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Discuss exemptions, constructive receipt, for/from AGI, Tax

Provide very general explanation (to readers who have never heard of these terms) about the following topics:

1.- discuss the concept of DEPENDENCY EXEMPTION as it applies to the income tax of individuals
2.- discuss the concept of CONSTRUCTIVE RECEIPT as it applies to the income tax of individuals
3.- for individual tax purposes, what is the distinction between deduction FOR adjusted gross income and deduction FROM adjusted gross income important?
4.- discuss the distinction between TREASURY REGULATIONS and REVENUE RULINGS and the role each plays
5.- discuss what is covered by the term TAX LAW and the relative importance of its components.

Solution Preview

1. The dependency exemption represents an amount which can be deducted from income of a taxpayer. The taxpayer must comply with rules used to qualify a person as a dependent of another. If the dependent meets the tests, the taxpayer is allowed to claim the dependent as a valid deduction on his tax return. Common dependents are children of the taxpayers, but the list of dependent types is longer. For example, if a taxpayer supports his elderly parent who has little or no income, that parent can become a dependent on the taxpayer's tax return.

2. Constructive receipt is a doctrine used to determine when certain income is taxable to a taxpayer. It usually has to do with income that the taxpayer has not yet received. The doctrine states that if a taxpayer has the right to receive the money, even if he chooses not to, the income is ...

Solution Summary

In a 576 word, cited solution, the response gives a clear and concise explanation of the terms requested.