This chapter discusses the definition of gross income and various income categories that are included or excluded from gross income calculations for tax purposes. It covers interest, dividends, alimony, prizes, annuities, life insurance, gifts and inheritances. It also discusses exclusions such as employer-provided health insurance, meals and lodging, municipal bond interest, and social security benefits. The chapter contains examples and learning objectives related to calculating taxable portions of various income streams.
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
"Tagging Images For Findability: Making Your DAM Work For You", Ian DavisIan Davis
A presentation given to the Henry Stewart DAM Conference in London, UK on 1st July 2009. Presentation given by Ian Davis, Global Taxonomy Delivery Manager, Dow Jones Client Solutions
Is the process by which the sovereign, through its lawmaking body raises revenues used to defray expenses of government.
Means of the government in increasing its revenue under the authority of the law purposely used to promote welfare and protection of its citizenry.
"Tagging Images For Findability: Making Your DAM Work For You", Ian DavisIan Davis
A presentation given to the Henry Stewart DAM Conference in London, UK on 1st July 2009. Presentation given by Ian Davis, Global Taxonomy Delivery Manager, Dow Jones Client Solutions
nuage, deployment strategy of a distributed cloud infrastructure, OW2con'15, ...OW2
The nuage R&D project to create a strongly secured, resilient, distributed cloud based on opensource standard end in summer 2014. Two components have been released by the partners of the consortium. September 2014, Celeste present the StarDC, a mini datacenter ready to use in 4 month for 150 K€. April 2015, Non Stop Systems, the consortium leader, present CloudStar, a private cloud controller full open source (Debian-Openstack-Ceph-Zabbix...) ready to use in 5 weeks for 30 K€. Those two components bring full automation and remote administration to allow the deployment of distributed clouds toward large areas. French local public administration and SME's start experimentation of the first nuage components.
Presentation from the 2008 Audio Engineering Society 2008 Conference on the challenges and practicalities of running an internet radio station designed originally to serve listeners in the virtual world of Second Life. I've updated it from its original 2008 presentation to include equipment currently in use.
Building An Application On The SugarCRM Platform, OW2con'12, ParisOW2
Need to build an application to run part of your organization? One approach is that you could start writing something from scratch, perhaps leveraging an existing general purpose framework to help get you going. However, even if you use a framework, there's still the need to build all those standard components such as user interface, workflow, and ACL security, which can take quite some time to design and code. There's no need to start from scratch; SugarCRM is designed as a Rapid Application Development platform
USE IT CLOUD MARKETPLACE, Open Cloud Forum @ Cloud Expo Europe 2014OW2
Use it Cloud Marketplace is a platform which allows applications not only to be ported to the Cloud and operated in SaaS mode, but also to be distributed in the Cloud and purchased by users. This presentation is given by Najah Naffah, Managing Director, Prologue.
2013 Changes in Tax Law and Year End Tax Planning Opportunities
Individuals
o 2013 tax rates
o Tax on investment income
o Other changes in tax law affecting individuals
o Year end planning opportunities
Businesses
o Employment tax
o Depreciation
o Pass-through entities
Estate and Gift Tax
o Exemption amounts
o Tax rates
o Gifting strategies
o Valuation discounts
o Grantor trusts
Transcript: Selling digital books in 2024: Insights from industry leaders - T...BookNet Canada
The publishing industry has been selling digital audiobooks and ebooks for over a decade and has found its groove. What’s changed? What has stayed the same? Where do we go from here? Join a group of leading sales peers from across the industry for a conversation about the lessons learned since the popularization of digital books, best practices, digital book supply chain management, and more.
Link to video recording: https://bnctechforum.ca/sessions/selling-digital-books-in-2024-insights-from-industry-leaders/
Presented by BookNet Canada on May 28, 2024, with support from the Department of Canadian Heritage.
Neuro-symbolic is not enough, we need neuro-*semantic*Frank van Harmelen
Neuro-symbolic (NeSy) AI is on the rise. However, simply machine learning on just any symbolic structure is not sufficient to really harvest the gains of NeSy. These will only be gained when the symbolic structures have an actual semantics. I give an operational definition of semantics as “predictable inference”.
All of this illustrated with link prediction over knowledge graphs, but the argument is general.
UiPath Test Automation using UiPath Test Suite series, part 4DianaGray10
Welcome to UiPath Test Automation using UiPath Test Suite series part 4. In this session, we will cover Test Manager overview along with SAP heatmap.
The UiPath Test Manager overview with SAP heatmap webinar offers a concise yet comprehensive exploration of the role of a Test Manager within SAP environments, coupled with the utilization of heatmaps for effective testing strategies.
Participants will gain insights into the responsibilities, challenges, and best practices associated with test management in SAP projects. Additionally, the webinar delves into the significance of heatmaps as a visual aid for identifying testing priorities, areas of risk, and resource allocation within SAP landscapes. Through this session, attendees can expect to enhance their understanding of test management principles while learning practical approaches to optimize testing processes in SAP environments using heatmap visualization techniques
What will you get from this session?
1. Insights into SAP testing best practices
2. Heatmap utilization for testing
3. Optimization of testing processes
4. Demo
Topics covered:
Execution from the test manager
Orchestrator execution result
Defect reporting
SAP heatmap example with demo
Speaker:
Deepak Rai, Automation Practice Lead, Boundaryless Group and UiPath MVP
Let's dive deeper into the world of ODC! Ricardo Alves (OutSystems) will join us to tell all about the new Data Fabric. After that, Sezen de Bruijn (OutSystems) will get into the details on how to best design a sturdy architecture within ODC.
Dev Dives: Train smarter, not harder – active learning and UiPath LLMs for do...UiPathCommunity
💥 Speed, accuracy, and scaling – discover the superpowers of GenAI in action with UiPath Document Understanding and Communications Mining™:
See how to accelerate model training and optimize model performance with active learning
Learn about the latest enhancements to out-of-the-box document processing – with little to no training required
Get an exclusive demo of the new family of UiPath LLMs – GenAI models specialized for processing different types of documents and messages
This is a hands-on session specifically designed for automation developers and AI enthusiasts seeking to enhance their knowledge in leveraging the latest intelligent document processing capabilities offered by UiPath.
Speakers:
👨🏫 Andras Palfi, Senior Product Manager, UiPath
👩🏫 Lenka Dulovicova, Product Program Manager, UiPath
"Impact of front-end architecture on development cost", Viktor TurskyiFwdays
I have heard many times that architecture is not important for the front-end. Also, many times I have seen how developers implement features on the front-end just following the standard rules for a framework and think that this is enough to successfully launch the project, and then the project fails. How to prevent this and what approach to choose? I have launched dozens of complex projects and during the talk we will analyze which approaches have worked for me and which have not.
Builder.ai Founder Sachin Dev Duggal's Strategic Approach to Create an Innova...Ramesh Iyer
In today's fast-changing business world, Companies that adapt and embrace new ideas often need help to keep up with the competition. However, fostering a culture of innovation takes much work. It takes vision, leadership and willingness to take risks in the right proportion. Sachin Dev Duggal, co-founder of Builder.ai, has perfected the art of this balance, creating a company culture where creativity and growth are nurtured at each stage.
GraphRAG is All You need? LLM & Knowledge GraphGuy Korland
Guy Korland, CEO and Co-founder of FalkorDB, will review two articles on the integration of language models with knowledge graphs.
1. Unifying Large Language Models and Knowledge Graphs: A Roadmap.
https://arxiv.org/abs/2306.08302
2. Microsoft Research's GraphRAG paper and a review paper on various uses of knowledge graphs:
https://www.microsoft.com/en-us/research/blog/graphrag-unlocking-llm-discovery-on-narrative-private-data/
Epistemic Interaction - tuning interfaces to provide information for AI supportAlan Dix
Paper presented at SYNERGY workshop at AVI 2024, Genoa, Italy. 3rd June 2024
https://alandix.com/academic/papers/synergy2024-epistemic/
As machine learning integrates deeper into human-computer interactions, the concept of epistemic interaction emerges, aiming to refine these interactions to enhance system adaptability. This approach encourages minor, intentional adjustments in user behaviour to enrich the data available for system learning. This paper introduces epistemic interaction within the context of human-system communication, illustrating how deliberate interaction design can improve system understanding and adaptation. Through concrete examples, we demonstrate the potential of epistemic interaction to significantly advance human-computer interaction by leveraging intuitive human communication strategies to inform system design and functionality, offering a novel pathway for enriching user-system engagements.
Connector Corner: Automate dynamic content and events by pushing a buttonDianaGray10
Here is something new! In our next Connector Corner webinar, we will demonstrate how you can use a single workflow to:
Create a campaign using Mailchimp with merge tags/fields
Send an interactive Slack channel message (using buttons)
Have the message received by managers and peers along with a test email for review
But there’s more:
In a second workflow supporting the same use case, you’ll see:
Your campaign sent to target colleagues for approval
If the “Approve” button is clicked, a Jira/Zendesk ticket is created for the marketing design team
But—if the “Reject” button is pushed, colleagues will be alerted via Slack message
Join us to learn more about this new, human-in-the-loop capability, brought to you by Integration Service connectors.
And...
Speakers:
Akshay Agnihotri, Product Manager
Charlie Greenberg, Host
Connector Corner: Automate dynamic content and events by pushing a button
Chapter 2 power point
1. CHAPTER 2
Gross Income &
Exclusions
Income Tax Fundamentals 2012
Gerald E. Whittenburg
Martha Altus-Buller
2012 Cengage Learning
2. Learning Objectives
Understand and apply definition of gross
income
Determine tax treatment of income
categories such as interest, dividends,
alimony, etc.
Calculate taxable portion of annuities
Identify exclusions from gross income
such as life insurance proceeds, fringe
benefits, inheritances and gifts, etc.
Apply rules governing inclusion of Social
Security payments as income
2012 Cengage Learning
3. Defining Gross Income
Tax code defines gross income as “All
income from whatever source derived”
This means all sources of income are
included unless specifically excluded
◦ See Table 2.1 on page 2-3 for inclusions
◦ See Table 2.2 on page 2-3 for exclusions
◦ Non-cash items included at fair market value
◦ Barter transactions are includable
Note: Income from illegal activities is includable in gross income
2012 Cengage Learning
4. Interest Income
Iftotal interest income >$1,500, must report
on Schedule B (1040) or on Schedule 1
(1040A)
Interestis reported in year received for cash
basis taxpayers
◦ Fair market value of gifts/services a taxpayer
receives for making long-term deposits or
opening an account are taxable interest
2012 Cengage Learning
5. U.S. Government Bonds
Series EE bonds
◦ Purchase at discount and then redeem
Interest taxed in year of maturity or year bonds are cashed in
(whichever is earlier)
Series HH bonds
◦ Issued at face value
Pay interest semiannually and interest is taxed each year
Treasury stopped issuing 8/04, but there are still outstanding HH
bonds paying interest
Series I bonds
◦ Purchase for face value
Earnings are adjusted semiannually for inflation
Interest taxed each year or at maturity
2012 Cengage Learning
6. Dividend Income
3 kinds of dividends
◦ Ordinary dividends
Most common
Return of net income to shareholders
Schedule B (1040) when total dividend income > $1,500
◦ Nontaxable distributions
Return of original investment - not paid from corporation’s
earnings and profits
Not included in taxpayer’s income
Reduces basis in stock
◦ Capital gain distributions (CGD)
When stock reaches zero basis, further distributions are CGD
Report on page 1 of 1040 or Schedule D
2012 Cengage Learning
7. Tax Rates for Dividends
2003, 2006 and 2010 Tax Acts lowered tax rates for
“qualifying dividends”
“Qualifying dividends” are classified by corporations
issuing dividends and brokerage firms holding stock
investments
Regular tax Qualifying
bracket Dividend Rate
10%, 15% 0%
Higher brackets 15%
If not “qualifying”, dividends taxed at ordinary rates
2012 Cengage Learning
8. Alimony
Alimony is deductible to payer and taxable to
payee
Alimony payments must meet five requirements
as follows (if subject to divorce agreement after
1984)
o Must be in cash and received by ex-spouse
o Must be made in connection with written instrument
o Can’t continue after death of ex-spouse
o Can’t be designated as anything other than alimony
o Parties may not be members of the same household
2012 Cengage Learning
9. Other Issues with Alimony
Recapture provisions prevent front-end
loading of alimony payments
Property transfer is not alimony because
it’s not cash
◦ Transferor doesn’t have to recognize any gain
on transaction
◦ Transferee’s basis in property is same as
transferor’s
Note: annulled marriages treated as never having existed
and tax returns must be restated for up to three years
2012 Cengage Learning
10. Alimony Example
Example
Complying with a 2011 written divorce decree,
Frederik pays Shanna $1,800/month. The
decree specifies that the payments will be
reduced 40% when their daughter, in Shanna’s
custody, becomes eighteen. How much can
Frederik deduct per year as alimony?
2012 Cengage Learning
11. Solution
Example
Complying with a 2011 written divorce decree, Frederik
pays Shanna $1,800/month. The decree specifies that
the payments will be reduced 40% when their daughter,
in Shanna’s custody, becomes eighteen. How much
can Frederik deduct per year as alimony?
Solution
40% of each payment is considered nondeductible child
support; therefore, $1,800 x 12 months x 60% =
$12,960/year deductible alimony.
2012 Cengage Learning
12. Child Support
Child support is not deductible to payer and
not taxable to payee
Ifpayer falls behind on child support, he/she
must bring this current before any portion of
payments can be considered alimony
Rules differ for divorce agreements executed
pre- and post-1985
2012 Cengage Learning
13. Prizes/Awards
Taxableamount equal to cash prize or fair
market value of property
◦ Exception: Employee awards of tangible
personal property (up to $400) received for
recognition of length of service or safety
achievement are excludable. Up to $1,600 may
be excluded, if it is granted under a “qualified
plan award.”
Game show and reality TV show winners
should be aware that prizes/awards are
taxable
2012 Cengage Learning
14. Prize/Award Example
Example
Josef, an employee of Vesuvius Statuaries
LLC, receives a clock for 20 years of
service valued at $1,500 and the award is
not considered a “qualified plan award”;
how much is excludable from Josef’s gross
income?
2012 Cengage Learning
15. Solution
Example
Josef, an employee of Vesuvius Statuaries LLC,
receives a clock for 20 years of service valued at
$1,500 and the award is not considered a
“qualified plan award”; how much is excludable
from Josef’s gross income?
Solution
$400 is excluded and $1,100 would have to be
included in Josef’s gross income calculation
2012 Cengage Learning
16. Annuities/Pensions
An annuity is an instrument that a taxpayer
buys (usually at retirement) in return for periodic
payments for the remainder of his/her life
The taxable portion of these periodic payments
is calculated based on
◦ Mortality tables provided by IRS
and
◦ The annuity purchase price
2012 Cengage Learning
17. Annuities/Pensions
General Rule
◦ Payments received are both taxable
(income) and nontaxable (return of capital)
◦ Must calculate amount to exclude from
income
1. First, calculate exclusion ratio
Investment in Contract / (Annual payment x Life expectancy)
2. Secondly, find the amount to exclude
Exclusion Ratio x Annual Amount of Annuity Received
2012 Cengage Learning
18. Annuities/Pensions Example
Example
Din has saved $750,000 in his retirement
account and uses it to purchase an annuity.
His annuity equals $4,800/month and the IRS
tables show he is expected to live 19 years.
How much is excludable from tax each year of
Din’s retirement? Assume that Din is required to
use the general rule.
2012 Cengage Learning
19. Solution
Example
Din has saved $750,000 in his retirement account and uses it to
purchase an annuity. His annuity pays $4,800/month and the
IRS tables show he is expected to live 19 years. How much is
excludable from tax each year of Din’s retirement? Assume
that Din is required to use the general rule.
Solution
$750,000/($4,800 x 12 months x 19 years) = .685 exclusion
ratio
.685 = 68.5% of amount is excluded from tax
.685 x ($4,800 x 12 months) = $39,456 annual exclusion
2012 Cengage Learning
20. Annuities/Pensions –
Simplified Method
Individuals generally required to use this
method to calculate taxable amount from an
annuity - if annuity payments commenced
after 11/18/96
Taxpayer must fill in worksheet provided by
IRS
o See pp. 2-13 and 2-14 for example of simplified
method worksheet
2012 Cengage Learning
21. Employee Annuities
Employers may make periodic payments
to retirement plans on behalf of their
employees
These payments are not taxable to
employee in current year
They are not considered part of
investment when calculating exclusion
ratio
2012 Cengage Learning
22. Life Insurance Proceeds
Life
insurance proceeds are excluded
from gross income if:
◦ Proceeds paid to beneficiary by reason of
death of the insured
and
◦ Beneficiary has an insurable interest
Note: Interest on proceeds paid over
several years is generally taxable income
2012 Cengage Learning
23. Life Insurance Proceeds Example
Example
Karina dies on 6/15/10, leaving her husband,
Dann, a $500,000 life insurance policy. The
proceeds will be paid out to Dann $100,000
per year plus interest for 5 years.
In the current year, Dann receives $105,000
($100,000 + $5,000 interest). How much is
taxable to Dann in the current year?
2012 Cengage Learning
24. Solution
Example
Karina dies on 6/15/10, leaving her husband, Dann, a
$500,000 life insurance policy. The proceeds will be
paid out to Dann $100,000 per year plus interest for
5 years. In the current year, Dann receives $105,000
($100,000 + $5,000 interest). How much is taxable
to Dann in the current year?
Solution
Dann must include the $5,000 of interest income in his
gross income calculation; the face value of $100,000
is not taxable.
2012 Cengage Learning
25. Viatical Settlements
Also known as accelerated death benefits
Viatical settlements are excludable from gross
income in certain situations
◦ Chronically or terminally ill taxpayer collects early
payout from insurance company or sells/assigns
policy to a viatical settlement provider
Terminally ill patient must have certification from MD
stating that he/she reasonably expected to die within
24 months
Chronically ill must have certification from MD stating
the he/she is unable to perform daily living activities
unassisted
2012 Cengage Learning
26. Life Insurance Policy
Transferred for Value
Ifpolicy is transferred for value, then all or part
of the proceeds may be taxable to recipient
Taxable amount = Proceeds from death of insured
- Cash surrender value (at time of transfer)
+ Premiums paid by purchaser to keep policy
active
Exception: if policy is transferred for value to
partner of insured, a partnership in which insured
is a partner or a corporation in which insured is an
officer, then policy proceeds are not taxable
2012 Cengage Learning
27. Life Policy Transfer Example
Example
Bianca transfers a life insurance policy with a face
value of $25,000 and cash surrender value of $4,000
to Yvette as payment for services rendered. Yvette
pays premiums of $500 per year for a total of $1,500
in the ensuing 3 years; Bianca dies and Yvette
collects the $25,000. How much must Yvette include
in her gross income?
How would this answer differ if Yvette and Bianca were
partners in a partnership?
2012 Cengage Learning
28. Solution
Example
Bianca transfers a life insurance policy with a face value of
$25,000 and cash surrender value of $4,000 to Yvette as
payment for services rendered. Yvette pays premiums of
$500 per year for a total of $1,500 in the ensuing 3 years;
Bianca dies and Yvette collects the $25,000. How much
must Yvette include in her gross income? How would this
answer differ if Yvette and Bianca were partners in a
partnership?
Solution
Yvette must include $19,500 in income [$25,000 – (4,000 +
1,500)]. If Yvette and Bianca were partners in a partnership,
the entire proceeds ($25,000) would be tax-free.
2012 Cengage Learning
29. Gifts & Inheritances
Inheritances are excluded from income
◦ Any income generated from property received after
transfer is taxable
◦ Estate may incur taxes
Gifts received are excluded from income
◦ A gift is defined by the courts as a voluntary transfer of
property without adequate consideration
◦ Gifts in business settings usually considered taxable
income
◦ If recipient renders services for the gift, amount is taxable
2012 Cengage Learning
30. Scholarships
Scholarships received for fees, books,
tuition, course-required supplies or
equipment are excluded from income
Must include scholarship amounts in income
for:
◦ Any amounts applied to room and board
◦ Any amounts received as compensation for
required work (including work study)
2012 Cengage Learning
31. Employer Paid Accident &
Health Insurance Premiums
Taxpayers may exclude from income the total amount
received for
◦ Payment of medical care
◦ Payment for loss of a body member or function (called
accidental death and dismemberment)
Premiums paid by employer on employee’s behalf
are excluded from income
◦ For medical insurance
◦ For accidental death and dismemberment (AD&D) insurance
2012 Cengage Learning
32. Meals and Lodging
Meals and lodging provided by employer
are generally excluded from income (if
following tests are met)
(1) Meals provided by employer on premises during
working hours solely for the benefit of the
employer because employee must be available
for emergency calls or is limited to short meal
periods
(2) Lodging provided by employer on premises and
must be accepted as a requirement for
employment
2012 Cengage Learning
33. Municipal Bond Interest
Taxpayer may exclude interest on state and
local government obligations (called “muni
bonds”) from federal taxation
After-tax return for tax-free bond calculated as
follows
After-tax return = Tax-free interest rate / (1.00 – taxpayer’s tax rate)
2012 Cengage Learning
34. Municipal Bond Interest Example
Example
Gopal is in the 33% federal income tax
bracket and invests in a Nashville City
Bond paying 6%. What taxable
interest rate will yield the same after-
tax return as the municipal bond?
2012 Cengage Learning
35. Solution
Example
Gopal is in the 33% federal income tax bracket
and invests in a Nashville City Bond paying 6%.
What taxable interest rate will yield the same
after-tax return as the municipal bond?
Solution
Taxable interest rate equivalent = 8.96%
(.06) / (1.00 - .33) = .0896
2012 Cengage Learning
36. Social Security Benefits
Part of Social Security benefits may be included
in gross income
◦ Maximum inclusion amount = 85%
Inclusion based on taxpayer’s Modified AGI
(MAGI)
◦ MAGI = AGI + tax-exempt interest (and other items)
If(MAGI + (50%)(SS benefits)) < base amount*
then benefits are not includable
*If this number exceeds base amount, must compute
taxable portion. See pages 2-24 – 2-25 for sample worksheets
on how to calculate includable Social Security benefits.
2012 Cengage Learning
37. Calculating Taxable
Amount of SS Benefits
If (MAGI + (50%)(SS benefits)) exceeds base amount
as follows:
Base Amount Filing Status
$32,000 MFJ
$25,000 MFS
$25,000 All others
…then, the taxable amount is calculated by
completing the Simplified Taxable Social Security
Worksheet
2012 Cengage Learning
38. Unemployment Compensation
Unemployment compensation payments
are fully taxable
These payments are deductible on some
state’s income tax returns
2012 Cengage Learning
39. Employer-Provided
Spending
Accounts
Employer-sponsored plan allowing employees to
set aside pretax dollars for:
◦ Dependent care (up to $5,000/year)
◦ Medical/dental/optical care
◦ Health insurance co-pays
◦ Prescription costs
◦ Public transport/parking up to certain limits
Can result in significant tax savings for employee
“Use-it-or-lose-it” provision
◦ If amounts are left in plan after certain date, EE loses them
2012 Cengage Learning
40. Employee Fringe Benefits
Mayexclude certain fringe benefits from gross
income, such as:
◦ Employer-paid premiums for group term life insurance (face
value up to $50,000)
◦ Qualified employee discounts with exceptions
◦ Working condition fringe benefits
Excludable if you could deduct item on your own as an employee
For example, a subscription to professional journal,
◦ De minimis fringe benefits
These are immaterial and not worth tracking
◦ Tuition reduction
Different rules for undergraduate vs. graduate
◦ Value of membership to athletic facilities
◦ Retirement planning services
◦ Other excludable fringes
2012 Cengage Learning