Mark and his brother,Rick,each own farms.Rick is experiencing severe financial difficulties and cannot afford to buy feed for his cattle.Mark purchases $2,000 of feed and gives Rick one-half of the feed.Mark tells Rick that there is no need to repay him and to consider the feed a gift.Which of the following statements is true?
A)Mark can deduct $2,000 for the feed.
B)Mark can deduct $1,000 for the feed.
C)Rick must report $1,000 as income.
D)None of the above is true.

Question

Quizplus · Accepted Answer

Mark can only deduct the portion of the feed that he paid for himself, which is $1,000. Since Rick received a gift, he does not need to report any income.

Mark and His Brother,Rick,each Own Farms