CHAPTER3 - Chapter 3 Chapter 3 Tax Determination; Personal...

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Unformatted text preview: Chapter 3 Chapter 3 Tax Determination; Personal and Dependency Exemptions; An Overview of Property Transactions Tax Determination; Personal and Dependency Exemptions; An Overview of Property Transactions Individual Income Taxes Individual Income Taxes C3 - C3 - 2 Individual Income Taxes Individual Income Taxes Tax Formula (slide 1 of 2) Tax Formula (slide 1 of 2) Income (broadly conceived) $x,xxx Less:Exclusions (x,xxx) Gross Income $x,xxx Less:Deductions for AGI (x,xxx) Adjusted Gross Income (AGI) $x,xxx Less:The greater of-Total itemized deductions or the standard deduction (x,xxx) Personal & dependency exemptions (x,xxx) Taxable Income $x,xxx Income (broadly conceived) $x,xxx Less:Exclusions (x,xxx) Gross Income $x,xxx Less:Deductions for AGI (x,xxx) Adjusted Gross Income (AGI) $x,xxx Less:The greater of-Total itemized deductions or the standard deduction (x,xxx) Personal & dependency exemptions (x,xxx) Taxable Income $x,xxx FIGURE 31 C3 - C3 - 3 Individual Income Taxes Individual Income Taxes Tax Formula (slide 2 of 2) Tax Formula (slide 2 of 2) Tax on taxable income (see Tax Tables or Tax Rate Schedules) $ x,xxx Less: Tax credits (including income taxes withheld and prepaid) (xxx) Tax due (or refund) $ xxx Tax on taxable income (see Tax Tables or Tax Rate Schedules) $ x,xxx Less: Tax credits (including income taxes withheld and prepaid) (xxx) Tax due (or refund) $ xxx FIGURE 31 C3 - C3 - 4 Individual Income Taxes Individual Income Taxes Income -Broadly Conceived Income -Broadly Conceived Includes all the taxpayers income, both taxable and nontaxable Essentially equivalent to gross receipts It does not include a return of capital or receipt of borrowed funds Includes all the taxpayers income, both taxable and nontaxable Essentially equivalent to gross receipts It does not include a return of capital or receipt of borrowed funds C3 - C3 - 5 Individual Income Taxes Individual Income Taxes Partial List of Exclusions from Gross Income Partial List of Exclusions from Gross Income Accident insurance proceeds Annuities (cost element) Bequests Child support payments Cost-of-living allowance (for military) Damages for personal injury or sickness Gifts received Group term life insurance, premium paid by employer (for coverage up to $50,000) Inheritances Interest from state and local (i.e., municipal) bonds Life insurance paid on death Accident insurance proceeds Annuities (cost element) Bequests Child support payments Cost-of-living allowance (for military) Damages for personal injury or sickness Gifts received Group term life insurance, premium paid by employer (for coverage up to $50,000) Inheritances Interest from state and local (i.e., municipal) bonds Life insurance paid on death Meals and lodging (if furnished for employers convenience) Military allowances Ministers dwelling rental value...
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CHAPTER3 - Chapter 3 Chapter 3 Tax Determination; Personal...

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