Although Hank is retired, he is an excellent handyman and often works part-time on small projects for

Question:

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 in December to the big game in January. The tickets have a 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.
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...