>> Accounting Basics
Carey is a self-employed landscaper. He contracted to maintain Ted's lawn for $150 per month. Ted was very pleased with Carey's work and at the end of the year paid Carey an additional $500.
a. Does the fact that Ted had no legal obligation to make the payment mean that Carey can exclude the $500 from gross income as a gift?
b. True or False: The intent of the donor does not matter as long as there is no legal or moral obligation to pay the $500. The donor's intent may disqualify the $500 from being considered a gift.