Your client has a blood type that is so rare and in demand that she earns $300 each time she provides blood. Last year, she earned a total of $15,000 from giving blood. Your client has substantial capital loss carry-forwards from stock sales entered into last year. Your client has asked you if the money she receives from selling blood constitutes the sale of an asset or the provision of a service.
a. From a federal income tax standpoint, would your client prefer to contend that she is selling an asset or providing a service?
b. Under the AICPA Standards, what steps should you take to determine whether your client can claim this sale as a capital gain?
c. From a state sales tax standpoint, would your client prefer to contend that she is selling an asset or providing a service?
d. Do the AICPA Standards apply to the preparation of state sales tax returns?
e. Your client has asked you to report her proceeds as the sale of an asset for federal income tax purposes, but as the provision of a service for state sales tax purposes. Is this definitely unethical?