Questions from General Taxation

Q: Ms. Lewis, a bartender and aspiring actress, won a

Ms. Lewis, a bartender and aspiring actress, won a statewide beauty pageant and was awarded a $15,000 cash scholarship to further her education and career goals. She used the money to pay for private...

Q: On a recent scuba dive, Mr. Underhill located a shipwreck

On a recent scuba dive, Mr. Underhill located a shipwreck and recovered a Spanish sword inlaid with precious stones. The sword’s appraised value is $11,500. Mr. Underhill mounted the sword over his fi...

Q: The pilots of Skyway Airlines have been on strike for four months

The pilots of Skyway Airlines have been on strike for four months. Ms. Biggs received a $2,700 benefit from her union, the Airline Pilots Association International. The union funded the benefits for S...

Q: Mrs. Overton, age 60, won an age discrimination suit

Mrs. Overton, age 60, won an age discrimination suit against her former employer. The court awarded her $100,000 in damages for mental anguish and $200,000 for the violation of her civil rights.

Q: Mrs. Newton, who is a self-employed author,

Mrs. Newton, who is a self-employed author, paid $3,200 for a new computer system. She uses the system to write her books, and her two children use it for their schoolwork and video games.

Q: Mr. Tahoma, who is a member of the Navajo tribe

Mr. Tahoma, who is a member of the Navajo tribe of Native Americans, developed severe arthritis this year. He paid $1,100 to a tribal medicine man who performed a series of traditional Navajo healing...

Q: On April 3, Mr. and Mrs. Rath traveled to

On April 3, Mr. and Mrs. Rath traveled to Japan. They made the trip because their son, who lives in Tokyo, was injured in an accident and needed their care. After nursing their son back to health, the...

Q: On July 2, Mrs. Nation received a notice assessing a

On July 2, Mrs. Nation received a notice assessing a $10,861 tax deficiency. She was short of funds, so she did not pay her tax bill within 10 days as required by the notice. Instead, she waited until...

Q: On April 13, Mr. Price applied for an automatic extension

On April 13, Mr. Price applied for an automatic extension of time to file his Form 1040. He estimated that the balance of tax due was $3,800, which he paid with the extension request. He filed his ret...

Q: Nunoz Inc., a calendar year taxpayer, incurred a net operating

Nunoz Inc., a calendar year taxpayer, incurred a net operating loss in 2018 that it carried back as a deduction against 2016 income. Nunoz’s treasurer filed a claim for a $712,600 refund of 2016 tax a...