Explain Why the Taxpayer in Each of the Following Situations

question 20

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.Leon works for Golfshop America, a large retailer of golf items. Golfshop allows all employees to purchase golf items at a 30% discount. Leon purchases a set of golf clubs for $700 that normally sells for $1,000 (cost of the golf clubs to Golfshop was $600). In addition, Leon is selected as salesman of the year and receives a gold putter worth $900.
b.Brenda is a student at Atlantic University. Brenda pays the $15,000 cost ($10,000 for tuition and books; $5,000 for living expenses) of attending Atlantic University with a $5,000 general scholarship from the college of economics, a $5,000 student loan, and $3,000 from her parents.
c.Becky pays off the loan on her son's car while he is a student at State University. The son, Daryl, owed $5,400 before Becky made the payment.
d.Leona is injured while on the job. She receives $4,000 from workers' compensation during the time she was away from her job.

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Definitions:

Skeletal Structure

A simplified representation of organic molecules highlighting the bonds between carbon atoms without explicitly drawing hydrogen atoms.

Condensed Formulas

A method of writing a formula of a compound using the line bond structure but omitting the lines representing bonds to simplify the representation.

Line-Angle Structure

A simplified representation of chemical structures where bonds are represented by lines and carbon atoms are implied at each line's end and vertices.

Carbon Atoms

The fundamental building blocks of organic molecules, capable of forming four covalent bonds.