ACCT 2000finalfgfgdf

ACCT 2000finalfgfgdf - ACCT 2000 Topical Outline Fall 2006...

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ACCT 2000 Topical Outline Fall 2006 INDIVIDUAL INCOME TAXATION SECTION 1 – Fundamentals A. Different types of tax Income o Objective: Primary – raise revenue for the government to provide services to the US Secondary – give tax breaks to help certain areas of the economy; social (i.e. allow tax breaks for donations to charity to “better society”) o Individual, Partnership, and Corporate tax laws Sales and Use o On all tangible “personality” o 4% LA and 5% EBRP o Use Tax = if we buy something outside of Louisiana and bring it into the state it’s subject to a tax. You are supposed to pay the voluntarily pay the 8% use tax Property o Based on the underlying value of the property o Based on the “ad valorem” o Pay tax based on the “realty” = real estate Payroll Estate o Tax at death o The estate you leave behind at death consists of all the assets you acquire over time o This taxes the value of the estate o *This is a FEDERAL tax Excise o Tax on tobacco, alcohol, and gasoline o Its already included in the price o Imposed at both state and federal level o This is why there is such a difference in gas prices across state lines Inheritance o Same thing as the estate tax but at the estate tax but at the STATE level B. Objectives of the federal income tax Primary - raise revenue for the government to provide services to the US Secondary Social – for social donations to charity; set up to “better society” Economic - give tax breaks to help certain areas of the economy C. Income Tax Model
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Gross Income - Deductions for Adjusted Gross Income (aka “Adjustments”) = Adjusted Gross Income - Standard Deduction or Itemized Deductions (whichever is greater) - Exemptions = Taxable Income x Tax Rates (or Tax Tables ) = Tax Liability + Other Taxes = Total Tax - Credits and Payments = Tax Due or Refund Due SECTION 2 – Gross Income – What is taxable and what is not? A. Inclusions in Gross Income (Taxable items of income) Alimony Amounts recovered after being deducted in prior years Awards Bonuses Capital gains and losses (15% max tax rate on “long-term” capital gains) Compensation for services Debt cancellation Dividends Employee benefits (if discriminatory – only offered to certain employees) Gains from illegal activities Gambling winnings Hobby income Interest (on savings accounts, corporate loans, personal loans, etc) Partnership income (loss) Prizes Rents (received from rental property) Retirement pay Rewards Royalties Scholarships (room and board) to the extent not used for tuition/books/supplies Social security benefits (0-85% is taxable) Tips Unemployment compensation B. Exclusions from gross income Child support payments Damages for personal injury (physical) Disability benefits Fringe benefits (employee benefits that are not discriminatory) Gifts
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Health insurance proceeds
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ACCT 2000finalfgfgdf - ACCT 2000 Topical Outline Fall 2006...

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