Mike contracted with Kram Company, Mike's controlled corporation. Mike was a medical doctor and the contract provided that he would work exclusively for the corporation. No other doctor worked for the corporation. The corporation contracted to perform an operation for Rosa for $8,000. The corporation paid Mike $6,500 to perform the operation under the terms of his employment contract.

a. Mike's gross income is $6,500.

b. Mike must recognize the $8,000 gross income because he provided the service.

c. Mike must recognize $8,000 gross income since the patient obviously wanted him to perform the operation.

d. The Kram Company corporation's gross income is $1,500.

e. None of these.

Question

Hamlet

Business

8 March, 12:06

Mike contracted with Kram Company, Mike's controlled corporation. Mike was a medical doctor and the contract provided that he would work exclusively for the corporation. No other doctor worked for the corporation. The corporation contracted to perform an operation for Rosa for $8,000. The corporation paid Mike $6,500 to perform the operation under the terms of his employment contract.

a. Mike's gross income is $6,500.

b. Mike must recognize the $8,000 gross income because he provided the service.

c. Mike must recognize $8,000 gross income since the patient obviously wanted him to perform the operation.

d. The Kram Company corporation's gross income is $1,500.

e. None of these.

+2

Answers (1)

Know the Answer?

Quinton Stewart · Answer 1

a. Mike's gross income is $6,500.

Explanation:

Given that

As mike contracted with Kram company, which he worked for the corporation that reflect he is an employee of Kram company

Since the corporation paid him $6,500 for performing the operation under the terms and conditions of the employment contract. So, it would be included in his gross income or we can say it is his gross income of $6,500

While the other amount shows the gross income for kram company i. e $6,500 as the corroboration perform for Rosa