. Write a Research Memorandum to convey your conclusions. See Chapter 2 of your textbook for a sample memorandum. Make sure you prepare a Research Memorandum NOT a Client Letter.

TAXPAYER INFORMATION

You are a senior manager of a large public accounting firm located in Des Moines, Iowa. One of your clients, Daniel Douglas, who is a minister of a local church in Des Moines, recently called you to research a tax question for him. Please research the issues relating to Daniels question and write a tax research memorandum. Daniels question relates to the following:

Daniel is a minister who receives an annual salary of $16,000 in addition to the use of a church parsonage with an annual rental value of $6,000. Daniel accepted this minimal salary because he felt that was all the church could afford to pay. He plans to report these amounts on his income tax return but he is uncertain how to treat the cash gifts he receives from the members of his congregation. These gifts are made out of love and admiration for him.

During the year, the congregation developed a regular procedure for making gifts to him on special occasions. Approximately two weeks before each special occasion when Daniel was not present, the associate pastor announced before the service that those who wished to contribute to the special occasion gifts for Daniel could do so by placing cash in envelopes and giving them to the associate who would give them to the Daniel. Only cash was accepted to preserve anonymity. The church did not keep a record of the amounts given nor the contributors, but the Daniel estimates that these gifts amount to about $10,000 in the current year. How should Daniel treat these gifts?