Mr Crum, an Architect, Billed a Client $12,500 for Professional

question 79

Multiple Choice

Mr. Crum, an architect, billed a client $12,500 for professional services rendered. When Mr. Crum received a check in full payment from the client, he endorsed the check and mailed it to his college-age son, Paul, who cashed it and deposited the $12,500 in his own bank account. Which of the following statements is a correct application of the assignment of income doctrine?

• A) Mr. Crum must report $12,500 income on his tax return because he earned it.
• B) Paul must report $12,500 income on his tax return because he received the cash.
• C) It is illegal for Mr. Crum to transfer the check to Paul.
• D) Mr. Crum and Paul may decide which one of them reports $12,500 income on his tax return.

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Definitions:

Microeconomist

An economist specializing in the study of the behavior of individuals and firms in making decisions regarding the allocation of scarce resources.

Macroeconomist

An economist who studies the overall workings of an economy, including issues like inflation, unemployment, and economic growth at a large scale.

Minimum-Wage Laws

A law that establishes the minimum hourly pay rate that employers are legally allowed to offer their workers.

Council Of Economic Advisers

A group of economists who advise the President of the United States on economic policy.