Which of the following applies to the categories below
a. In come items that are taxed (specifically items included in realized in income
b. Items excluded from realized income.
c. Deductions and exemptions.
Advertising and marketing expenses
All expenses incurred in conducting the trade or business
All items of income are included in gross income from whatever source unless specifically exluded by the Tax Code
Charitable contributions (with limits)
Deduction for dividends received from other corporations (the dividend received deduction)
Deductions for past tax losses (a net operating loss carry forward deduction)
Dividend and interest income
Foreign tax credits
Generally appreciation in the value of assets held is not taxable until the gain is realize by sale or exchange of the asset.
Research and development credit
Research and development expenditures
Revenue less cost of goods sold from operations Royalties
Tax exempt interest on municipal bonds
The alternative minimum tax credit
Wages and salaries
The rule is that income from all sources are taxed unless specifically excluded (like tax exempt interest or unsold asset appreciation). Business expenses are deductions unless specifically disallowed like some entertainment expenses). There are special provisions for prior year losses to reduce current year income and certain ...
A few sentences give you the general rule and then each is classified.
Morris Jory, a long-time tax client of the firm you work for, has made substantial gifts during his lifetime. Mr. Jory transferred Jory Corporation stock to 14 donees in December 2005. Each donee received shares valued at $11,000. Two of the donees were Mr. Jory's adult children, Amanda and Peter. The remaining 12 donees were employees of Jory Corporation who are not related to Mr. Jory. Mr. Jory, a widower, advised the employees that within two weeks of receiving the stock certificates they must endorse such certificates over to Amanda and Peter. Six of the donees were instructed to endorse their certificates to Amanda and six to Peter. During 2005, Mr. Jory also gave $35,000 cash to his favorite grandchild, Robin. Your firm has been engaged to prepare Mr. Jory's 2005 gift tax return. In January 2006, you meet with Mr. Jory, who insists that his 2005 taxable gifts will be only $24,000 ($35,000 to Robin _ $11,000 annual exclusion). After your meeting with Mr. Jory, you are uncertain about his position regarding the amount of his 2005 gifts and have scheduled a meeting with your firm's senior tax partner, who has advised Mr. Jory for more than 20 years. In preparation for the meeting, prepare a summary of the tax and ethical considerations (with supporting authority where possible) regarding whether you should prepare a gift tax return that reports the taxable gifts in accordance with Mr. Jory's wishes.View Full Posting Details