Ally served as chairperson of the local school board. Upon completion of her term in office, the organization awards her a silver-serving tray in recognition of her outstanding service to the organization. The value of the tray is $200. What are the tax effects of the award?
I.The value of the tray is included in gross income because of services rendered.
II.The tray is a gift because it is from a detached and disinterested generosity.

Question

Ally served as chairperson of the local school board. Upon completion of her term in office, the organization awards her a silver-serving tray in recognition of her outstanding service to the organization. The value of the tray is $200. What are the tax effects of the award?
I.The value of the tray is included in gross income because of services rendered.
II.The tray is a gift because it is from a detached and disinterested generosity.
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Quizplus · Accepted Answer

The tray is considered a gift because it is given as a result of Ally's service and is from a detached and disinterested generosity. Therefore, it is not considered taxable income.

Ally Served as Chairperson of the Local School Board