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Overstated Basis Causes Understated Income However …..

The lesson I learned today is that an overstatement of basis (cost of an asset) could result in an understatement of income in the future when the asset is sold but is not necessarily the same as under reported income that,

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Posted in Asset Classification, Basis, Business Expense, Rental Real Estate

Taxable Incove Vs. Financial Accounting Income

Daniel N. Shaviro (NYU) has published The Optimal Relationship between Taxable Income and Financial Accounting Income: Analysis and a Proposal, 97 Geo. L.J. 423 (2009). Here is the abstract: The persistence of the book-tax gap, or excess of companies’ reported

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Posted in Income

Reporting Hobby Income and Expenses

Since a hobby is something done for personal pleasure it is not a trade or business, should income be generated from a hobby the gross income is reported on Line 21, Form 1040. The cost of the materials used to

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Posted in Hobby, Income

How to determine Business Income

Business Income, Gross Receipts or Sales If there is a connection between any income received and a business, the income is business income. A connection exists if it is clear that the payment of income would not have been made

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Posted in Business Income, Income, Taxable Income
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