? In which of the next situations would the taxpayer realize taxable income? A mechanic performs work on his own car. 400 for doing the same work. A mechanic maintenance his neighbor’s personal car. In exchange, the neighbor, an accountant, agrees to prepare the mechanic’s tax return. A mechanic maintenance his daughter’s car with no charge.

Which of the next would be includable in gross income? 500 from his company because he developed an idea that reduced the employer’s creation costs. 500 from his mother in order to finance his last year in college. 500 to be always a graduation present. 4,000 in the condition lottery. 500 prize on her behalf entry in a poetry contest. 2,000 when she was selected as “Teacher of the Year” by the local school district. For every scenario, indicate the amount that must definitely be contained in the taxpayer’s gross income.

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Al flies for AAA Airlines. AAA provides its employees with several fringe benefits. Al and his family are permitted to fly on a space-available basis on AAA Airline. 2,000. AAA covered a membership to two mags published for pilots. 80. The airline covered Al’s foods and lodging while he was abroad overnight in connection with his job. 10,000. Although Al cannot eat while flying, he was allowed to drink espresso provided by the airline.

100 per month. The airline treated Al and his family to a one-week all-expenses-paid holiday at a resort near his home. This benefit was granted because of Al’s outstanding safety record. Which of the benefits are taxable to Al? Determine whether the following items represent taxable income. 40,000. One-half of the arrangement represented wages lost by Pat because of this of the discrimination and the balance represented an honor based on personal injury. Matt sued the local paper for a tale that reported he was affiliated with arranged crime. 50,000 of libel damages. 10,000 from an employer sponsored disability plan. 15,000 of medical expenditures.