Question

Please answer the the following questions:

1) Employer gives all of her employees, except her son, a case of wine at Christmas, which $120. She gives son, who also is an employee, a caase of wine, worth $700. Does son have gross income?

2) The congregation for whom Reverend serves as a minister gives her a check for $5000 on her retirement. Does reverend have gross income?

3) Employee receives a $5000 trip on employees's 50th birthday. To pay for the cost of the trip. Employer contributed $2000. and fellow employees of employee contributed $3000. Does employee have gross income?

Please analyze the problems.

Answer 1

1.As per Income Tax law any benefit received by the employees from the organization which is receivable in cash or kind or both is included in gross total income of the assessee & taxable in hands of assesee(employee). In the given scenario even the son is employee of the organization, so it is included in gross income of son.

2.As per Income tax Laws any sum received or receivable by a person providing diplomatic service to the nation at the time of rendering service or at the time of retirement is exempt from provsions of Income tax. In the given case Reverend serves as minister & received a check during his Retirement, is exempt from provisions of tax. There fore it is not included in gross income.

3.As per Income tax law any sum or benefit received by employees of the organization which is received or receivable in cash or kind or both is included in the gross total income of the employee. In the given case employee received a net benefit of $ 3000 (i.e $ 5000-$2000).Therefore sum of $ 3000 is included in gross income of employees.