Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Facts: Your client, a German named Werner visited his brother Klaus, who immigrated to the United States eight years ago and has been living in

Facts: Your client, a German named Werner visited his brother Klaus, who immigrated to the United States eight years ago and has been living in Washington, DC. At the time, Werner was under contract to a German soccer team and was expected to return to the team to begin play for the fall 2014.

Considerable encouragement from Klaus and the Redskins organization seemed to be in vain until the Redskins, at Klauss suggestion, offered Werner a $100,000 bonus. At this point, Werner signed a contract, which Klaus co-signed as a witness and interpreter.

Grateful to his brother for assisting as an interpreter and negotiator, and for encouraging him to stay, Werner instructed the Redskins to pay $15,000 of the negotiated bonus directly to Klaus. Klaus reported the $15,000 as other income on his 2014 income tax return and paid the appropriate tax.

After examining Werners 2014 tax return, the IRS made a deficiency assessment claiming that the $15,000 paid to Klaus constituted income to Werner and should thus be included in his income. Your manager has asked you to prepare a tax research memo indicating if the $15,000 should be included in taxable income for Werner.

FROM STUDENT: Please guide me to the correct tax code and court citation to answer this. Thanks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Planning Guide For Information Systems Security Auditing

Authors: National State Auditors Association And The U. S. General Accounting Office

1st Edition

1508456720, 978-1508456728

More Books

Students also viewed these Accounting questions

Question

What is job enlargement ?

Answered: 1 week ago

Question

what is the most common cause of preterm birth in twin pregnancies?

Answered: 1 week ago

Question

Which diagnostic test is most commonly used to confirm PROM?

Answered: 1 week ago

Question

What is the hallmark clinical feature of a molar pregnancy?

Answered: 1 week ago