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Question: Facts:
David Anderson worked for Arctic Corporation, which closed one division of its local plant. Arctic's management was very concerned about the employee's morale within the remaining part of the plant. Arctic decided to pay the cost of job replacement assistance (outplacement services) for employees who lost their jobs in the closed division.
The outplacement services provided to the downsized employees include using Consultants to assist employees in writing resumes, identifying potential employers for employees, and contacting those employers about possible employment positions.
David made use of a consultant during 2014 and secured a new position. Arctic send David a letter stating that it will include the value of outplacement services as income on David's 2014 W-2. David is wondering whether Arctic's treatment of the outplacement services is correct.
Prepare a MEMO for the tax file. Please keep in mine their a difference between a MEMO and a LETTER.
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