Textbook Problems-Week 2
Team A
ACC/547
January 18, 2016
Kristen Debbis
Textbook Problems-Week 2
Chapter 2:
Problem 74
Latrell recently used his Delta Skymiles to purchase a free roundtrip ticket to Milan, Italy (value $1,200). The frequent flyer miles used to purchase the ticket were generated from Latrell’s business travel as a CPA. Latrell’s employer paid for his business trips, and he was not taxed on the travel reimbursement.
a) Use an available tax research service to determine how much income, if any, does Latrell have to recognize as a result of purchasing an airline ticket with Skymiles earned from business travel.
b) Write a memo communicating the results of your research.

To: Latrell
Date: January 14, 2016
Subject: Frequent Flyer Miles Attributable to Business or Official Travel

Latrell does not recognize any income as a result of purchasing an airline ticket with Skymiles. The frequent flyer miles earned because of business travel is not taxable. IRS Announcement 2002-18 states that frequent flyer miles earned for business or official travel and exchanged for in-kind promotional benefits do not represent taxable income. This verdict does not apply to travel or other promotional benefits that is converted for cash, to compensation that is paid in the form of travel, or other situations where these benefits are used to avoid taxes. (Internal Revenue Service, n.d.).
Chapter 3:
Problem 49
Bendetta, a high-tax-rate taxpayer, owns several rental properties and would like to shift some income to her daughter Jenine. Bendetta instructs her tenants to send their rent checks to Jenine so Jenine can report the rental income. Will this shift the income from Bendetta to Jenine? Why or why not? Bendetta instructing her tenants to send their rent checks to Jenine so Jenine can report the rent income will not shift the income from Bendetta