Chapter 7 Notes:
After tax rate of return of investment depends on:
Before tax rate of return
When investment income and gains are taxed (annually, deferred, or exempt)
When investment losses are deducted (annually, deferred)
Rate at which investment inco
Chapter 10 Notes:
Assets adjusted basis or the tax basis is = assets initial cost or historical basis minus accumulated
175000 for a building to expand its operations. 15000 on painting and remodeling the building in
preparation for its open
Tax Book Notes:
Community property system: the income earned from services by one spouse is treated as though
it was earned equally by both spouses.
- Half of the income earned from the services of one spouse is included in the gross income of
Deductions for AGI are preferred over from AGI deductions because they reduce taxable income
dollar for dollar. Deductions from AGI have no effect on taxable income.
Three categories of deductions for AGI. 1) directly related to business activi
Chapter 8 Notes:
Subject to the kiddie tax because she is under age 18 and has unearned income.
Full time student under the age of 24.
Home equity interest is deductible for AMT if the proceeds of the loan are used to acquire or
substantially improve the