McGraw-Hill's Taxation of Individuals 3rd Edition by Brian Spilker,Benjamin Ayers,John Robinson,Edmund Outslay ,Ronald Worsham,John Barrick,Connie Weaver

Exercise 1

Dewey is a lawyer who uses the cash method of accounting.Last year Dewey provided a client with legal services worth $55,000, but the client could not pay the fee.This year Dewey requested that in lieu of paying Dewey $55,000 for the services, the client could make a $45,000 gift to Dewey's daughter.Dewey's daughter received the check for $45,000 and deposited it in her bank account.How much of this income is taxed, if any, to Dewey Explain.