BUS311HW4 - Bosun Kim 106408308 BUS311 02-28-2011 Homework...

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Bosun Kim 106408308 BUS311 02-28-2011 Homework Chapter 5 Discussion Question 1. Explain how the definition of gross income in §61 might influence whether particular cash flow is included in gross income. Gross income generally defines all income from whatever source derived. In §61 gross income broadly defines all income from whatever source derived, unless excluded by law. Gross income includes income realized in any form, whether in money, property, or service. 6. Tim is a plumber who joined a barter club. This year Tim exchanges plumbing services for a new roof. The roof is properly valued at $2,500, but Tim would have only billed $2,200 for the plumbing services. What amount of income should Tim recognize on the exchange of his services for a roof? Would your answer change if the Tim would have normally billed $3,000 for his services? In barter clubs, when members exchange property, they realize and recognize income at the market price, the amount that outsiders are willing to pay for the goods or services. The roof properly recognizes $2,500 on the exchange of his services for a roof. It would change a value of the roof depend on his value of his plumbing services. 16. Distinguish earned income from unearned income, and provide an example of each. Earned income defines all income from services such as salary, wages, and
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BUS311HW4 - Bosun Kim 106408308 BUS311 02-28-2011 Homework...

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