Questions for Class 5
TAX 3500 Fall 2014
1. In the last several baseball seasons there have been some hits that marked notable (for baseball fans) milestones. One was Barry Bonds hitting a record-breaking 756th home run. Another was Derek Jeter getting his 3000th hit. My question is about the fellow who caught the ball in each of these two events -- Derek Jeter’s 3000th hit and Barry Bonds’s 756th home run. The baseball in each case was estimated to be worth several hundred thousand dollars – did these men realize income at that moment? (Hint: there are a couple of items in the assigned reading for today’s class -- Gross Income – Inclusions and Exclusions folder in Course Materials that might help you.)
2. Do the recipients of the Oscar ‘swag bags’ have income? If you think ‘no’ is a good answer to Question 1 above, why might the swag bag cases be different?
3. After you’ve read Corliss v. Bowers and Helvering v. Horst on Blackboard, you’ll be able to tell us why Hornung had income (or did not) in 1961. Read the beginning of the “OPINION” portion in Hornung v. Commissioner. Notice that the Taxpayer is making a two-part argument: (1) that the value of the car is not income, but, if it is, (2) it was income in 1961, not in 1962. Why is that second part of his argument important?
Eileen is a cash basis attorney. In 2013, she performed services in connection with the formation of a corporation and received stock with a value of $5,000 for her services. By the end of the year, the value of the stock had decreased to $2,500. She continued to hold the stock. Does Eileen recognize $2,500 of gross income or $5,000 or some other amount with respect to stock for 2013?
Tom owned stock that increased in value by $10,000 during the year, but he did not sell the stock. He earned $40,000 salary, although he “took home” only $29,000 because his employer had withheld $11,000 in federal and state income taxes and FICA. Tom saved...
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