Chapter 3 Gross incomer Inclusions
Chapter 3 Gross Income: Inclusions
Learning objectives Explain the difference between economic, accounting, and tax concepts of income Explain the principles used to determine who is taxed on a particular item of income
Learning Objectives • Explain the difference between economic, accounting, and tax concepts of income • Explain the principles used to determine who is taxed on a particular item of income
Learning objectives Determine when a particular item of income is taxable under both the cash and accrual methods of accounting Apply the rules of sec. 61a to determine whether such items as compensationg dividends, alimony and pensions are taxable
Learning Objectives • Determine when a particular item of income is taxable under both the cash and accrual methods of accounting • Apply the rules of sec. 61(a) to determine whether such items as compensation, dividends, alimony, and pensions are taxable
Concepts of Income 三 CONOMIC ACCOUNTING wealth that values are flows to measured by a individuals transaction changes in value in individuals appr。ach wealth income realized unrealized gains as a result of gifts completed inheritances are transactions considered Icome use historical cost
Concepts Of Income ECONOMIC – wealth that flows to individuals – changes in value in individuals’ wealth • unrealized gains • gifts & inheritances are considered income ACCOUNTING – values are measured by a transaction approach – income realized as a result of completed transactions – use historical cost
Tax Concept Of Income · The tax c。 ncept of income has adopted the accountants concept of income The reasons for this generally relates to Administrative convenience concept Wherewithal to pay concept
Tax Concept Of Income • The tax concept of income has adopted the accountant’s concept of income. • The reasons for this generally relates to – Administrative convenience concept & – Wherewithal to pay concept