1. An example of the administrative convenience concept is the IRS’s announce-ment that the value of frequent flyer miles earned for business travel need not be included in the recipient’s gross income. Based on the IRS’s stated rationale in Announcement 2002-18, do you believe that the same rule would apply to “miles” earned for personal travel? Why or why not?

2. Mr. Grifter embezzles $150,000 from his employer. He gets caught . . . but only after having spent much of that money. Is Mr. Grifter properly taxable on that $150,000 – i.e., should it be included in his gross income for FIT purposes? Why or why not?

3. The board of directors of ABC Corp. meets on December 15^th, Year 1, and ap-proves the immediate payment of a $2.5 million cash bonus to Ms. Executive. She (Ms. Executive) goes immediately to ABC’s treasurer and asks that her bo-nus check not be prepared and delivered to her until January 2, Year 2. The trea-surer says “Well, I was just about to prepare it, but okay!”.

As ABC Corp.’s Tax Director, what advice do you give to ABC’s treasurer regard-ing when the $2.5 million should be reported to the IRS – i.e., as part of Ms. Exe-cutive’s Year 1 pay or her Year 2 pay, and why?

Answer rating: 100% (QA)

1 I believe the same rules should apply for miles earned for personal travel Benefits accrued to emp... View the full answer