Anita, a cash basis taxpayer, sued her former employer for wage discrimination. her attorney agreed to pursue the case on a contingent fee basis—the attorney would receive one-third of any settlement or court award. the parties reached a settlement, and the attorney for anita’s former employer wrote a check payable to anita for $320,000 and a check payable to her attorney for $160,000. anita reasons that she and the attorney were partners in the lawsuit who shared profits two-thirds and one-third, respectively. therefore, she includes $320,000 in her gross income. is anita’s analysis correct? explain.

The answer is: Anita is not correct in her analysis.

Explanation:

Anita's gross income should include the total amount of the settlement ($480,000). Anita and her lawyer are not business partners. She can deduct the $160,000 that her attorney received as a deduction from her adjusted gross income (AGI).

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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