Reference no: EM1336881

I need detail answer of these question according to Taxation and legal principles in a range of situation given below in the problems . It is not an accounting exercise what is important is the adoption of correct legal methodology when applying the principles and reaching conclusions .

1) John is hard working accountant in a professional accounting practice . At Christmas he receives several gifts from his clients . These include :

Six bottles of expensive red wine .

One carton of beer .

As John does not drink alcohol he donates the carton of beer to the office drinks and gives the red wine to his family as Christmas presents .

Advise John of the taxation implications of these gifts in the following situations

John is an employee of the accounting practise .

John is the sole proprietor of the accounting practice .

2) A popular local actress agreed to sell her life story to a weekly magazine . Under the contract the actress was to be paid $ 25000 on signing the agreement and $ 75000 on completion of the manuscript . She received the $25000 in march 2005 and the second instalment of $ 75000 became due and payable to her in June 2005. However, at the request of the actress , the $75000 was not paid to her until July 2005 . Comment on any tax implications of this arrangement .