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1 year ago

How does gross taxable income and adjusted gross income differ between the two?

Business

1 answer:

Ierofanga [76]1 year ago

6 0

Gross taxable income is the total income a person earns before any deductions or credits.

What is Tax?
Tax compliance refers to policy actions as well as individual behaviour aimed at ensuring that taxpayers pay the right amount of tax just at right time and securing the correct tax allowances as well as tax reliefs. A tax is a mandatory financial charge or another type of levy imposed on the a taxpayer by a governmental organisation in order to fund government spending as well as various public expenditures (regional, local, or national). Around 3000–2800 BC, the first recorded taxation was enacted in ancient Egypt. Non-compliance with the law includes failing to pay on time as well as evading or resisting taxation. Taxes can be paid in cash or in the labour equivalent and can be either direct or indirect.

Adjusted gross income is the amount of income a person earns after subtracting certain deductions that are allowed by the Internal Revenue Service, such as certain business expenses, student loan interest payments, or alimony payments. In other words, adjusted gross income is the amount of income that is actually taxable.

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In the current year, Plum, Inc., a closely held C corporation, has $410,000 of net active income, $20,000 of portfolio income, a

fenix001 [56]

Answer:

(a) $430,000

(b) $355,000

Explanation:

To answer the question, it is important to understand the meaning of passive income or loss and how it applies to personal service corporation (PSC) and C corporation.

Passive income refers to income received from investment without active participation in the running of the business. Example of passive income is dividend.

For personal service corporation (PSC), when there is a passive loss, in can only be deducted from any other available passive income from other investments. If there is no other passive income, the passive loss is not deductible from active income.

For C corporation, passive loss is allowed to be deducted against net active income. However, it can not be deducted against portfolio income .

The questions are then answered as follows:

a) If Plum is a personal service corporation (PSC)

Since Plum is PSC, it cannot deduct passive activity loss of $75,000 from the net active income nor portfolio income.

Therefore, it taxable income is the addition of net active income and portfolio income as follows:

Taxable income = $410,000 + $410,000 = $430,000

b) Plum is not a personal service corporation

Here, Plum is considered as a C coporartion. Therefore, it can deduct the passive loss from the active income but not from portfolio income. Its Taxable income is therefore as follows:

Taxable income = ($410,000 - $75,000) + $20,000 = $355,000

5 0

3 years ago

Although you may know William Shakespeare from his classic literature, what is not well-known if that he was an astute investor.

coldgirl [10]

Answer:

oh shot man idk

Explanation:

3 0

3 years ago

Tom is responsible for ordering hardware for a custom home his company is building. The contractor installing the hardware is sc

Vilka [71]

Answer:

Explanation:

Free slack can be described as the total amount of time a project can be delayed without affecting the project's completion time . Tom and the contractor share a slack time of 10 days

Total slack measures the total amount of time a project can be delayed before the project's completion.

Functional slack measures the amount of time that each activity in a project can be delayed without affecting the project's completion time.

4 0

3 years ago

You bought a car for $17,250. You put down $3,000 cash and have to take a loan out to pay for the rest. The car dealership is of

LuckyWell [14K]

Answer:

Interest will be $855 x 10 years= $8,550

Explanation:

Interest

6÷100=0.06

0.06x14,250=$855

$855x10=$8,550.

How much to have paid back

At the end of 10years $8,550 would have been paid as interest

Total sum will be $14,250+$8,550=$22,800 to be paid back.

8 0

3 years ago

Mark and Kate are establishing a fund for their son's college education. They would like $60,000 in the fund at the end of 10 ye

katen-ka-za [31]

Answer:

The lump sum amount to be deposited should be $27,020.67

Explanation:

Data provided in the question:

Future value = $60,000

Time, t = 10 years

Interest rate, r = 8% = 0.08

Compounded monthly i.e number of periods n = 12

Now,

Future value = Amount deposited × $\left( 1 + \frac{r}{n} \right)^{\Large{n \times t}}$

Therefore,

on substituting the respective values, we get

$60,000 = Amount deposited × $\left( 1 + \frac{0.08}{12} \right)^{\Large{12 \times 10}}$

$60,000 = Amount deposited × ( 1.00667 )¹²⁰

$60,000 = Amount deposited × 2.220522

Amount deposited = $60,000 ÷ 2.220522

Amount deposited = $27,020.67

Hence,

The lump sum amount to be deposited should be $27,020.67

7 0

2 years ago