Assessable income=ordinary income + statutory income. Ordinary income: income deriving from the courts (s6-5)
Negative propositions: items that are not income by ordinary concepts:
1.Amounts not convertible into money :In Tennant v Smith (1892) free accommodation provided to a bank manager was held not to be ordinary income because building could not be sub-let and the benefit thereby converted to money. In FCT v Cooke & Sherden (1980) an incentive prize offered by a manufacturer was not income of the winning retailers because it was not transferable and so not convertible into money. 2.Capital does not have the character of income: For tax law purposes we need to distinguishing income and capital for several reasons: a) ordinary
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But: -- just because regularity is a common feature of income, do not conclude that an isolated or one-off receipt cannot be income: see Cooling’s case. [Principle upheld by a majority of HCA in Montgomery (1999).] Isolated transactions may generate income when they are entered into with the intention of making a profit - Myer Emporium (1987); California Copper (1904). 9. Amount derived from carrying on a business The old view was that this provision captured only what was already income by ordinary concepts other than its non-convertibility to money [hence ‘value to the taxpayer’ - Scott’s case] but in Smith’s case (1987) Brennan J considered the provision captured capital amounts too. The application of s26(e)/15-2 has been largely overtaken by Fringe Benefits Tax (for employees) and s21A (for business benefits) 10. Amount derived from employment or the provision of service. • Isolated transactions See Myer Emporium [California Copper].~ Isolated or unusual transactions involving the sale of capital assets [structure] may yet produce revenue amounts when entered into with the intention of making profit. ordinary business transactions generate income by ordinary concepts because the nature of business is profit making; 11. Amount derived from property. Property yields rent, interest, dividends and royalties. Interest is not defined in the Act. Its ordinary meaning is the amount
However, they fail to distinguish between the initial question of economic outlay and the secondary issue of debt or equity. Only if the first question had an affirmative answer would the second arise. The tax court correctly determined that the appellant’s guarantees in itself have not constituted contributions of cash or other property which might increase the bases of the appellant’s stock.
The Tax Court, per Judge Ruwe, issued an order on May 8, 1995, denying Pope & Talbot 's motion and granting the IRS 's motion. The court 's opinion characterized the issue before it as one of "first impression," and found resort to the legislative history of the statute necessary since the court was unable to "achieve...certainty based on the language of the statute." After reviewing the legislative history of IRC Sec. 311, the court observed the following: It is apparent that the purpose underlying IRC Sec. 311(d) was to tax the appreciation in value that occurred while the corporation held the property and to prevent a corporation from avoiding tax on the inherent gain by distributing such property to its shareholders...It follows that we must focus on the value of the Washington properties as owned by petitioner and value them as if petitioner had sold them at fair market value at the time of distribution.
Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.
Arlen is required by his divorce agreement to pay alimony of $2,000 a month and child support of $2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen and Jane?
Nothing is included in Decedent’s gross income, because under section 2035(d), Subsection (a) and paragraph (1) of subsection (c) shall not apply to any bona fide sale for an adequate and full consideration in money or money’s worth.
ASC 470-10-25-2 “While the classification of the proceeds from the investor as debt or deferred income depends on the specific facts and circumstances of the transaction, the
Cesarini v. U.S. - Found $ in piano. Filed return claiming $. Filed claim for refund. See outline
(TCO E) For federal tax purposes, royalty income not derived in the ordinary course of a business is classified as:
A Health Savings Account (HSA) plan requires a high-deductible medical insurance policy, which means that the premiums on the policy will be less than for a low-deductible policy. The contributions to the HSA are deductible for AGI, which reduces the nondeductible amount of itemized deductions subject to certain limitations, and the taxpayer does not have to itemize to obtain the deduction. The HSA distributions pay for the deductible medical expenses and they are not included in gross income. Also, the income earned on the HSA is not included in gross income if it is used to pay medical expenses not covered by the high-deductible plan.
Income – for an individual, the amount of money received through wages, rents, investments, pensions, and subsidy payments for a given period.
* The Act requires that any amount received based on production or use of property disposed must be included as property income
• - some other Commonwealth matters, such as those covered by the Customs Act 1901, the Social Security Act 1991 and the Taxation Act 1953
348 U.S. 426, 431 [47 AFTR 162] (1955). Stated otherwise, gross income includes earnings unaccompanied by an obligation to repay and without restriction as to their disposition. James v. United States, 366 U.S. 213, 219
Penny sold her own house is the capital gain and the profit on the taxpayer’s main residence will be ignored under s.118-100, but in this case, she subdivide a block of land and sell the newly created houses, any profit is generally treated as a capital gain subject to CGT. However, the profit may be treated as ordinary income if the profit was made from a profit making scheme. Unders15-15 ITAA1997
The leading cases, CIR v Mitsubishi Motors Ltd [1995] and Commissioner of Taxation v James Flood Pty Ltd [1953] that reflect a taxpayer