taxation

Problem I

Noncash Compensation.  For each of the following items, indicate whether the individual taxpayer must include any amount in gross income.

1. Employees of Eastside bookstore are given their birthdays off with pay.

2. Westside Hardware, Inc., gave each employee 10 shares of Westside stock worth $ 100 per share in lieu of cash bonus.

3. Employees of Northside Manufacturing were allowed to take home the company’s old computers when the company purchased new ones.

Comprehensive problem

Problem II

During 2013, Gary earned $ 57,000 as an executive, Gary, who is single, supported his half-sister, who lives in a nursing home. Gary received the following interest: $ 400 on City of Los Angeles bonds, $ 200 on a money market account, and $ 2,100 on a loan made to his brother.

Gary spent one week serving on a jury and received $50.

Gary received a refund of federal income taxes withheld during the prior year of $ 1,200 and state income taxes refund of $ 140. Gary had itemized deductions last year of $8,000 which included $ 1,000 of state income taxes.

Gary received qualified dividends from Ace Corporation of $1,000 and from Tray Corporation of $ 1,400. Gary itemized deductions equal $9,000, and withholding for federal income taxes is $8,000. Compute Gary’s tax due refund due 2013.