Tax Description

CH4

-Items Included in Gross Income: Compensation for services, including fees, commissions, fringe benefits, gross income derived from business, gain derived from dealings in property, interest, rents, royalties, dividends, alimony and separate maintenance payments, annuities, income from life insurance and endowment contracts, pensions, income from discharges of indebtedness, destributive share of partnership gross income, income in respect of a decedent, income from an interests in an estate trust.

-Compensation is included in gross income. Gifts are excluded from gross income.

-Prices and awards are taxable based on FMV at time of receipt. *However, if ALL 4 conditions occur, excludable: 1)Connected with the fields of science, charity, or the arts, 2)Involuntary selection process, 3)no future services required to recipient 4) assigned to a governmental agency or tax-exempt charitable organization.

-Employee achievement awards are taxable, except that the value of awards for length of service or safety achievement delivered at a meaningful presentation are excluded up to 1)$400 if the plan is non-qualified 2)$1600 if the plan is qualified *If an employee receives both qualified or nonqualified awards, the overall exclusion may not exceed $1600.

-The scholarship or fellowship are taxable, but excludable if they are: 1)to a degreed candidate attending an educational institution 2)for tuition and course related material (not room or board) 3)as a result of academic achievement, and not connected with services provided.

-Sole proprietor includes all business income (less cost of goods sold) in gross income, Partnerships and S corps are not taxed but their taxable income is taxed to individual partners and shareholders. Partners and shareholders must include their proportionate share of business income in their gross income, regardless of if the income was distributed.

-Tax effect on landlord: ALL rent received is taxable income, including future years’ rent...