Exercise - Need help with following three questions
1) List the conditions that must be met in order to claim a dependency exemption for qualifying children and qualifying relatives. Briefly explain each one.
2) Ricardo owns a small unincorporated business. His 15-year-old daughter Jane works in the business on a part-time basis and was paid wages of $3,000 during the current year. Who is taxed on the child's earnings: Jane or her father? Explain.
3) a. Explain the difference between the treatment of prepaid income under the tax law and under financial accounting
b. Why are the two treatments so different?
c. What problem does this treatment create for taxpayers?