Professor Vanessa Lazo received a free tour to Costa Rica in a drawing at a professional conference. Professor Lazo has asked for your help in determining whether the free tour that she received is taxable. She understands that prizes and awards are taxable income to the recipient, but she does not think the free tour qualifies as a prize or award and is, therefore, not taxable.
Required:
Go to the IRS website (www.irs.gov) and locate Publication 525. Review the chapter on Other Income. Write a letter to Professor Vanessa Lazo stating whether the free tour is taxable. If it is taxable, be sure to include in your letter where the income must be reported and the dollar amount. (An example of a client letter is available at the website for this text, located at www.cengagebrain.com.)