美国税法2010 Gross Income Concepts and Inclusions.pptVIP

Chapter 4 Gross Income: Concepts and Inclusions Gross Income (slide 1 of 3) Definition: Gross income includes all income from whatever source derived, unless specifically excluded under the Code Concept is interpreted broadly by the courts Gross Income (slide 2 of 3) Taxability of income follows the realization principle from accounting Income is recognized (taxed) when realized Mere appreciation in wealth (economic income) is not considered realized income Gross Income (slide 3 of 3) Income is recognized whether it is in the form of cash, or “in-kind” cash equivalents (i.e., property or services) The amount of income from “in-kind” receipts is equal to the FMV of the property or services Income does not include recovery of the taxpayer’s capital investment Accounting Periods Taxable year is generally a 12-month period Taxable year for most individual taxpayers is the calendar year Fiscal year can be elected if taxpayer maintains adequate records Fiscal year is a 12-month period ending on the last day of a month other than December Example: July 1 to June 30 Accounting Methods (slide 1 of 2) There are 3 primary methods of accounting for tax purposes: Cash receipts and disbursements method Accrual method Hybrid method Accounting Methods (slide 2 of 2) In addition to overall accounting methods, taxpayers may choose (elect) tax treatment for various transactions, for example Taxpayers can elect to use the installment method Certain contractors may elect to use either the percentage of completion method or the completed contract method Cash Receipts Method (slide 1 of 2) Income is recognized in the year it is actually or constructively received in cash or cash equivalent An amount is constructively received when it is set aside and made available to taxpayer without substantial restrictions Cash Receipts Method (slide 2 of 2) Example - Constructive receipt An employer issued a bonus check to an employee on December 31st but asked her to hold it for a few days unt