Federal Income Tax

1)  Individual A paid $10,000 in to B.  What is the federal income tax effect to A?

Hint:  Clearly, this is an open ended question.  You are not expected to address all possible scenarios.  However, it is important to communicate your process and support any points you raise with citations to primary authority.   I suggest that you put a time limit for responding (it is best to attempt to answer each question).

Required: Provide specific detail (cited) regarding how to analyze an expenditure for federal tax purposes. What is the process that you must follow to determine the tax treatment of an expenditure? Provide examples.