The Reverend Shaman Oracle is an ordained minister in the Church of Prophetic Prophecy in Palm Desert, California. In the current year, Shaman receives payments of $ 150,000 from the church for his services. Of this amount, the church designates $ 60,000 for compensation and $ 90,000 as a housing allowance. Shaman and his wife own a home and have actual expenditures during the year for the home of $ 72,000. The house is located in a well-established rental market, and the fair market rental value of the home for the current year is $ 55,000. Shaman wants to know how he and his wife should report these amounts on their current year’s tax return. After appropriate research, write a letter to Shaman explaining your findings. His address is P. O. Box 1234, Palm Desert, California 92211.
Answer to relevant QuestionsWhen an Internal Revenue Code section and a tax treaty provision appear to conflict, which usually prevails? In addition to committee reports, which are byproducts to the development of tax legislation, what other report may be of value to the tax researcher analyzing a new provision of the tax law? Why? What is found in each of the following subtitles of the Internal Revenue Code? a. Subtitle B b. Subtitle F c. Subtitle A d. Subtitle C Which Internal Revenue Code sections are found in each of these subchapters of Subtitle A, Chapter 1? a. Subchapter J b. Subchapter A c. Subchapter I d. Subchapter P Tax protesters who file “frivolous” tax returns or bring “frivolous” proceedings before the U. S. Tax Court are subject to certain fines or other penalties. What are the grounds for imposing each penalty? What is the ...
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