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Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.-BUT-Sec 102(c)(1)- subsection (a) shall not exclude from gross income any
Employees - Meals and LodgingIRC Sec.119- excludes from income for an employee (including spouses and dependents) meals and lodging “for the convenience of the employer”I.e. hotel by the oversea business sites, dinner at office during April 14, 2019/ October 14, 2019 at a tax firm
Employee Fringe Benefits IRC Sec. 132- Excludes various employer provided items from income, including:1.No cost additional services- like a free flight ticket to NY from employer’s flights 2.Employee discounts - limited to gross profit on goods, and 20% on services3.Working condition costs - where employee would be allowed to deduct4.De Minimis Fringes- small stuffs5.Transportation Fringes- Commuting expense- limited to $255/month
Homework #22The $500,000 Jason receives is exempt from Federal income tax
Chapter 6: Tax Deduction and Losses in General
Deduction for AGI are generally found on either:●Separate 1040 “ Profit and Loss”○Schedule C - Sole proprietorship business ○Other schedule D, E, F○All deduction are part of Total income ●Or, Form 1040, schedule 1, Line 23 - 35 (2018)
Deduction for AGI-Generally●Tax law must allow a “return of capital”●No deduction for personal expense○Loss is not deductible but gain is taxable though●Expenses for trade or business are deductible for AGI●Expenses for rents and royalties are deductible○I.e. management of property held for production or income●But not everything can be deduct and some have limit!
Deduction From AGICan include:1.Personal and Dependent Exemption (2017 and prior) and2.Either:a.Standard deductionb.Itemized deduction (ch.10)
Definition of Trade or Business●Not defined by IRC or Regulations○Generally i) an activity regularly carried on, ii) with the motivation to make a profit●