Question

In each of these independent situations the partner of your firm came to you with these questions. She is not sure the answer to these questions. She ask you to research them and email her with your findings. Answer the questions for each question below in an email that you are sending the partner in your firm. This is not a formal communication to a client, but it is an email to the partner of your firm.

#1.  Staff sergeant G. I. Jane was a soldier in the Iraq War. Her salary was $2,600 per month, and she was in the war zone for eight months. How much of her salary is taxable for the eight months? In answering this case, use only the Internal Revenue Code for your research.

#2.  Odiferous Chemical Company (OCC) manufactured pesticides that were toxic. Over the course of several years, the toxic waste contaminated the air and water around the company s plant. Several employees and people living near the plant suffered toxic poisoning, and the Environmental Protection Agency (EPA) cited the company for violations. A federal district court judge found OCC guilty and imposed a fine of $15 million, which OCC paid to the EPA. You have been asked to assess the deductibility of the payment of the fine.
a. Locate the code section(s) that deals with this situation. State the section number(s).
b. Review the code section(s). Does it raise a need for new information to solve this question?
c. Are you able to reach a conclusion about the research question from this code section? If so, what is your conclusion(s)?

Answer 1

#1. Staff sergeant G. I. Jane was a soldier in the Iraq War. Her salary was $2,600 per month, and she was in the war zone for eight months. How much of her salary is taxable for the eight months? In answering this case, use only the Internal Revenue Code for your research.

#2. Odiferous Chemical Company (OCC) manufactured pesticides that were toxic. Over the course of several years, the toxic waste contaminated the air and water around the company s plant. Several employees and people living near the plant suffered toxic poisoning, and the Environmental Protection Agency (EPA) cited the company for violations. A federal district court judge found OCC guilty and imposed a fine of $15 million, which OCC paid to the EPA. You have been asked to assess the deductibility of the payment of the fine.
a. Locate the code section(s) that deals with this situation. State the section number(s).
b. Review the code section(s). Does it raise a need for new information to solve this question?
c. Are you able to reach a conclusion about the research question from this code section? If so, what is your conclusion(s)?

Refer to the below images for more detailed solution with explanation.

# 1 Realfrement Foreign earned income exclusion. one tax break for expatriates is the foreign earned an- come exclusion. If an American moves abroad, he cor) she can exclude foreign- earned income up to $95100 as of 2012 from Uso taxation. To quality that person most have lived outside the United States for 330 days in 12 consecutive months Given Since he (Jane) was in the war he does not quality he needs zone entire for eight months. income is taxable. - - Internal Revenue code section (3121): publication 54, gax guide for vos. Citizens and Resident Alins Abroad. publication 514 foreign tax credit for individoals. publication 597 Information on the united States - Canada Income tax treaty.

#③ Requirement Locate the code section (8) that situation. deals this with state the section number (3) wer: Section 162(4). raise a need for new b) Review the information code to Section (5) solve this Does it question ? wed. for new information Answer. No. It to solve does not raise a need this question. c) are you able to reach a conclusion about the research aquestion from this code section ? If so, what is your conclusion (5) 2 yes. Under & 162(f) fines and penalties are not deductible. Therefore odiferous Chemical would not be allowed to deduct the $ 15 000 000 penalty paid to the EPA ko Examples of key words: fine, penalty, Ept, toxic, deduction which computer tax service was used will vary from Student to student.