Ch04 - Chapter 4 Gross Income 2011 CCH. All Rights...

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Chapter 4 Gross Income ©2011 CCH. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 1 800 248 3248 www.CCHGroup.com
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Chapter 4 Exhibits 1. Constructive Receipt Doctrine 2. Community Property Income 3. Items Included in Gross Income 4. Compensation vs. Gift 5. Prizes and Awards 6. Employee Achievement Awards 7. Scholarships and Fellowships 8. Business Income 9. Below-Market Interest Loans—Types of Loans CCH Federal Taxation Basic Principles 2 of 31 Chapter 4, Exhibit Contents A
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Chapter 4 Exhibits 10. Below-Market Interest Loans—Tax Effect 11. Rental Income 12. Tenant Improvements 13. Dividend Income 14. Alimony—Post-1984 Agreements 15. Alimony and Child Support (Post-1984 Divorces) 16. Alimony Recapture 17. Discharge of Debt 18. Discharge of Debt—Bankruptcy CCH Federal Taxation Basic Principles 3 of 31 Chapter 4, Exhibit Contents B
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Constructive Receipt Doctrine “When is income taxable?” Generally, any compensation granted to an individual to which the individual has an absolute right is regarded as constructively received income. CCH Federal Taxation Basic Principles 4 of 31 Chapter 4, Exhibit 1
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Community Property Income Property acquired after marriage is community property. Income from community property is community income Property acquired before marriage remains separate property. What happens to income from separate property? CCH Federal Taxation Basic Principles 5 of 31 Chapter 4, Exhibit 2a
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Community Property Income CA Rule – Income from separate property remains separate . Applies to California, Arizona, Nevada, New Mexico, Washington and Wisconsin. TX Rule - Income from separate property is community income. Therefore, if spouses filed separate returns, the income would be shared between them. Applies to Texas, Idaho and Louisiana. CCH Federal Taxation Basic Principles 6 of 31 Chapter 4, Exhibit 2b
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Items Included in Gross Income Compensation for services, including fees, commissions, fringe benefits, and similar items Gross income derived from business Gain derived from dealings in property Interest Rents Royalties Dividends Alimony and separate maintenance payments Annuities Income from life insurance and endowment contracts Pensions Income from discharge of indebtedness Distributive share of partnership gross income Income in respect of a decedent Income from an interest in an estate or trust CCH Federal Taxation Basic Principles 7 of 31 Code Sec. 61(a) lists 15 items that generally must be included in gross income: Special circumstances may result in the exclusion or deferral of any of these items. Chapter 4, Exhibit 3
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Compensation vs. Gift Example FACTS: Grandma offers 16-year-old Billy $10,000 if he quits smoking and playing pinball over the next five years. He does, and upon attaining the age of 21, she pays him $10,000. QUESTION:
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Ch04 - Chapter 4 Gross Income 2011 CCH. All Rights...

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