Jason's Employer Pays Year-End Bonuses Each Year on December 31

question 111

Multiple Choice

Jason's employer pays year-end bonuses each year on December 31. Jason, a cash basis taxpayer, would prefer to not pay tax on his bonus this year (and actually would prefer his daughter to pay tax on the bonus) . So, he leaves town on December 31, 2017 and has his daughter, Julie, pick up his check on January 2, 2018. Who reports the income and when?

• A) Julie in 2017.
• B) Julie in 2018.
• C) Jason in 2017.
• D) Jason in 2018.
• E) None of the choices are correct.

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Definitions:

Income

The total earnings acquired by an individual or business from various sources including work, investments, or sales, crucial for determining spending, savings, and investment decisions.

Utility Function

Reflects the consumer's preferences, assigning values to combinations of goods and services to indicate the satisfaction gained from them.

Compensating Variation

An economic concept that quantifies the amount of money needed to compensate someone for a policy change, maintaining their original utility level.

Consumption

The process by which goods and services are utilized by individuals or households to satisfy their needs and wants.