Class 1, Overview And Introduction

Question 1

Procedure for computing taxable income
IRC §63(a)

Answer 1

Taxable income is calculated by subtracting from gross income any allowable deductions, excluding the standard deduction.

Question 2

Why is it important to know a taxpayer’s taxable income?
IRC §1(a)

Answer 2

Taxpayer’s taxable income determines their level of taxation.

Question 3

Under what conditions will an individual have gross income?
IRC §61(a)

Answer 3

If a person receives money from any sort of economic activity, including wages, renting out property, investments,pensions, royalties, etc., then they will have gross income.