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Taxation and legal principles

Problem of Taxation law

I need detail answer of these question according to Taxation and legal principles in a range of situation given below in the problems . It is not an accounting exercise what is important is the adoption of correct legal methodology when applying the principles and reaching conclusions .

Question 1 -

John is hard working accountant in a professional accounting practice . At Christmas he receives several gifts from his clients . These include :

Six bottles of expensive red wine .

One carton of beer .

As John does not drink alcohol he donates the carton of beer to the office drinks and gives the red wine to his family as Christmas presents .

Advise John of the taxation implications of these gifts in the following situations

John is an employee of the accounting practise .

John is the sole proprietor of the accounting practice .

Question 2 -

A popular local actress agreed to sell her life story to a weekly magazine . Under the contract the actress was to be paid $ 25000 on signing the agreement and $ 75000 on completion of the manuscript . She received the $25000 in march 2005 and the second instalment of $ 75000 became due and payable to her in June 2005. However, at the request of the actress , the $75000 was not paid to her until July 2005 . Comment on any tax implications of this arrangement .
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Problem of Taxation law

I need detail answer of these question according to Taxation and legal principles in a range of situation given below in the problems . It is not an accounting exercise what is important is the adoption of correct legal methodology when applying the principles and reaching conclusions .

Question 1 -

John is hard working accountant in a professional accounting practice . At Christmas he receives several gifts from his clients . These include :

Six bottles of expensive red wine .

One carton of beer .

As John does not drink alcohol he donates the carton of beer to the office drinks and gives the red wine to his family as Christmas presents .

Advise John of the taxation implications of these gifts in the following situations

John is an employee of the accounting practise.
If John is an employee, then the employment rules of the company will prevail. If the rules say that he keeps the gifts without disclosing then he can do so. For example please see what the STANDING RULES OF THE US SENATE SAY ABOUT GIFT RECIEIVING: No Member, officer, or employee of the Senate shall knowingly accept a gift except as provided in this rule
A Member, officer, or employee may accept a gift (other than cash or cash equivalent) which the Member, officer, or employee reasonably and in good faith believes to have a value of less than $50, and a cumulative value from one source during a calendar year of less than $100. No gift with a value below $10 shall count toward the $100 annual limit. No formal record keeping is ...

Solution Summary

Taxation and legal principles in a range of situations are given below.

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