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    Income VIVI

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    Sim Belsondra
    This document discusses income, including sources of income like wages, interest, dividends, and self-employment. It classifies income into ordinary income, capital gains, and tax exempt income. It also discusses tax accounting periods, including the calendar and fiscal year, as well as short tax years and changing tax years. Finally, it discusses accounting methods for reporting income and expenses, including cash, accrual, special, and hybrid methods.

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    Income VIVI

    Uploaded by

    Sim Belsondra
    16 views19 pages
    This document discusses income, including sources of income like wages, interest, dividends, and self-employment. It classifies income into ordinary income, capital gains, and tax exempt income. It also discusses tax accounting periods, including the calendar and fiscal year, as well as short tax years and changing tax years. Finally, it discusses accounting methods for reporting income and expenses, including cash, accrual, special, and hybrid methods.

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    This document discusses income, including sources of income like wages, interest, dividends, and self-employment. It classifies income into ordinary income, capital gains, and tax exempt income. It also discusses tax accounting periods, including the calendar and fiscal year, as well as short tax years and changing tax years. Finally, it discusses accounting methods for reporting income and expenses, including cash, accrual, special, and hybrid methods.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    16 views19 pages

    Income VIVI

    Uploaded by

    Sim Belsondra
    This document discusses income, including sources of income like wages, interest, dividends, and self-employment. It classifies income into ordinary income, capital gains, and tax exempt income. It also discusses tax accounting periods, including the calendar and fiscal year, as well as short tax years and changing tax years. Finally, it discusses accounting methods for reporting income and expenses, including cash, accrual, special, and hybrid methods.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 19

    INCOME

    LESSON OBJECTIVES:
    •Discuss sources of income.
    •Classify income.
    •Identify tax accounting period.
    •Discuss the methods of
    reporting income and
    expenses.
    Sources of income.
    • Wages ( selling labor)
    • Interest, dividends, and gains from investment
    ( selling capital)
    • Self-employment (operating a business or selling a
    good an service)
    • Property Rental.
    • Royalties ( rental of intellectual property)
    • “Others” income such as alimony, gambling winnings
    or prizes.
    TYPES OF INCOME
    ORDINARY
    INCOME
    Ordinary income encompasses earnings,
    interest, regular, dividends, rental income,
    distributions from pensions or retirements
    accounts, and social security benefits.
    CAPITAL
    GAINS
    •Are the gains from
    selling assets that
    have appreciated in
    value.
    TAX EXEMPT INCOME
    Interest paid on certain
    bonds issued by
    governmental entities is
    treated as a tax-excempt
    income.
    TAX
    ACCOUNTING
    PERIOD
    Tax Year
    • A tax year is an annual accounting period for keeping records and
    reporting income an expenses.

    * Calendar Year- 12 consecutive months beginning January 1


    and ening December 31
    * Fiscal year- 12 consecutive months ending on the last day of any
    month except December.
    SHORT TAX YEAR

    Is a tax year of less


    than 12 months
    Not in excistence entire year

    •Even if you a taxable entity were not in


    existence for the entire year
    A tax return is required for the time you
    were in existence.
    Changing your tax year

    • Once you have adopted your tax year, you


    may have to get IRS approval to change it.
    To get approval, you must file Form 1128.
    See the instruction for Form 1128. for
    exceptions.
    ACCOUNTING
    METHODS
    •An accounting method is a
    set of rules used to
    determines when and how
    income and expenses are
    reported on your tax return.
    METHODS YOU CAN USE:
    • CASH METHOD
    - Income, Expenses
    • ACCRUAL METHOD
    - Generally report income in the year it is earned and deduct capitalized expenses in the
    year incurred.
    - The purpose of an accrual method of accounting is to match income and expenses in a
    correct year.
    • SPECIAL METHOD
    - Doesn’t discuss special method of accounting for certain items of income and expenses.
    • HYBRID METHOD
    - Generally, you can use any combination of cash, accrual, and special methods of
    accounting if the combination clearly reflects your income and you use it consistently.
    CASH METHOD
    ACCRUAL METHOD
    SPECIAL METHOD
    •Publication 225-Farmers Tax
    •Publication 535- Business expenses
    •Publication 537- Installment sales
    •Publication 946- How to depreciate
    property
    THANK YOU!!!

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