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Issues Relating To Taxation Research Paper

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Oprah CaseIn one of her television shows, Oprah Winfrey decided to give away Pontiac G6 Sedans to her audience. From an accounting perspective, its important to determine whether the value of these cars was taxable. Following a comprehensive analysis of taxable and nontaxable income, the cars awarded to the TV audience should have been included in their gross income and subject to federal taxation. According to federal taxation prizes and awards in the form of goods and services must be included in an individual’s income at their fair market value (Bureau of Internal Revenue, 2009). Federal taxation laws stipulate that if an individual wins a prize in a television program, radio quiz program, lucky number drawing, beauty contest or any other event, he/she must incorporate it in his/her income. Based on these taxation regulations, the TV audience should have included the Pontiac G6 Sedans in their gross income and subjected it to federal taxation based on the cars’ fair market value.

While the manufacturing company could have agreed to pay for a huge portion of the vehicles’ local charges, the fair market value of the car would need to be included in the gross income of the taxpayer....

However, Oprah’s audience had a choice on whether keep the Pontiac G6 Sedan, forfeit it or sell it and pay taxes and profits. The Bureau of Internal Revenue (2009) states that if an individual refuse to accept a prize or award, he/she should not include its value in his/her gross income. If the TV audience refused to accept the Pontiac G6 Sedans, they would not need to include its value in their gross income.
World Furniture Case

After the Chicago Bears defeated Green Bay Packers in the team’s football season opener at Green Bay’s Lambeau Field, World Furniture Mall in Plano, Illinois gave away $275,000 of furniture on Labor Day Weekend 2006. While the furniture was given away by the company, its important to establish whether it was in the form of a discount or rebate taxable based on existing federal taxation regulations. Moreover, it’s important to determine whether World Furniture Mall should have handed the customers a Form 1099-MISC.

A comprehensive research on this issue shows that the owner of World Furniture Mall, Randy Gonigam, was a huge Bears fan (Associated Press, 2006). Prior to the season opener, Gonigam got tired of players’ bragging about…

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