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:

Anesthetics

Substances used to induce loss of sensation or consciousness during medical procedures.

Sedatives

Sedatives are a class of drugs that slow brain activity, used for calming the nervous system and inducing sleep or relaxation.

Pain Medication

Drugs or substances specifically used to relieve pain, ranging from over-the-counter analgesics to prescription opioids.

Cesarean Sections

A surgical procedure used to deliver a baby through incisions made in the mother's abdomen and uterus.