C237 Taxation 1 Exam with accurate detailed solutions ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
individual income tax formula - ✔✔Gross Income (-Deductions) ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
AGI (-Standardized/Itemized Deduction, Deduction for QBI, and Charitable Contributions)
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Taxable Income (*Tax Rate) ||//\\|| ||//\\|| ||//\\||
Income Tax Liability (+Other Taxes) ||//\\|| ||//\\|| ||//\\|| ||//\\||
Total Tax (-Credits/Prepayments) ||//\\|| ||//\\||
= Taxes Due/Refund
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All-inclusive Income Concept - ✔✔Gross Income includes all realized Income from ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
whatever source derived unless government tells you to exclude it. ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
2 Categories of Income - ✔✔Ordinary and Capital
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Ordinary Assets - ✔✔Inventory/Supplies, depreciable property, real property used in trade ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
or business ||//\\||
Capital Assets - ✔✔all assets OTHER THAN Inventory/Supplies, depreciable property, and
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real property used in trade or business
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Section 1221 - ✔✔Defines capital assets in the negative ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Capital Assets are... - ✔✔Investment-type assets and personal use assets
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Give 3 Examples of Ordinary Assets - ✔✔Inventory, Supplies, and Real Property
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, Give 3 Examples of Capital Assets - ✔✔Stock Investments, personal residence, and personal
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automobile
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Long-term Asset - ✔✔Capital asset held 366+ days ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Short-term asset - ✔✔Capital asset held a year or less ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Sales of capital assets generate... - ✔✔Capital Gains and Losses
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What if a taxpayer sells multiple capital assets that result in both gains and losses? -
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✔✔calculate the net to determine overall gain or loss ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
How much of a capital loss can you take against your ordinary income? - ✔✔$3,000, total if
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married or single (does NOT increase on joint return) ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Unrealized - ✔✔Gain or loss of asset value on paper ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Realized - ✔✔Asset has been sold and money is in hand ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Recognized - ✔✔Required to list gain as income OR allowed to take a loss as deduction on ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
your income taxes
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Deductions - ✔✔Reduce taxable income ||//\\|| ||//\\|| ||//\\|| ||//\\||
FOR AGI - ✔✔Business deductions and some allowable personal deductions taken from
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Gross Income before you get AGI (Student loan interest, IRA Contributions)
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individual income tax formula - ✔✔Gross Income (-Deductions) ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
AGI (-Standardized/Itemized Deduction, Deduction for QBI, and Charitable Contributions)
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Taxable Income (*Tax Rate) ||//\\|| ||//\\|| ||//\\||
Income Tax Liability (+Other Taxes) ||//\\|| ||//\\|| ||//\\|| ||//\\||
Total Tax (-Credits/Prepayments) ||//\\|| ||//\\||
= Taxes Due/Refund
||//\\|| ||//\\||
All-inclusive Income Concept - ✔✔Gross Income includes all realized Income from ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
whatever source derived unless government tells you to exclude it. ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
2 Categories of Income - ✔✔Ordinary and Capital
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Ordinary Assets - ✔✔Inventory/Supplies, depreciable property, real property used in trade ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
or business ||//\\||
Capital Assets - ✔✔all assets OTHER THAN Inventory/Supplies, depreciable property, and
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
real property used in trade or business
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Section 1221 - ✔✔Defines capital assets in the negative ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Capital Assets are... - ✔✔Investment-type assets and personal use assets
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Give 3 Examples of Ordinary Assets - ✔✔Inventory, Supplies, and Real Property
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
, Give 3 Examples of Capital Assets - ✔✔Stock Investments, personal residence, and personal
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
automobile
||//\\||
Long-term Asset - ✔✔Capital asset held 366+ days ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Short-term asset - ✔✔Capital asset held a year or less ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Sales of capital assets generate... - ✔✔Capital Gains and Losses
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What if a taxpayer sells multiple capital assets that result in both gains and losses? -
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
✔✔calculate the net to determine overall gain or loss ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
How much of a capital loss can you take against your ordinary income? - ✔✔$3,000, total if
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
married or single (does NOT increase on joint return) ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Unrealized - ✔✔Gain or loss of asset value on paper ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Realized - ✔✔Asset has been sold and money is in hand ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Recognized - ✔✔Required to list gain as income OR allowed to take a loss as deduction on ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
your income taxes
||//\\|| ||//\\||
Deductions - ✔✔Reduce taxable income ||//\\|| ||//\\|| ||//\\|| ||//\\||
FOR AGI - ✔✔Business deductions and some allowable personal deductions taken from
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Gross Income before you get AGI (Student loan interest, IRA Contributions)
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