Tax test 1 chapters

Who pays taxes in a SP

Owner and it comes directly from their personal return

Who pays taxes in partnership

Partners and they usually don’t pay fed income tax

Who pays S corporations taxes

the shareholders and it goes directly to them

Who pays C Corp taxes

the Corporation and the corporation pays its own taxes and the individuals pay their dividend taxes

What are the three types of income

Economic, accounting, and tax income

What is economic income

As increase in a person’s economic wealth, like an increase in stock

What is accounting income

Income defined under GAAP for financial statements

What is tax income

Income measured under IRS for calculating tax

Who is taxed?

Income that is taxes to who earns it, owns the property, or has a legal right to receive it.

When is income taxable in cash method

When it is received

When is income reported in accrual method

When the action is completed

What determines whether an item is income

It includes all income from whatever source derived, unless a specific provision excludes it

What are some major statutory exclusions

Unrealized Income, ROI, gifts/inheritance, scholarships, damage payments, employee fringe benefits, discharge of indebtedness, foreign income, and life insurance proceeds

What is the difference between for and from AGI

From AGI are standard deductions and For AGI are certain expenses