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Individual Tax
University of Mississippi School of Law
Green, Karen O.

Individual Income Taxation
Green 2006
Office in room 503
 
We will go through chapter 17
Cha 11, 12, and13 will not be covered in detail
Try to stay about 35 pages ahead of where we are in class
 
-What constitutes Gross Income for tax purposes?
S61 is a very broad definition and list some specifics such as income from any source
Some following sections specifically discuss inclusionary rules as well as rules about items that are specifically excluded
-We want tax laws to be uniform throughout the states
But since prop interest are defined under state laws it is important to look at those rights
 
Relationships between parties are important and can have tax affecting consequences
For instance it is difficult for an employer to give an employee a gift
 
Adjusted gross income – the number after taking deductions from the total income à usually affects business
This number is used for many purposes including limiting deductions as well as limiting charitable deductions
S62 lists what is an above the line deduction
There are also itemized deductions as well as personal exemptions
 
Tax Expenditures – concept that has to do with the government giving an indirect subsidy by giving up revenue à interest on personal residence deduction
 
Important questions
Gross income?
Whose income?
When to tax the income?
Character of the income?
 
In order to have a capital gain you have to have a capital asset à capital gains have historically had lower tax rates
 
Sources of Tax Law
Most important source is the statutory code itself
Regulations
 
Progressive system of taxation is one in which the more you make the higher percentage of taxes are paid
 
The IRS issues several types of rulings
Revenue rulings
Revenue procedures
Technical Advise Memorandum
Private letter rulings (applicable to individual tax payers)
Announcements
 
Two elections made on every tax report are 1) method of accounting and 2) what taxable year is going to be u

evenue corps actually are bringing in
-Tax returns of 100,000 or up only accounted for about 9.5% of all tax returns but reflected 40% of total income and 61.7% of tax
-We have historically had a progressive tax system but in 1986 the tax base was broadened and a two bracket system was implemented
 
-The estate tax is only applicable if you leave more than a million to anyone other than one’s spouse
-The majority of federal income comes from the federal income tax
-Unlike the US, other developed countries receive a large portion of their income from consumption taxes
-The highest percentage of audit in the US is in LA at about 1.4%
 
-Many times there is actually no substance to a transaction other than to receive tax benefits
So there are transactions with no purpose but tax avoidance