Compute hanks gross income for this year

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Reference no: EM13905823

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 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.

Reference no: EM13905823

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