CHAPTER 3 INTRODUCTION TO INcome TAXATION NCEPT OF INCOME Taxable recovery, of yoni. east : “ny inane ject tan? amet menuee @-Procete of crops ied entree = —Ot-tax payer's ability to pay 4X. An exeltent object _b- Guarantee payments o¥+otion inde aati o gpenmest dts, Indenity Coated cangetent infringemens Sross Incame— tax concept of income (NIRC);___vit__ Taxable ttem of incame~‘ilem of qfoss income.” or Inclusion_in gross_income- 2: \tis 0 realized benefit a Sass Income {axable income; braoder to pertain 4a Benefit~ any form of advontoge. derived bythe tox —Ony, income ‘hot con_be subjected to income tax ;any payer; increase in net worth octurs when one receiy = “G> Receipt of a\can™ properties increase, but obli> Elements of Gross \ncome gations olso incfease resulting in an offselting €- cli ial hatin 7 __ Sechin ital = e - Dis ties= ra it ses the tax payers. net orth Qwner Return on_capital= increases. net worth_is income sub~_C-Ressipt of money or property toe held intrust, ject to income tox Or fone Cemited to,ondther person. Retum_cf copifal= merely maintains net worth’, not _Reo\ized= earned, Fequites that there is a degree of. taxable -|mprovement innet worth indicates an_undertolsing or saceifice from the taxpayer to be bility ta pay,fax- entitled of tne penefit Requisites Of avealized penefit Capital items deemed with infinite value __\- There mustbe on exchange transaction Return 0% Capital - anything received Os compenso- 2. The-transoction involves another entity —tion for their loss Cex. "fe, health, human reputation) 3. Yt involves the net worth ofthe cecipient Types. Tronsers, “Renan ta cal vs Recmny clad pts 1. Biloterul transfers of exchanges “onerous 4 ‘rmsoasn: —Lost of copifal= decrease in net worth, G- Sale. Lost of Profits ~ does nat decrease networth, vb: Barter: Etsoven a eat capital merely maiotains net worth 2 Unilateral ttonsfess gratuitays Amansoctions CiesSveru at last puatits~ Increases networth