Latka Novatny Gave You the Following Information to Use in the Preparation

question 44

Essay

Latka Novatny gave you the following information to use in the preparation of his current year's tax return:
$\begin{array}{ll}\text { Salary }&\$120,000\\\text { Dividends } & 20,000 \\\text { Itemized deductions } & 35,000\end{array}$ In addition,he received $40,000 from a relative for whom he had worked previously.You have researched whether the $40,000 should be classified as a gift or compensation and are confident that substantial authority exists for classifying it as a gift.What tax compliance issues should you consider in deciding whether to report or exclude the $40,000?

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Definitions:

Breccia

A type of rock consisting of angular fragments of minerals or rocks cemented together by a finer-grained matrix, often formed by volcanic or tectonic actions.

Formation

A rock unit that is distinct, laterally traceable, and mappable; also used as an informal term for an eroded, perhaps unusually shaped, mass of rock.

Cross Beds

Sedimentary layers deposited at an angle to the horizontal, typically formed by wind or water currents.

Well-sorted

Describes sediment in which grains are of nearly the same size.