Which situation requires taxes on the income received?
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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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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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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 ...
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