Betty performed bookkeeping services for Donald charging him $550.Donald agreed that he would pay Betty's credit card bill for the same amount.Betty has received an economic benefit and must report $550 in income on her tax return.

Question

Quizplus · Accepted Answer

Payment made by Donald for Betty's credit card bill equals the amount charged by Betty for her bookkeeping services, thus resulting in an economic benefit for Betty. As per the IRS, any economic benefit received by an individual is considered income and must be reported on their tax return. Therefore, Betty must report $550 in income on her tax return.

Betty Performed Bookkeeping Services for Donald Charging Him $550