Concepts
Year of Inclusion
Income
100
there is no income subject to tax until the taxpayers has recovered the capital invested
recovery of capital doctrine
100
calendar or fiscal year
taxable year
100
difference between the original amount of the loan and the amount due at maturity
original issue discount
200
all income from whatever source derived except as otherwise provided
gross income
200
property or services received are included in the taxpayer's gross income in the year of actual or constructive receipt
cash receipts method
200
advance payments received by customers but taxed in year of receipt if sale accounting methods are different for tax and reporting purposes
prepaid income
300
change in net worth increased by value of the goods and services a person actually consumed during the period
economic income
300
included in gross income for the year in which it is earned, regardless of when it is collected
accrual method
300
the income must be attributed to the source it came from
fruit and tree metaphor
400
the type of income not recognized until it is realized
accounting income


400
combination of accrual and cash method when inventory is an income-producing factor
hybrid method
400
to prevent double taxation these are taxed at special rate since corporations and shareholders are taxed and what are these special rates
qualified dividends 10-15% marginal- no tax

24/28/33/35% marginal rate- 15% tax

39.6% marginal rate- 20% tax

500
income realized in any form whether in money, property, or services
form of receipt of gross income
500
if income is available the taxpayer should not be allowed to postpone income recognition
constructive receipt doctrine
500
income is reported as earned even if not distributed
partnership distributive share of income
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