SUFFOLK UNIVERSITY Prof. Angelini/Federal TaxI 2. In which of the fol staat ons
ID: 2562270 • Letter: S
Question
SUFFOLK UNIVERSITY Prof. Angelini/Federal TaxI 2. In which of the fol staat ons world the taxpayer not be considered constructive receipt of income in 2017? Assume that all of the taxpayers use the cash imethod of accounting a. Al is a self-employed accomtant. On Deccmber 27, 2017, he received a check for the November financial statements of one of his clients. Due to $2.000 for illness, he was unable to deposit the check watil Juary 5,2018 b. Ben entered into a contract to sell his rental propcrty ou December 3, 2017. On that Please write your answer on the lime to the left of the question number. Only sclect one date, the down payment, a check for S1,000, was placed in an escrow account. Ben answer. the check when the closed on Jaquary 20, 2018 television all over the world. On December 28, thc agent, Don Queen, a check for $5 million representing his prize money for the fighe Don delivered the check to Sugar Ray on January 12, 2018 QUIZ figlat promoters gave Sugar Ray's . Arguably, free paking places provided to enmployces by their employers might be a. such items neither satisfy the econounic definition of incoene nor fall within the “ is secondary or incidental to the angloyers d. Oa December 20, 2017, Mr. Big rcceived stock worth $10,000 as a bous from the c. All of the taxpayers above are in constructive receipt of the income items excluded froum taxable income on the grounds that corporation for which he He did not sell the stock until January 5, 2018 c. the vabae of the bencfit obtained by the employee is not detenninable d thc benefit obtained by the calployee is not in the frm of cash. for all or a paet of its operations a F Gas Corporation, a chain of 10 gas stations ownod and operated by F. The b The Clinic. This corporation has average asssal gross reccipts of $13 milion ansmally varicty who provide a of health care services to the citizens of Houston Annual billings to arance of Idaho is a partnarship owned by B and T. Gross receipts for ownod by J and A. The partncrship opcrates oil driling rigs $100,000 Amsal gross receiptsExplanation / Answer
1) Arguably, free parking places provided to employees by their employers might be excluded from taxable income on the grounds tha b. any gain obtained by the employee is secondary or incidental to the employer’s business purpose that is served by granting such benefit Free parking places provided by employers to employees do not represent compensation to the employee because it is primarily serving business needs of the employer. 2)In which of the following situations would the taxpayer not be considered in constructive receipt of in-come in 2017? Assume that all of the taxpayers use the cash method of accounting Sugar Ray fought Rocky on December 25, 2017, a Christmas fight shown on television all over the world. On December 28, the fight promoters gave Sugar Ray’s agent, Leo Luciani, a check for $5 million representing his prize money for the fight. Leo delivered the check to Sugar Ray on January 12, 2018 This income is deemed to be received in the taxable year. 3)Which of the following businesses must use the accrual method of accounting to account for all or a part of its operations? a) F Gas Corporation, a chain of 10 gas stations owned and operated by F. The corporation has gross receipts of $3 million annually. b) The Clinic. This corporation is owned and operated by 80 physicians who provide a variety of health care services to the citizens of Houston. Annual billings to insurance companies and patients monthly exceed $20 million As a general rule, corporations must use the accrual method unless the corporation has average annual gross receipts of less than $5 million or is a qualified personal service corporation. So option a and b is meeting this condition.
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