AC 750 Chapter 5

AC 750 Chapter 5 - Chapter 5 With excerpts and 13 Gross...

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Gross Income and Exclusions For Individuals AND Businesses Chapter 5 There is untold wealth in America -- especially at  income tax time ~Anonymous With excerpts from 11, 12 and 13
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Gross Income Gross Income  - §61: gross income means all income from  whatever source derived, including (but not limited to)  the following items:  Compensation for services… income derived from business…Interest; Rents;  Royalties; Dividends; Alimony and separate  maintenance payments… Gross Income  = Income Realized – Income Excluded  (nontaxable) 2 AC 750 - Chapter 5
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AC 750 - Chapter 5 3 Is it income? Economists  – the amount an individual could have spent For consumption during a period while remaining as well  off at the end of the period as at the beginning of the Period [consumption + change in net worth]. Accounting  –income occurs when it it realized; the  earnings process is complete and an exchange or  transaction has taken place (a conversion). Judicial (Tax)  – Income must be realized (objective).  Includes all gains  unless specifically exempted.  Any increase in net worth that has been  realized.
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AC 750 - Chapter 5 4 Concepts of Income Form of Receipt  – (aka form of benefit) income may be in many forms,  not just cash; any economic benefit Return of Capital  – return of capital is not taxed; no change in net worth (gain formula) Recovery of Amounts Previously Deducted  – to the extent the taxpayer  benefited from the deduction, the refund is included in income Indirect Economic Benefits  – many benefits are not taxed if they are not designed as a form of compensation but rather for necessity.
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5 Income 1.     Is it income?  a) Specific statutes or definition (concept)? b)
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AC 750 Chapter 5 - Chapter 5 With excerpts and 13 Gross...

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