AC256_Finley_Joey_Gross Income Exclusions_Unit 4

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Running head: GROSS INCOME EXCLUSIONS 1 Gross Income Exclusions Joey Finley Kaplan University Federal Tax AC256 Emil Koren June 14, 2011
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Gross Income Exclusions 1) Problem I:4-33- Self-Help Income- In which of the following situations would the taxpayer realize taxable income? a. A mechanic performs work on his own automobile. The mechanic would have charged a customer $400 for doing the same work. i. There is no exchange of goods/services done for somebody else, just the mechanic himself. He may be trained and qualified to perform the work for pay, for a customer, but the mechanic is not performing the work for someone else. b. A mechanic repairs his neighbor’s personal automobile. In exchange, the neighbor, an accountant, agrees to prepare the mechanic’s tax return. The services performed are each worth $200. i. An equivalent value of goods/services between both the mechanic and accountant were performed, requiring that taxable income by both be claimed for the year that the income was realized. Under the IRS's Bartering Income statute, "Bartering occurs when you exchange goods or services without exchanging money" ("Bartering Income," 2011, p. 1). ii.
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