Chapter 4 Gross incomes Exclusions
Chapter 4 Gross income: Exclusions
Learning Objectives Explain the conditions that must exist for an item to be excluded from gross Income Determine whether an item is nome Decide whether specific exclusions are available Understand employment-related fringe benefit exclusion items
Learning Objectives • Explain the conditions that must exist for an item to be excluded from gross income • Determine whether an item is income • Decide whether specific exclusions are available • Understand employment-related fringe benefit exclusion items
tems That Are not Income · Unrealized income Land valued at $20,000 beginning of year appreciates to $40,000 at end of year, the $20,000 increase in value is unrealized income and is not subject to tax
Items That Are Not Income • Unrealized income • Land valued at $20,000 beginning of year appreciates to $40,000 at end of year, the $20,000 increase in value is unrealized income and is not subject to tax
tems That Are not Income Self-help income The amount saved is not subject to tax Cleaning your own carpet Repairing your car Rental value of personal use property Selling price of property Only the gain, not the entire selling price
Items That Are Not Income • Self-help income – The amount saved is not subject to tax – Cleaning your own carpet – Repairing your car • Rental value of personal use property • Selling price of property – Only the gain, not the entire selling price
Major Statutory Exclusions o Social generosity or benevolence Public assistance programs Economic incentives Exclusion of certain scholarships sec。179 Confusion avoidance Compensation or gift Tax exempt interest
Major Statutory Exclusions • Social generosity or benevolence – Public assistance programs • Economic incentives – Exclusion of certain scholarships – Sec. 179 • Confusion avoidance – Compensation or gift – Tax exempt interest