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Highway Farm Case Study

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Answer # 1
Highway Farms, Inc. v. U.S.
2002-1 USTC ¶50,281
Facts:

Highway Farms, Inc. is a family-owned farm corporation. In Tax years 1995 & 1996, Highway Farms gave the hogs to two officers as bonuses in exchange for their performance of agriculture labor. The Two officers are brothers and only officers of corporation. The officer’s hogs and Highway Farm’s hogs were transported to the market in the same truck and sold to the same buyer.
Issues:

Can a Highway Farms corporation’s motivational bonus to the two officers constituted “wages” for FICA tax purpose?
Conclusions:

Yes, the bonuses to the officers are constituted as wages and hence subject to FICA tax.
Arguments and Authorities:

The two officers are brothers and were the only …show more content…
According to Section §179 (a) “Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service.” IRS 2011 Publication 946 (Ch. 1 Pg. 7) clearly states “You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if you are not using the property, it is in service when it is ready and available for it specific use.”

Research Case 45
NO. Matthew cannot deduct the loss on the sale of the Xerox stock because it’s a wash sale. According to Code Section §1091 (a), the loss on a wash sale is disallowed if taxpayer acquires similar stocks or securities within a period of 30 days after selling stocks or securities. Because Matthew purchased identical stock within 30 days period, he can’t deduct the loss on the sale.
According to Reg § 1.1091-1(a), “No loss deduction is allowed for any loss from any sale or other disposition of stock or securities (including contracts or options to acquire or sell stock or securities) if, within a period beginning 30 days before and ending 30 days after the sale, the taxpayer acquires, or has entered into a contract or option to acquire, substantially identical stock or securities.”

Answer # 3
Research Case

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