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Which situation requires taxes on the income received?

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.

b. A mechanic repairs his neighbor's personal automobile. In exchange, the neighbor, an accountant, agrees to prepare mechanic's tax return. The services performed are each worth $200.

c. A mechanic repairs his daughter's automobile without any charge.

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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.

b. A mechanic repairs his neighbor's personal automobile. In exchange, the neighbor, an accountant, agrees to prepare mechanic's tax return. The services performed are each worth $200.

c. A mechanic repairs his daughter's automobile without any charge.

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*I am covering the two situations that do not have a taxable income example first*

A) There is no exchange of goods/services. He may be trained and qualified to perform the work for pay, for a customer, but the mechanic is ...

Solution Summary

Are you faced with a similar question posed here? You might wonder what situation dictates that a taxpayer must realize income as taxable. My solution answer the question, as well as provides 2 references.

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