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Jonas owns a building that he leases to Dipper, Inc., for $5,000 per month. The owner of Dipper has been complaining about the condition of the restrooms and has proposed making improvements that will cost $24,000. Dipper's owner is willing to pay to have the improvements made if Jonas will reduce the monthly rent on the build- ing to $4,000 for one year. Write a letter to Jonas explaining the tax effects for Jonas of the proposal by Dipper's owner.
In each of the following problems, identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.
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