Question

In: Accounting

1. Which is the subchapter of the Code containing Code Section 303? 2. What is the...

1. Which is the subchapter of the Code containing Code Section 303?

2. What is the Internal Revenue Code section for a qualified dependent?

3. J. C. has been a professional gambler for many years. He loves this line of work and believes the income is tax-free.

- Is J.C. Correct? What court cases can you find that supports your position?

Solutions

Expert Solution

1. Section 303 - Distributions in redemption of stock to pay death taxes comes under US Code 26 Internal Revenue Code chapter 1- Normal Taxes and Surtaxes. Subchapter C - corporate Distributions and Adjustments. Part 1- Distributions by Corporations and Subpart A - Effects on  Recipients.

2. Section 152 of Internal Revenue Code defines a Qualified Dependent

3. Being a professinal gambler, J.C has to pay Income tax. According to Internal revenue code income earned from gambling is fully taxable. according to Section 165(d) losses from 'Wagering transactions' can be deducted up to the extent of gains from gambling activities.

A professional gambler has to report his gambling income on Schedule C.

In Comm'r V. Groetzinger, 480 U.S 23 Case(1984) Supreme Court concluded that 'if a person engaged in gambling as a full time activity for production of income or for a livelihood, and not a mere hobby, it is considered as trade or business.' hence income from gambling is taxable.


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