ACIS 4314 Lecture Notes - Lecture 5: Tax Basis, Financial Statement, D-Pad

• School: Virginia Tech
• Department: Accounting and Information Systems
• Course: ACIS 4314
• Professor: Huang

Document Summary

Sole prop: biz income is personal income other entities: its biz income; owners file separate personal return. Partnetship: form 1065; s corp: for 1120s; c corp: form 1120. Gross income include all income from whaterver source derviced . Sources of income = inventory sales, services, renting/leasing (care about source bc diff accrual method) Business deductions: purpose: deduct expense to generate income (not expenses incurred for personal objectives tho) Expenditure must be ordinary (natural; lawsuits) & necessary (helpful/conducive to biz) If ordinary & necessary, only deductible to extent its reasonable in amt (arms length) Most likely an issue in related party transactions. Exps against public policy: no deduct for fines, bribes, lobby or political contributions. Capital exps: tangible assets capitalized & costs are deprec. Related to tax exempt inc: cant deduct int on loans for muni bonds. deduct if biz is life insurance benef.