129378094-Tax-Master-Outline-Law-School

School: Ohio Northern University - Course: LAW 1280 - Subject: Accounting

Tax Master Outline11/23/2011 ° II: Gross Income- Concepts and Limitations  A: What is Gross Income? - "accession to wealth" o i: Internal Revenue Code  §61:Gross Income: Gross income means all income from whatever source derived, including but not limited to: compensation for services (fees, commissions, fringe benefits etc), gross income derived from business, gains derived from dealings in property, interest, rents, royalties, dividends, alimony and separate maintenance payments, annuities, income from life insurance and endowment contracts, pensions, income from discharge of indebtedness, distributive share of partnership gross income, income from a decedent or income from an interest in a trust or estate.  §85:Unemployment compensationis included under gross income  §86:Social Securityis generally included under gross income. o ii: Treasury Regulations  §§1.61-1: Gross Income: All income from whatever source derived unless excluded by law. Realized in any form.  §§1.61-2(a)(1): Compensation For Services: Taxable income includes wages, salaries, commissions, tips, bonuses, severance pay, rewards, jury fees, marriage fees to clergymen, retirement, pensions  §§1.61-2(d)(1):Compensation Paid Other than in Cash: If services are paid for in property the FAIR MARKET VALUE of the property must be included in income as compensation. If paid for in other services the fair market value of those services must be taken in income as compensation- if given at a stipulated price, that price will be taken as the FMV.  §§1.61-2(i):Property Transferred to An Employee or Independent Contractor: if property if transferred by an employer to an employee as compensation for an amount less than its FMA, thedifference between the amount paid and the FMW at the time of transfer is compensation and shall be included in gross income.In subsequent sale, to compute gain or loss, the basis shall be the amount paid for the property increased by the amount included in gross income.  §§1.61-8(a)Rents and Royalties: Gross income includes rentals received or accrued for the occupancy of real estate or the use of personal property. Gross income also includes royalties (like from publishing a book)  §§1.61-9(a):Dividends: Dividends are included in gross income. Dividends may give rise to a credit against tax under §34.

 §§1.61-11(a):Pensions: Pensions and retirement are income unless excluded by law. If employer did not contribute to pension then the full amount is taxable gain. If the employer did contribute then the amount in excess of the contribution might be taxed as capital gain rather than income.  §§1.61-14(a):Misc. Taxable Income: Punitive damages, another person's payment of income tax, illegal gains treasure trove, prizes, awards, damages for personal injury, income taxes paid by the lessee corporation, scholarships and fellowships, tax free covenant bonds, notional principal contracts.