ACCT 203 Lecture 21: GMU ACCOUNTING 203 Lecture 21
25 May 2018
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GMU ACCOUNTING 203 Lecture 21
Wealth taxes
Real property taxes.
A levy on the total value of personal assets, including: bank deposits, real estate,
assets in insurance and pension plans, ownership of unincorporated businesses,
financial securities, and personal trusts.
Wealth Transfer Tax
Gift and estate taxes.
Any kind of tax that is levied on the transfer of official documents or other
property. Transfer tax is paid by the seller of the property. Gift and estate taxes
are both transfer taxes. Transfer tax is also known as "excise tax" in some states.
Estate tax dollar limitations (death tax)
-$14,000 annual gift tax exclusion (can give away up t0 $14 million to as many
people as you want without those gifts being counted against your $5 million
lifetime exclusion.
- An individual can leave $5.45 million to heirs and pay no federal estate or gift
tax.
-For a married couple, this is $10.98 million.
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-Someone who dies can give the surviving spouse or a charity their money
without triggering the gift tax.
Tax benefit of S-corporations
S corporation passes through most of its income and loss items to the
shareholders. Unlike a regular corporation, there is no "double taxation," once at
the corporate level and again on the individual shareholder level. Each
shareholder is subject to his or her own individual tax rate on the income (or
losses) passed through to him or her.
(pass-through entity)
Tax Rate on Dividends
-Dividend income is taxed at lower rate because it is subject to double taxation
(no deduction for corporation paying the dividend)
-Ordinary dividends are taxed as ordinary income.
-Qualified dividends are taxed at a 20%, 15%, or a 0% rate, depending on the tax
bracket.
tax rate on interest incomes
-Interest Income - The amount of regular interest that has been paid from fully
taxable instruments, such as corporate bonds, mutual funds, CDs and demand
deposit accounts.
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