Jan owns her own service business and also owns some blue-chip stock. She is starting to retire and she wants her son, Matt, to take over the business and also generally be in charge of looking after Jan. In X1, Matt began working for the business and Jan paid Matt a salary. She also signed over 25% of her own earnings to Matt. On July 1, X1, Jan gifted the blue-chip stock to Matt. On September 15, X1 the stock paid dividends. On her X1 tax return, Jan reported 75% of the earnings from her service business and none of the dividends (taking the position that these items were income to Matt). The IRS is auditing the return and assert that all of the business earnings and all of the dividends should have been reported by Jan. Required: Discuss a) the business earnings, and b) the dividends. Is the IRS correct? Why or why not? What information is needed to make the decision? Provide a couple of scenarios.