Chapter 5 In Class Notes Flashcards
Dub gave a customer list to jones. Jones company grew a lot because of it. Jones was so grateful so he gave dub a nice car. Dub looked at it as if it was a gift so it was not taxable. Jones recognized the car as a deduction because it was a business deduction. Can the car be considered a gift for dub.
No because that does not meat the definition of a gift. The case was taken to court and the car was considered as income for dub so it was taxable. A gift is given through love or affection or respect.
Gift
something transferred from one person to another through love, affection, respect.
If your parents give you a convertible after you graduate from medical school. Is this taxable for the graduate?
No because it was a gift (given through love and respect and affection.
Is a gift deductible for the giver?
No
Inheritances are tax free?
True
An inheritance is tax free to the heir because
Some of that property has already been taxed by the person that gives the inheritance.
Gifts are not taxable because?
It would be difficult to keep track off and the government doesn’t want to make revenue on people giving gifts to other family members.
A death benefit is taxable?
False. When a wife dies the government doesn’t tax the husband for death benefits from insurance because that would just be a bad policy. The guy already is sad enough.
accelerated death benefits
If you know your going to die in like 2 years and it’s said by 2 or more doctors you can get your death benefits and it is non taxable.
You can receive a damage reward for
- physical injury
- loss of business Reputation
- loss of wages
- loss of your personal reputation
- Punitive damages (treble damage)
If you get a physical injury and you get a damage award is it always deductible?
Yes
The damage award for treble damage awards is always income.
True because the Punitive ( treble) damage awards is to punish the wrong doer.
Physical injury is always deductible because.
The purpose is to restore your capital (your human capital)
The treble damage award is always income because.
The purpose is not to restore your capital, it is to punish the wrong doer
The loss of business reputation and loss of wages and loss of personal reputation are taxable or deductible?
They are usually income. The only way they would be deductible is if you relate it to the physical injury, which is always excludable.
What is workers compensation
When there’s an accident while working you can go to the state of utah and get workers compensation for injuries.
meals and logding provided as a fringe benefit to the employee. Are they excludable.
Depends
In order for the meals to meet the excludable they must meet two requirements.
- Must be on the business premises
2. They must be for the convenience of the employer, not the employee.
In order for lodging to meet the excludable they must meet 3 requirements.
- must be on the business premises
- They must be for the convenience of the employer, not the employee.
- Required as a condition of employment
Flexible spending plan
You make 3,000 a month and the employer has a flexible spending plan. Employee goes to employee and says only pay me 2700 a month and the other 300 goes to the employer in the health benefit plan. When you have noninsured medical expenses it’s better. Your not taxed on the 300. Your paying your medical expenses with non-taxed income.
No additional cost service is only tax free if (example you let somebody get on the plane on a seat that wasn’t going to be used anyway)
it does not cost the provider anything.
You as an employee can get up to a 20% discount on services you buy from employer without showing it as income?
true
small things like free movie tickets, free jazz tickets are taxable.
false they are not
Are stock dividings tax free?
Yes. There is no increase in net work. Stock dividends are where every one has 1 stock. then everyone has 2 stock. It must have been a stock split.