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Taxing Non-Cash Winnings; Bad Debt Deduction; Tax Base1.Tom Y, a longtime client and golfing buddy, has asked you
to prepare his tax return. In looking at the material he has prepared for you,
you notice that he has not mentioned the BMW that he won in the annual club
tournament.When you ask Tom about this, he says that he knows that the
club never reports these items to the IRS and they told him to “proceed
accordingly.”What would you advise Tom to do? What would you do?2.Dr. Z is a cash basis taxpayer who maintains a dental
practice as a sole proprietor. After performing various procedures, he billed
the clients repeatedly, but never received payment. He is confident that these
clients will never pay their bills.So, for tax year 2008, he claims $20,000 as a bad debt
deduction.What do you think about Dr. Z’s approach?
3.Why is real property a better tax base than personal
property?