Research Problem 2. Your client, John Butler, is an avid HoustonAstros fan. Last March...

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Accounting

Research Problem 2. Your client, John Butler, is an avid HoustonAstros fan. Last March at the Astros’ home opener, as a result of arandom drawing of those in attendance at the game, John won 300Shipley Do-Nut coupons. Each coupon entitled him to a cup of coffeeand a free doughnut or a dozen doughnut holes. John used some ofthe coupons (approximately 20), but he found that eating so manydoughnuts directly conflicted with his goal of losing weight. Theunused coupons expired on January 1, 2018. Thus, John was surprisedwhen he received a Form 1099 in February 2018 that valued his prizeat $900. John would like to know whether the value of the doughnutcoupons should be included in income and asks you to research hisquestion. If you conclude that their value should be included inincome, John also would like to know if he can reduce his grossincome by including in income only the value of the coupons that heused. He has the unused coupons as documentation that neither henor anyone else used them.

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ANSWER According to IRS Instructions for Form 1099MISC 2017 page5 the installment of rewards is viewed as made when really paid Further according to IRS Publication 525 2016 page32 See Answer

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In: AccountingResearch Problem 2. Your client, John Butler, is an avid HoustonAstros fan. Last March at...Research Problem 2. Your client, John Butler, is an avid HoustonAstros fan. Last March at the Astros’ home opener, as a result of arandom drawing of those in attendance at the game, John won 300Shipley Do-Nut coupons. Each coupon entitled him to a cup of coffeeand a free doughnut or a dozen doughnut holes. John used some ofthe coupons (approximately 20), but he found that eating so manydoughnuts directly conflicted with his goal of losing weight. Theunused coupons expired on January 1, 2018. Thus, John was surprisedwhen he received a Form 1099 in February 2018 that valued his prizeat $900. John would like to know whether the value of the doughnutcoupons should be included in income and asks you to research hisquestion. If you conclude that their value should be included inincome, John also would like to know if he can reduce his grossincome by including in income only the value of the coupons that heused. He has the unused coupons as documentation that neither henor anyone else used them.