R1:M4 - Loss Limitations for Individuals

Question 1

What are the 4 “baskets” of income?

Answer 1

1) Ordinary
2) Portfolio
3) Passive
4) Capital

Question 2

What consists of Ordinary Income?

Answer 2

1) Salaries and Wages
2) State and Local Tax Refunds
3) Alimony
4) IRA and Pension Income
5) Self-employment Income (Sch C)
6) Unemployment Compensation
7) Social Security
8) Prizes
9) Taxable portion of Scholarships and Fellowships
10) Gambling Income
11) Anything NOT falling into one of the other 3 “baskets”

Question 3

What is and consists of Portfolio Income?

Answer 3

Income a taxpayer would earn on his

Portfolio of Assets - Interest and Dividends