How do prizes and awards received work in taxation? And, what does gambling winnings work in accounting?

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 3DQ: What is an arms-length transaction? What is its significance to income taxation?
Question

How do prizes and awards received work in taxation? And, what does gambling winnings work in accounting? 

Expert Solution
Step 1: Concept introduction on various terms

Prizes and Awards received - In order to encourage employees for better performance and increase their morale, companies follow the process of giving prizes and awards to different forms of achievements. The achievements can be performance related or efficiency related or commitment related etc.

Gambling wining - Wining something from a random event. Gambling wining can be from Casino, lottery tickets, online games, sports betting etc,.


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