Question

Dwight Schrute owns an office building that is leased to Dunder Mifflin, Inc., a paper company, for their Scranton, PA location. Michael Scott, regional manager of Dunder Mifflin- Scranton branch, has a brilliant idea to boost morale and productivity in the office. He meets with Dwight to discuss the idea. Michael tells Dwight he wants to remodel the office and build a room that is part café and part disco, a.k.a. Café Disco, so that employees can let off steam by dancing and drinking coffee. Michael estimates the remodeling would cost about $20,000 but would really not increase the value of the building because no one really wants a Café Disco in their office building. Dwight tells Michael he thinks the idea is ridiculous and Michael threatens to go to another office building. Dwight does not want to lose Dunder Mifflin as a lessee so Dwight says he will forgo one month’s rent of $5,000 if Dunder Mifflin will pay for the Café Disco remodel. Michael really does not want to move so he agrees to the arrangement. Dwight Schrute engages your CPA Firm and needs your advice and guidance regarding what amount, if any, that he must include in gross income for tax purposes. Write a letter to Mr. Schrute in the required format with your answers by the due date listed in Blackboard. Mr. Schrute’s address is 8600 Money Beets Road, Scranton, PA 18503.

What is the rule of law for each section?

A. Legislative Authority- The IRS Code

B. Administrative Authority- Regulations, Revenue Rulings

C. Judicial Authority-Court Cases

Answer 1

Answers : -

A. The legislative Authority - The IRS Code

The legislative authorities consist of the US Constitution and the new laws are introduced and enforced by the Congress and further incorporated in the IRS Code. The reports are issued by the committees as the law was enforced by the Congress.

B. Administrative Authority - Regulations, Revenue Rulings

The revenue Rulings are the administrative ruling for the public by the internal revenue service(IRS) in the United States department of the treasury of the United States federal government that applies the law to a certain situation.

C. Judicial Authority - Court Cases

In the United States Court system, the Supreme Court is the final authority on the interpretation of the federal Constitution and all the regulations created by the government as well as the constitutionally of the various state laws.