Your Client, Professor Smith, obtained tenure and a promotion to full professor status in the accounting field years ago. Yet, he continues to publish research papers in scholarly journals to satisfy his own curiosity and to maintain his professional prestige and status within the academic community.
Publications are also considered by the college when deciding whether to give pay raises to tenured faculty. This year, Dr. Smith spent $7,500 of his own funds to travel to various seminars and training sessions related to emerging issues in the accounting profession. He used the information to prepare three papers for publication. The first was published by his employer; he sold the other 2 papers for $500 each to an accounting journal.
He used a small room in his home to prepare the research, write the papers and correspond with other accounting professionals during the editing process.
Please prepare a memorandum to me using the following format:
Issue:
Authority:
Analysis:
Analysis begins with the determination of income as taxable or non-taxable.
Conclusion:
The memo (which should be at least 2 but no more than 4 pages in length) should address the tax treatment of the $7,500 travel expenses, the $1000 of income form the sale of the papers and any other issues raised by the facts. For full credit the memo should cite to at least one source from each of the three sources of primary authority (i.e. at least one case, one code section and item of administrative guidance)