Tax Ch 2 (2010) - IncomeTax Chapter2 GrossIncome

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    Income Tax  Chapter 2
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    Gross Income Code:  All income from whatever source  unless specifically exempted Examples of Included and Excluded  Self-Study 2.1  (page 2-4)
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    Three Classifications:         self-employment Portfolio – investment income such  Passive – business without active      participation, rentals,      limited partnership 
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    Interest Income Taxable Bank interest Personal loan interest Corporate bond interest Federal bond interest Credit union “dividends” Exempt Municipal bond interest
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    Federal Bonds EE Savings Bonds Purchased at a discount Interest paid when cashed Cash method – taxed when bond cashed Accrual method – taxed on increase in value HH Bonds Pay interest each year Accrual method only Not taxable for California income tax
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    Corporate Dividends Ordinary dividends Taxable Nontaxable distributions Previously taxed Return of capital Capital gains distributions From mutual funds Taxed as capital gains
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    Tax Rates for Dividends Qualifying dividends  (ordinary dividends qualifying to  be taxed at a lower rate) held for over 60 days of 120 beginning 60 days  before ex-dividend date corporation Rate 0% for taxpayer in 10%-15% bracket 15% for taxpayers above 15% bracket Non-qualifying taxed at ordinary rates Worksheet for tax – page 2-8
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  Schedule B Interest and Ordinary Dividends Page 2-7 Required if over $1,500 of taxable interest or  dividends right
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Tax Ch 2 (2010) - IncomeTax Chapter2 GrossIncome

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