If Tom, an accountant, agrees to provide accounting services to Carl, a friend, in exchange for Carl fixing Tom's office floor, then: (Points : 1)
Tom must report income on his tax return.
Carl must report income on his tax return.
Neither Tom nor Carl must report income on their tax returns.
Both of them must report income on their tax returns.
both
In this scenario, both Tom and Carl must report income on their tax returns.
Tom, as an accountant, is providing accounting services to Carl and receiving a benefit (Carl fixing his office floor) in return. This benefit can be considered income for Tom, and therefore he must report it on his tax return.
Similarly, Carl is receiving accounting services from Tom in exchange for fixing Tom's office floor. This can also be considered income for Carl, and he must report it on his tax return.
When individuals exchange goods or services, it is important to treat the value received as income, even if it is not in the form of money. Tax regulations require reporting income regardless of the form it takes.
Remember, tax regulations can vary from country to country, so it is always advisable to consult with a tax professional or refer to specific tax laws in your jurisdiction for accurate and personalized advice.