Inclusions

Here are the requested Q&A flashcards:


  1. What is Gross Income?All realized income from whatever source derived, unless a tax provision says otherwise.


  2. What is Economic Benefit?Taxpayers must receive an item of value to have gross income.


  3. What is the Realization Principle?Income is realized when a transaction results in a measurable change in property rights.


  4. What is Recognition of Income?Taxpayers must include economic benefits in gross income unless stated otherwise by tax provisions.


  5. What is the Return of Capital Principle?Taxpayers can recover the cost of property tax-free when calculating gain from the sale.


  6. What is the Tax Benefit Rule?Refunds from expenditures deducted in previous years can be included in gross income to the extent they produced a tax benefit.


  7. What is the Accrual Method?Income is recognized when earned and expenses when liabilities are incurred, used by most large corporations.


  8. What is the Cash Method?Income is recognized when cash, property, or services are received, used by most individuals.


  9. What is the Constructive Receipt Doctrine?Cash method taxpayers must recognize income when it is actually or constructively received.


  10. What is the Claim of Right Doctrine?Income is realized if received without restrictions, even if required to return the payment later.


  11. What is the Assignment of Income Doctrine?Taxpayers cannot transfer the taxation of their income to another party.


  12. What are Community Property Systems?Income earned by one spouse is considered as earned equally by both spouses in certain states.


  13. What are Types of Income?Includes wages, business income, capital gains, dividends, interest, rents, and royalties.


  14. What are Property Dispositions?Gains or losses from asset sales, calculated as Sale Proceeds minus Tax Basis.


  15. What is a Flow-Through Entity?An entity like a partnership that passes income and deductions to partners or shareholders.


  16. What is Alimony?Financial support from one spouse to another, defined by specific tax law criteria.


  17. What are Prizes and Awards?Generally included in gross income, unless qualifying criteria apply for tax exclusion.


  18. What are Social Security Benefits?Up to 85% may be taxable based on filing status and modified AGI.


  19. What is Imputed Income?Direct economic benefits that are included in gross income, such as bargain purchases and below-market loans.


  20. What is the Discharge of Indebtedness?Debt relief that requires the taxpayer to include the forgiven amount in gross income.


  21. What is Amount Realized?The total amount received from the sale of an asset, also known as sale proceeds.


  22. What is Tax Basis?The original cost or investment in a property for tax purposes.


  23. What are Capital Gains?Profits made from the sale of an asset, usually taxable.


  24. What is Modified AGI?AGI excluding Social Security benefits plus tax-exempt interest income without foreign income.


  25. What are Community Property Rules?Rules determining equal ownership of property and income during marriage in certain states.