Does the fact that an item of income is paid in a form other than cash mean it is nontaxable? Explain.

A.

No. The main issue is whether the taxpayer receives any form of a personal benefit. Such as a grandfather transferring stocks and bonds to his grandson for a college education; this transaction is taxable.

B.

No. The general rule is the method of payment does not matter. For barter transactions which are direct exchanges of property and services, only one party to the transaction is taxed on the value of the property or services received in the exchange.

C.

No. The form of payment is usually unimportant. The important question is whether the taxpayer receives economic benefit.

D.

Yes. Gross income is limited to amounts received in the form of cash, not property or services.