1. Three Types of Income (on Final) a. Active (earned) income b. Passive income - income derived from a passive activity such as working interest in oil and gas, often associated with limited partnerships i. Can only deduct passive losses to the extent you have passive income c. Portfolio income (interest, dividend, annuities, sales of stocks and bonds, royalties not derived from an ordinary course of a trader business) 2. In –class quiz d. Owned a apartment
Words: 1742 - Pages: 7
1. John Smith tax issues: a. How is the $300,000 treated for purposes of federal tax income? John is to report the $300,000 as earned income. This gross income can be filed on Schedule C of his individual tax return or as gross income on the LLC return. Our course text book defines gross income as gross income is defined by the Code as including gross income derived from a business. Income is the fundamental concept of income is set forth in the Sixteenth Amendment, “incomes from whatever source
Words: 2059 - Pages: 9
better and save more for those unexpected emergencies. Utilizing income statements to document and manage personal finances also ensures your records are in order for state and federal tax purposes. According to the Windes and McClaughry Accountancy Corporation (2011), “Of the 142,823,105 total individual income tax returns with a filing requirement, 1,581,394 were audited. To translate the number into percentage, it is approximately 1.1%, slightly
Words: 811 - Pages: 4
THE FEDERAL TAX LAW SOLUTIONS TO PROBLEM MATERIALS DISCUSSION QUESTIONS 1. (LO 1) When enacting tax legislation, Congress often is guided by the concept of revenue neutrality so that any changes neither increase nor decrease the net revenues raised under the prior rules. Revenue neutrality does not mean that any one taxpayer’s tax liability remains the same. Since this liability depends upon the circumstances involved, one taxpayer’s increased tax liability could be another’s tax saving
Words: 5591 - Pages: 23
Ch. 1 We Have a global economy. Econimics-the study of scarce ersources(limited). Nobody can have everything they want. We make up the economy, always wanting more. Factors of Producion-Land, Labor, Capital, Entrepreneurship. Land-all the natural resources. Labor-skills and abilities (workers too). Capital-What we use making it the final product. Entrepreneurship-A risk taker. He brings the other three factors together in innovative ways. Opportunity Cost-The best alternative, foregoing something
Words: 1551 - Pages: 7
taxes so the stock represents a continuation of investment but in a different form. Source: Federal Taxation Comprehensive Topics Chapter 14: Page 5 and http://www.irs.gov/pub/irs-drop/rr-03-51.pdf 20: Corporation tax years C-corporations have greater flexibility in choosing a tax year. They may choose to use as their tax year the calendar year or any other12 month period. They can choose a tax year different from its shareholders which can result in income deferral in the first year. This
Words: 604 - Pages: 3
with this summer is Sommerville & Associates, P.C in Arlington, Texas. The company assists individuals and nonprofits with their tax and compliance relative needs. I. Company background: Sommervile & Associates, P.C was incorporated in 2002 under the name Ratliff & Sommerville, P.C. The firms split in 2009 into Sommerville & Associates, P.C doing tax practice and Ratliff & Associates, P.C doing financial statement practice. The firm’s operating philosophy is that highly trained
Words: 1476 - Pages: 6
Financial Aid Office 2012–2013 Verification Worksheet Independent Student Your 2012–2013 Free Application for Federal Student Aid (FAFSA) was selected for review in a process called verification. The law says that before awarding Federal Student Aid, we may ask you to confirm the information you reported on your FAFSA. To verify that you provided correct information the financial aid administrator at your school will compare your FAFSA with the information on this worksheet and with any other required
Words: 1433 - Pages: 6
action and decision we make has a tax consequence. Someone who isn't aware of the tax laws or concepts doesn't really consider tax when making a decision. Also they aren't aware of how their decisions they may affect their income. There are different types of income that receive different types of taxes. Some incomes are not taxed at all while others are taxed at a very high or low rate. The definition of Tax is money that is paid by citizens and residents to federal, state, and local governments. The
Words: 966 - Pages: 4
for coming to our offices and allowing us to review and discus your concerns regarding your tax questions. I have been assigned to reply to your questions and I have listed my recommendations below. After you both have reviewed these recommendations, please contact me so we can go over any additional questions you may have. Mr. Smith’s questions: 1(a) How is the $300k treated for purposes of Federal tax income? According to the IRC §61(a)(1), “Except as otherwise provided in this subtitle
Words: 1806 - Pages: 8
