economic income vs gross income


T

taxman

i'm having a few problems with this. compute taxpayer's GROSS income and
ECONOMIC income:

1. sold securities for 10,000. securities cost 6,000 in 1996. the fair
market value of them at the beginning of year was 9,000.

->I put gross income would be 4,000. would economic income be 1,000? i'm
confused about this.

2. taxpayer sold his business and received 15,000 under a convenant not to
compete.

->Would both be 15,000 income?

3. taxpayer used corporation automobile with a rental value of 800.

-> Would both gross and economic income be 800?

4. taxpayer raised vegetables in garden. the fair value was 900, and costs
were 100. she ate some and gave the rest to neighbors.

-> Gross income is 0, but what is economic income? 800?

5. local gov't changed zoning ordinances. because of change, taxpayers fair
market property value increased by 10,000.

-> Gross income 0, eoncomic income 10,000?

6. during year, taxpayer borrowed 50,000 at 9% interest. by end of year,
interest rates had increased to 12% and the lender accepted 49,000 in
settlement.

-> I know with Gross, you have to claim as income the difference for
settling (if settlement is less), but what about economic income?

thanks for clarifying and explaining...
 
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B

Bob

taxman said:
i'm having a few problems with this. compute taxpayer's GROSS income and
ECONOMIC income:

1. sold securities for 10,000. securities cost 6,000 in 1996. the fair
market value of them at the beginning of year was 9,000.

->I put gross income would be 4,000. would economic income be 1,000? i'm
confused about this.

2. taxpayer sold his business and received 15,000 under a convenant not to
compete.

->Would both be 15,000 income?

3. taxpayer used corporation automobile with a rental value of 800.

-> Would both gross and economic income be 800?

4. taxpayer raised vegetables in garden. the fair value was 900, and costs
were 100. she ate some and gave the rest to neighbors.

-> Gross income is 0, but what is economic income? 800?

5. local gov't changed zoning ordinances. because of change, taxpayers fair
market property value increased by 10,000.

-> Gross income 0, eoncomic income 10,000?

6. during year, taxpayer borrowed 50,000 at 9% interest. by end of year,
interest rates had increased to 12% and the lender accepted 49,000 in
settlement.

-> I know with Gross, you have to claim as income the difference for
settling (if settlement is less), but what about economic income?

thanks for clarifying and explaining...

Taxes and "economics" are very different, ask your congress critter !
 

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