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Published byEmery Mitchell Modified over 9 years ago
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Introduction to Income Taxation Gross Income General rule… Exceptions Life insurance proceeds, municipal bond interest income, gifts Return of capital Basis Buy building for $500,000. Take $200,000 of depreciation over 10 years. Sell building for $800,000.
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Introduction to Income Taxation Gross Income General rule… Increase in value of asset Like kind exchanges of real estate Barter
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Constructive receipt Cash basis versus accrual basis Could I get it if I wanted it? Mutual fund dividends reinvested in additional shares Substantial limitations or restrictions $50,000 a year bonus for 10 years if…
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Deferred compensation Unfunded Unsecured creditor of employer Deferred comp not taxable if Agreement reached before comp was earned Unsecured interest Rabbi trust Funded Taxable when: No longer risk of forfeiture Rights in deferred comp can be transferred
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Economic benefit theory Form of compensation doesn’t matter Corn, hogs, life insurance policy
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Assignment of income Give tree to give apple If transfer tree, apple is taxed to recipient
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