Larry is a tax accountant and Sheila is a hairdresser.

Larry is a tax accountant and Sheila is a hairdresser. Larry prepares Sheila’s tax return for free and Sheila agrees to style Larry’s hair six times for free in return for the tax return. The value of the tax return is approximately $300 and the hair styling work is approximately $300.

a. How much of the $300 is includable income to Larry? Why?

b. How much of the $300 is includable income to Sheila? Why?

Answer:

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