Gross Income Implications For The Individual Who Accepted The Bribe

The appellants view the “substance” of the transaction is over the “form”. Generally, taxpayers are bound by the form of their transaction and may not argue the substance triggers different tax consequences. The Tax Court found the form and substance of the transaction was a loan from the bank to VAFLA and not to the appellants. The proceeds were to be used in the operation of the business and petitioners were not free to dispose the loan. Nor were the payments reported as constructive dividends.

From the information that was provided, the income was derived from the business and this gross income is taxable pursuant to Code§1.61-3(a). He is subject to self-employment tax, since the total amount of income that will come through to his personal tax income of half of the self-employment tax liability.

With regards to constructive receipt, Treasury Regulation sec. 1451-2(a) states that income is constructively received by a taxpayer when it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions. The question now is whether Adrian faced substantial limitations or restrictions as defined by the tax law. The regulation does not provided an example specifically addressing Adrian's situation that would allow us to reach a conclusion.

According to the IRC §61(a)(1), “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the

This scenario demonstrates the motive to purchase personal expenses and hide small revenues and this ultimately results in a higher expense value, gaining a favourable tax return. Examples within the scenario were buying a sports car, or paying for a trip to Hawaii which are clear violations of the Business Entity Concept. This principles states that a business must be considered a separate entity from the person, and all of its financial matters should be recorded separately from one’s own. This act is seen as an unacceptable behaviour since the business is cheating the government, and keeping the money that could have been used to better the community in addition to violating common accounting standards.

taxpayers to report any income received and included in the gross income. Therefore, it is

Filed action in District Court since tax already paid, claiming refund. Taxpayer argued (p. 43):

It is unfathomable to me that someone could honesty believe that their wages are not income. Mr. Cheek was an adult who we can presume is fairly educated, after all he is an airline pilot. This guy did not misunderstand the law, tax laws are not obscure, they are common knowledge, this was a man attempting to avoid paying taxes. He should be serving time in a federal prison, maybe then he will have a better understanding of tax

Under Internal Revenue Code (IRC) 61, section (a) subsection (1) gross income is defined as “Compensation for services, including fees, commissions, fringe benefits, and similar items.” This section of the tax code is very comprehensive (with 15 descriptive subsections) to almost all forms of income with very few exceptions. This has also been held up by the supreme court in numerous cases including the land mark Eisner v. Macomber, 1 USTC p32,252 U.S. 189, 40 S.CT 189 (1920).

The tax issue here is that John Smith wants to know how the $300,000 he earned through his client fee is taxed. The $300,000 is taxed as ordinary income and is taxed in the year received. John Smith worked on the case for two years but he did not earn the $300,000 until this year so he will include it in this year’s taxable income. Therefore John Smith needs to include the entire $300,000 as ordinary income on his Federal tax return. Gross Income means all income from whatever source derived which includes compensation for services, including fees, commissions, fringe benefits, and similar items. (IRC Sec. 61(a),(1))

Under 18 U.S.C. § 666(a)(1)(b), a defendant is guilty of bribery if they accept something of value of $5000 or more from another person with the intent to be influenced in their actions as an agent of such government. But this circuit has yet to decide if specific quid-pro-quo intent is required for a conviction. In deciding whether this intent is an element of the crime, will the mere inference of agreement suffice or the more heightened standard of an express agreement?

he was paid $60 000 from the employer’s parent company in Papua New Guinea and tax was paid on this salary.

Yes, I think that the payments outlined on pages 12 and 13 should be considered corrupt practices because of the way they were registered in the company’s books -it was in compliance with the FCPA because of the anti-bribery provision and the books and records provision.

It is clear from the facts that $100000 is her salary, so it is assessable as ordinary income. It is a service from personal exertion. This amount is annual so it is regular and periodic. There is a sufficient nexus or flow between the receipt and her personal service. Hence, it is evident that $100000 is ordinary income because it satisfies the characteristics of section 6-5 of Income Tax Assessment Act 1997. It can be further explained in relation to Arthur Murray (NSW) Pty Ltd v FCT (1965) , which shows that the income is only assessable when it is derived and earned.

Current Tax is recognised when the income tax is payable in the current year to the ATO.