Betty Is a House Painter and Owns Trim Beautiful Painting

question 29

Multiple Choice

Betty is a house painter and owns Trim Beautiful Painting Company. Last month she painted the lake cottage of Anne, a local attorney who performed some litigation work for Betty to help in some delinquent bill collection. The painting, valued at $1,000, was done in exchange for the litigation work. Neither party charged fees. What should be the tax consequences of these events?
I.Anne reports $1,000 of income when the painting is completed.
II.No cash was received. Therefore, neither party reports income.
III.Neither individual reports income because there is no reporting of the event to the IRS.
IV.Both parties report income because there is no exclusion for barter transactions..
​

• A)Only statement I is correct.
• B)Statements II and IV are correct.
• C)Only statement II is correct.
• D)Statements I and IV are correct.
• E)Only statement IV is correct.

---

Definitions:

Copies

Replicas or reproductions of a document, file, data, or genetically identical organisms or cells.

Pure-Breeding

Refers to organisms that, when bred, produce offspring with specific, uniform characteristics over many generations.

Incompletely Dominant

A genetic scenario wherein the phenotype of the heterozygote is intermediate between those of the two homozygotes.

Stumpy

Describes an object, limb, or structure that is short and thick in proportion to its length, often used in describing plant or animal features.