The IRS three-prong test includes which of the following elements? Multiple Choice Multijurisdictional aspects Financial relationship Gratuitous control aspects Interdependence relationship
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Step 1: The IRS three-prong test is used to determine if a worker is an employee or an independent contractor. Show more…
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In not less than 3 pages (double spaced), discuss the factors that are considered in determining whether an arrangement is a "partnership" for federal income tax purposes. Your discussion should include a comprehensive analysis of the authority (court decisions, Internal Revenue Code, Treasury Regulations, and IRS pronouncements, i.e., Revenue Rulings) that pertain to this issue. The discussion should not focus on the characteristics of an "association" taxable as a corporation and the resulting classification of the entity as a partnership or a corporation under the Kinter Regulations, as those Regulations have been replaced by the new "check the box regulations" under Treasury Regulation 301.7701. The discussion should focus on whether an arrangement between persons creates the existence of a partnership for federal income tax purposes.
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Read the fictitious scenario below and select the most correct answer: Sarah owns Eco Building (Pty) Ltd, a construction company that specialises in environmentally friendly building materials. Sarah must identify her employees as well as any third-party contractors who are currently working on the same building project. What inquiries must Sarah, the employer, make when applying the control test to distinguish employees from third-party contractors? Group of answer choices Does the employer have the authority to monitor and control the employee? Is the employee an essential part of the employer's organization? Is the individual financially dependent on the employer? Is the individual a member of the employer's organization? Is the person wearing the company's uniform or following a dress code? Is the person involved in organizational activities? Is the person a member of the pension fund or medical aid? Is there any aspect of employer control over the employee's work? For example, are instructions provided as to what work must be completed? What is the overarching impression created by the working relationship? Does the employer choose who does the work, can the employer fire the person, must the person work specific hours, is remuneration based on time worked, does the employer provide the necessary tools, equipment, or office space, and can the employer assign task as it sees fit?
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