McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 44

Dewey is a lawyer who uses the cash method of accounting.Last year Dewey provided a client with legal services worth $55,000, but the client could not pay the fee.This year Dewey requested that in lieu of paying Dewey $55,000 for the services, the client could make a $45,000 gift to Dewey's daughter.Dewey's daughter received the check for $45,000 and deposited it in her bank account.How much of this income is taxed, if any, to Dewey? Explain.