For Each of the Following Situations,determine the Amount of Gross

question 124

Essay

For each of the following situations,determine the amount of gross income that the taxpayer should recognize.Explain why any amounts are excluded from gross income.
a.Gary is an employee of G&K Electronics.G&K allows all employees to buy goods from inventory at a 20% discount.Gary purchases a television under the discount plan for $800.The television,which cost G&K $700,normally sells for $1,000.
b.Carolyn receives an $8,000 National Merit Scholarship and a $2,000 Honors at Entrance Scholarship to attend State Tech.The scholarships were given based on national testing scores and high school grades,and require no future services on Carolyn's part.Tuition and other fees are $6,500 per year at State Tech.Carolyn also pays $6,000 for room and board in University housing.
c.Donnie's employer provides free parking to certain management level employees.In 2013,Donnie's employer provided parking cost his employer $3,180.
d.Gretchen receives $5,000 of 6% City of Orlando bonds as a graduation present from her boyfriend on May 1.The bonds pay interest on June 30 and December 31.Gretchen sells the bonds at a gain of $750 in August.

Understand the principles behind the equity method of accounting in consolidations.

Identify factors that indicate whether a business enterprise should consolidate a VIE.

Grasp the implications of subsidiary stock issuance and repurchase on a parent’s investment account.

Describe how noncontrolling interest in net income is calculated and reported.

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Definitions:

Plastic Toys

Manufactured playthings made from various types of plastic, often designed for children's entertainment and education.

Employee Stock Plans

Programs offered by companies allowing employees to purchase shares at a discount or receive stock as part of their compensation package.

High-Involvement

An organizational strategy that aims to engage employees deeply in their work and decision-making processes.

Natural Fit

A situation or condition where an individual or object seamlessly matches or integrates with a particular environment or role without force.