BASIC RULES OF INCOME TAXATION
01.Core Concepts
1. All accretions to wealth, from whatever source derived, constitute income • Exceptions: • Realization Principle • Capital Recovery Doctrine • Public policy exclusions 2. For every deduction taken, there must be an inclusion in income. • Implications: • To claim a deduction on a tax return, that amount must have been included in income. • Every deduction claimed by one taxpayer should constitute income to another taxpayer. • Exceptions: • Qualified Retirement Plans • Charitable Planning