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Question 6. (10 Marks) Fred Jones appears in your office and asks to...

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Accounting

Question 6. (10 Marks)

Fred Jones appears in your office and asks to speak to you confidentially.

You invite him inside and he advises that for the past 20 years he has been regularly each week placing a $10 systems bet on Tattslotto. He has just won $1.5 million dollars. He is worried that the tax authorities will try to take most of it away from him as his consistent use of a system has caused him to win about $200 every year and he may be considered a professional gambler.

Required:

Write a report to Mr Jones, explaining the concept of ordinary income and how it might apply to him. The report should be properly formatted as a report and referenced, including case law.

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