The Concept of Income
Introduction to Income Taxation
Why is income subject to tax?
-regarded as the best measure of
taxpayers ability to pay
What is income for taxation purposes?
-referred to as gross income under the
Capitalization vs. Expense. 1. Replacement of roof - capitalize and depreciate.2.Repainting of interior - deduct as an expense.3.Repair of door
handles and installation of locks - deduct as an expense.4.Replacement of broken windows - deduct as an expense
MEMO TO FILE
Brian Browns adjusted gross income for this current year is $100,000 but-due to retirement- his
adjusted gross income will fall to $35,000 per year. Mr. Brown is married filing jointly and has agreed to
donate a piece of land to Rosepark Comm
A fire has damaged the Taylors home and while their home is being restored they are staying in a motel
for three weeks. They pay $2,000 for the room and $500 for their food. Their homeowners policy the
Taylors have pays them $2,500 to reimburse them for t