From: Ron Kean (ronkean@juno.com)
Date: Thu Jul 15 1999 - 08:16:34 MDT
On Thu, 15 Jul 1999 15:47:50 +1000 "O'Regan, Emlyn"
<Emlyn.ORegan@actew.com.au> writes:
>Don't you have to earn actual money (rather than e-bucks) before tax
>comes
>into the picture? I'd love to see a prolonged diatribe from an expert
>on
>this (self proclaimed experts welcome).
>
>Emlyn
>
>
(If you are from Australia, please note that the following refers to the
United States federal income tax system. I know next to nothing about
Australian taxes.)
The IRS has long taken the position that 'income', for the purpose of the
income tax, is defined in the broadest possible terms. If you are paid
in chickens, the IRS regards the chickens as income equal to the cash
fair market value of the chickens. Same for barter. The IRS even has a
form for reporting barter transactions. The IRS uses the term 'taxable
boot' for taxable non-cash (or 'in kind') income. Money or value which
accrues to the taxpayer's benefit is generally taxable in the year in
which it accrues. You are taxed each year on the interest earned each
year by a 5-year CD even if it just accumulates in the CD account. You
are taxed each year on the imputed growth in value of a 30 year zero
coupon bond, even though you don't get the money until the bond matures
or is sold.
There are certain kinds of income which are exempt from the income tax,
though they may be subject to other taxes such as estate and gift taxes.
Those forms of income exempt from the income tax include inheritances,
bona fide gifts, casualty insurance settlements, disability payments,
awards and settlements for tort damages, life insurance beneficiary
proceeds, stipends, indemnities, and loans received.
Ron Kean
.
.
.
.
.
___________________________________________________________________
Get the Internet just the way you want it.
Free software, free e-mail, and free Internet access for a month!
Try Juno Web: http://dl.www.juno.com/dynoget/tagj.
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:04:29 MST