1. 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.

2. Introduction to Income Taxation Gross Income General rule… Increase in value of asset Like kind exchanges of real estate Barter

3. 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…

4. 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

5. Economic benefit theory Form of compensation doesn’t matter Corn, hogs, life insurance policy

6. Assignment of income Give tree to give apple If transfer tree, apple is taxed to recipient