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Classify: taxable, deduction, credits, not taxed

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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.
d. Credits.
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.
Interest expense
Rental expense
Rental Income
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
Utilities
Wages and salaries

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Solution Summary

A few sentences give you the general rule and then each is classified.

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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 ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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