Response to the following problem:
Marge is a hostess at a local diner. As a hostess, Marge normally does not receive tips. However, on occasion she will help out with an order and the waitress will give Marge part of her tips. During the current year, Marge's total tips were $200.
a. Discuss the tax consequences of the tip income if Marge did not receive more than $20 in tips in any one month during the year.
b. How would your answer to Part a. differ if she received more than $20 in tips during the month of May?