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Ch 9 Homework Questions (Doesn’t required any reference please use your own words to answer it . Don’t give the reference it’s a study guide professor wants to see students explanation only. To answer...

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Ch 9 Homework Questions (Doesn’t required any reference please use your own words to answer it . Don’t give the reference it’s a study guide professor wants to see students explanation only.
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Q. Megan and Jake Bille are ma
ied with two kids, Sammie (18) and Julie (4). Megan is a stay at home mother and Jake is a science professor at University of Texas. Both children are claimed as dependents on the Bille’s tax return.
 
1. Megan went to the hospital one day for outpatient surgery. The couple hired a babysitter for $80 to watch Julie while she was gone. What tax benefits are available to the Billes for this cash payment?
2. Sammie is a future NBA prospect. This year, while he was a college freshman and classified as an amateur under NCAA rules, the Billes spent $14,000 for special clothing, equipment, camps, and personal trainers to keep improving Sammie’s skills. Can the Billes deduct these items?
3. Under his contract, Jake’s inventions while employed at the university are the property of University of Texas, but Jake receives an addition to his salary equal to one-third of the royalties received by the university. This year, Jake received $100,000 on top of his salary, as royalties allocated to him. Does Jake recognize this amount as ordinary income or capital gain?
 
Required: Prepare a letter to Megan and Jake Bille answering their tax questions. Include in your letter, the appropriate citation (code section, ruling, or case). Use only primary sources. (Do not cite the IRS website or IRS publication.)
Ru
ic:
Format: +5
Spelling/Grammar: +5
Restatement of facts: +5
Co
ect answer(s): +30
Citations included: +5
Answered Same Day Nov 15, 2020

Solution

Preeta answered on Nov 17 2020
160 Votes
To Megan and Jake Bill,
I have read all the details about you and your family. Since Jake Bille is the only earning member in the family and Megan Bille is housewife, so his spouse Megan and kids will be regarded as dependent on him. As a tax consultant, I will advice you on the issues based on the taxation codes, rulings and cases.
As per the first issue, under IRS Publication 929 (2017), a family can claim tax benefits on the amount paid to the babysitter but some conditions must be fulfilled. The child must be below the age of 17, here Julie is of age 4, and so this condition is satisfied. The next condition is the payment amount should be lower than $5,000; in this case the amount paid is $80, so this condition is satisfied too. The last condition is that...
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