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Chapter 3: Gross Income:
InclusionsPrentice Halls Federal Taxation 2016:Indiiduals
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'ccountin" Concept o(IncomeIncome is usuall! measured
)hen it is reali*ed&
+alues are measura,le )hen
there is a transaction -e&"&% salesprice and ,asis can
,edetermined durin" a completed
transaction.&
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eali*ation
Transaction
)ith a secondpart!
eerance ineconomic
interest inpropert!
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Tax Concept o( Income
$conomic4ene5t
eali*ationo( Income
eco"nition o(
Income
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Purposes o( Income TaxConcepts
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Gross Income -GI.
ection 61 8 GI is income (rom)hateer source deried&
'll accessions to )ealth are
considered income unlessspeci5call! excluded&
This includes the F9+ o( "oods or
serices receied in ,artertransactions&
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Gross Income Items per 61
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income unless improements)ere in lieu o( rent&
I( F9+ o( improements not
includa,le% then lessor has *eroCop!ri"ht # 2016
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Jiidends
Jiidends "enerall! includa,le into GI&C Corps can exclude
,et)een ;0/
100K o( diidends under the
diidends/receied deduction -JJ.&Indiiduals 8 diidend rates
are
capped&
Generall!% diidend rules appl! onl! to
diidends (rom L companies% not(orei"n ones&
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Jiidends -contd.
Capital "ains diidendsdistri,uted ,! mutual (unds arereported on
10??/JI+ and are
treated as capital "ains>losses onchedule J&
Constructie diidends is a
treatment usuall! asserted ,! theI&
ccurs )hen emplo!ee/
shareholders are determined toCop!ri"ht # 2016 Pearson$ducation%
Inc& 3/23
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Jiidends -contd.
I( diidend treatment is upheld%then
emplo!ee/shareholderreco"ni*es income and
corporation does not o,tain adeduction (or the alue o( thedeemed
diidend&
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9aximum Jiidend ates
Taxpa!er 4racAet 9ax Ji& ates
10K% 17K 0K
27K/37K 17K
3?&6K 20K
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Pa!ments Incident toJiorce
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Taxa,ilit! o( JiorcePa!ments
T!pe o( Pa!ment Pa!or Pa!ee
'limon! Jed& Includa,le
Propert! ettlem& Bot Jed&BotInclud&
Child upport Bot Jed&Bot
Includ&
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