Use the RIA Checkpoint research database to answer the following questions. Cut and paste the relevant Internal Revenue Code and Treasury Regulation section(s) into your solution and explain how the authority answers the tax issue in question. Give the most specific citation applicable [e.g., Sec. 168(a)(1)] that answers the question. Note: If the answer can be found in both the code and regulations, you must provide both authorities.
1. Melinda takes classes costing $3,500 that are paid for by her employer’s educational assistance plan.
a. What code section and/or regulation allows the exclusion of payments from an employer’s educational assistance plan?
b. What code section and/or regulation limits the amount that can be excluded?
c. What code section and/or regulation defines the elements of an employer’s educational assistance plan that must be met for employees to be allowed an exclusion for payments received from the plan?
d. What code section and/or regulation defines what types of expense payments from an employer’s educational assistance plan can be excluded from the employee’s gross income?
2. Billy’s Barbeque has assets of $60,000 and liabilities of $100,000. To assist Billy’s, its bank agrees to reduce the amount due on a loan from $65,000 to $50,000.
a. What code section and/or regulation specifically includes discharges of debt in gross income?
b. What code section and/or regulation allows certain discharges of debt to be excluded from gross income?
c. What code section and/or regulation defines the condition that must be met to exclude a discharge of debt from gross income?
d. What code section and/or regulation limits the amount of debt discharge that can be excluded?