Travis and Amy Carter are married and have 2 children April (age 17), and Martin (age 18) Travis is a mining engineer; Amy is a registered nurse The Carters live only a few blocks from Ernest and Mary Walker, Amy Carters parents The Walkers are retired and live on interest, dividends, and Social Security benefits

1. The ad valorem property taxes increased on the Carters residence, while those on the Walkers residence decreased

2. When Travis registers an automobile purchased last year in another state, he is forced to pay a sales tax to his home state

3. Gifting a high value item: As an anniversary present, the Carters (the kids) gave the Walkers (the parents) a recreational vehicle (RV)

4. When Travis made a consulting trip out of state to Chicago, IL the client withheld Illinois state income tax from the payment made to Travis for his services

5. Travis employs his children to draft blueprints and prepare scale models for use in his work Both April and Martin have had training in drafting and topography

6. The Carters are audited by the state on an income tax return filed several years ago Later in the year, they are audited by the IRS on a Form 1040 they filed for the same year In each case, a tax deficiency and interest were assessed

7. The Walkers are audited by the IRS Unlike the Carters, they did not have to deal with an agent but settled the matter by mail

Explain these developments and resolve the issues raised