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CACC522-Week06-text - CACC522Week06 19:21 Chapter 7...

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CACC 522 – Week06  19:21 Chapter 7 Property Income Give property to others to use and earn income as a result. use money real estate royalties Does not include gains and losses from sale of property – ie. Capital gains Interest issue of interest deductibility if interest can be traced to the use of earning income, then interest is deductible interest is not deductible if borrowed money is used for personal assets. Corporation – recognized as accrued Individual – options for recognition o cash basis – recognized when paid o recognized on a receivable basis – when legally owed to individual have to be consistent for that investment o recognized on an anniversary basis – must be recognized at a minimum on the 12 month anniversary of the purchase of the investiment only for individuals, not corporations o foreign interest – must be declared at the full amount, then fill in the foreign withholding tax when entering tax payments. Use the average exchange rate that was applicable for the interest for the year.
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If the investment was bought or sold on a specific day, use the exchange rate on the day o expenses allowed safety deposit box professional fees to accountants, lawyers, etc. Rent income recognized on the accrual basis, when it is earned. for both individuals and corporations o not a cash basis deductions o interest o repairs and maintenance might be a capital cost if it lengthens the life of the asset.
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CACC522-Week06-text - CACC522Week06 19:21 Chapter 7...

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