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

Exercise 60

Although Hank is retired, he is an excellent handyman and often works part-time on small projects for neighbors and friends.Last week his neighbor, Mike, offered to pay Hank $500 for minor repairs to his house.Hank completed the repairs in December of this year.Hank uses the cash method of accounting and is a calendar-year taxpayer.Compute Hank's gross income for this year from each of the following alternative transactions:
a.Mike paid Hank $200 in cash in December of this year and promised to pay the remaining $300 with interest in three months.
b.Mike paid Hank $100 in cash in December of this year and gave him a negotiable promissory note for $400 due in three months with interest.Hank sold the note in January for $350.
c.Mike gave Hank tickets in December to the big game in January.The tickets have a face value of $50 but Hank could sell them for $400.Hank went to the game with his son.
d.Mike bought Hank a new set of snow tires.The tires typically sell for $500, but Mike bought them on sale for $450.