Explain Why the Taxpayer in Each of the Following Situations

question 19

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.Rafael works as a salesman of Dependable Cars Inc.Because Rafael is the year's top salesman,Dependable Cars allows Rafael to purchase a car for $30,000,which normally sells for $35,000 (Dependable Car's cost was $28,000).
b.Janine's brother Barry is laid off from his job for the first half of the year.Because Barry is having trouble paying all of his bills,Janine tells Barry that she will help him out and pay the property taxes on Barry's house.The property taxes amount to $1,000.
c.Thomas works as a production manager for Healthy Body,Inc.Because Thomas's unit had not had a work related accident for 2 years,Healthy Body gives Thomas a weight machine that was worth $500.
d.Emmett was out for his daily walk when he spots an old shirt on the side of the road.Upon inspection,he determines it to be an old baseball uniform,which is in good enough condition that he takes it home and washes it.At a party two months later,Mark,a baseball memorabilia collector,tells him that it might be worth something.Emmett takes the shirt down to the local collector's shop where he learns that the shirt was once worn by Willie Mays and is worth at least $7,000.
e.Helen invests $10,000 for a 25% interest in Lockport Landscaping,an S corporation,on January 1,2013.During 2013,Lockport pays Helen $45,000 in wages for her services as the general manager and $2,000 in cash dividends on her stock.Lockport reports a 2013 net income of $80,000.
f.Amber wins $10,000 in the state lottery from a ticket given to her by her cousin,Beverly.

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Definitions:

Self-Mutilation

The act of deliberately harming one's own body as a way to cope with emotional distress, without the intention of suicide.

Suicide Attempts

Actions taken by an individual with the intent to end their life, but which do not result in death.

Hopelessness

A feeling of despair or lack of hope, often associated with depression or difficult life circumstances.

Heat Stroke

A severe heat-related illness characterized by a body temperature of 104°F (40°C) or higher, potentially leading to damage to the brain and other internal organs.