Explain Why the Taxpayer in Each of the Following Situations

question 18

Essay

Explain why the taxpayer in each of the following situations either does or does not have taxable income and determine the amount,if any,that the taxpayer would have to recognize.
a.On December 1,2017,Tomlin,a cash basis taxpayer,bills a customer $5,000 for services rendered throughout 2017.The customer comes to Tomlin's office on December 30,2017,and offers to pay him the $5,000 amount owed.Tomlin suggests that the customer mail the check to him so he could see how quickly the post office could get the check to him through the mail.The post office delivers the check to Tomlin on January 10,2018.Tomlin promptly deposits the check in the bank.
b.Patty,age 65,will retire this year.Twenty years ago she purchased a retirement annuity contract at a cost of $6,000.Under the terms of the contract,Patty is to receive $150 per month for 10 years after reaching age 65.During the current year,Patty receives $1,200 (8 payments).
c.Bud is an accountant for Big Oil Company.In his spare time,Bud collects unique beer cans and bottles.During a party at his house,one of his friends tells him that his can of Billy Beer is a hot item in the professional collector's market.Bud investigates and instead of selling the Billy Beer,he trades the can of Billy Beer for a bottle of Leinenkugles beer.
d.Rosemary is awarded the "Outstanding Teaching Award" at DePauw University.She receives a plaque and $3,500.She assigns the $3,500 to DePauw to establish a scholarship for economics majors.

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Definitions:

Sexual Harassment

Unwanted sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature that can affect an individual's employment, interfere with their work performance, or create a hostile work environment.

Conflicts Of Interest

Situations where an individual's or organization's personal interests could improperly influence the performance of their professional duties or responsibilities.

Customer Confidence

The trust and belief that customers have in a company and its products or services.

Ethical Climate

The collective understanding within an organization of what is considered morally right or wrong, influencing ethical decision-making.