Searching Tax Issues
Answer FIVE of the following tax issues. For each of the following tax issues, first identify the issue. Then complete a search within RIA to find an answer. Provide a very brief conclusion regarding the tax issue based on the source you found. Also, provide the proper citation (using the Citation Style Guide) for the source you found. If you find multiple sources, you need only to provide the best, most relevant one.
Example:?During the current year, the corporation that employs Caroline provided child care assistance as a fringe benefit for its employees. Caroline took advantage of the service. She estimates that the total benefit that she received was worth $7,500.
a. Issue: Is the $7,500 in child care assistance gross income to Caroline? (or . . . . "Is the $7,500 in child care assistance taxable to Caroline?").
b. Answer: She may exclude the first $5,000, and the rest will be included in her gross income (i.e. taxable).
c. Source: §129(a)(2)(A)
d. Hint: I searched "child assistance" as my keywords. In my results, this brought up 25 hits ?from the Internal Revenue Code. However, I was able to narrow those down because I know that my issue is with income. So, I knew that the section I was interested in would have to be between §61 and §140 based on the code organization (see coursepack). Knowing this information narrowed my results list down to 9 viable options.
1. Johnny recently joined a country club in his neighborhood. He paid $4,000 in dues for this year. The dues allow him to use the facilities for social activities, to play golf, to dine in the private restaurant, and to attend and host events. Johnny wants to know if he can deduct the annual dues as a business expense since he often plays golf with his clients and uses the meeting rooms at the club to discuss business with them. HINT: This one is in a code section.
2. On 12/1/2016 Titan Company, a partnership, distributed a truck to Jackie. Jackie is a 20% partner in Titan. Kathy, the tax manager at Titan, would like to determine whether the partnership (Titan) has to recognize any income, gain, or loss on this distribution. HINT: This one is in a code section.
3. Despite their busy schedules, the Dunphy's believe that volunteering is very important so they make it a priority. The entire family volunteers weekly at a local community center. Phil provides financial advice to the young people of the community while Alex tutors the middle school children. Claire and Haley organize activities at the center, cook meals, and clean. Phil and Claire estimate the value of their time spent this year as approximately $5,000 since the two of them could be earning money at their jobs during that time. They want to know if this amount is deductible as a charitable contribution.
4. Adrian filed her 2016 tax return in February 2017, and she claimed a deduction for a contribution to her individual retirement account (IRA). However, now it is April 1st, 2017, and she just realized she forgot to make the actual contribution to her IRA. What can she do? Does she need to amend her tax return or is she within the deadline if she makes the contribution today?
5. Fernanda owns a construction business that operates in a small town. In order to get the necessary permits, often times Fernanda must pay illegal bribes to a local town official. Can Fernanda claim a deduction for these illegal bribes as business expense?