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Introduction to Income Tax Concepts Quiz

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Questions and Answers

What is the general term that means all wealth that flows into the taxpayer other than a mere return of capital?

Taxable Income
Capital Gain
Gross Income (correct)
Net Income

What refers to certain items of gross income less deductions and exemptions allowable by law?

Gross Income
Capital Gain
Taxable Income (correct)
Net Income

From what sources is income derived according to the text?

Inheritance only
Use or employment of labor and/or capital (correct)
Property rental only
Gifts only

What are the purposes of income tax mentioned in the text?

<p>To raise revenue to defray government expenses and to mitigate the evils arising from the inequalities of wealth (C)</p> Signup and view all the answers

What is regarded as the best measure of taxpayers’ ability to pay tax according to the text?

<p>Income (C)</p> Signup and view all the answers

Flashcards

Gross Income

All wealth that flows into a taxpayer, excluding return of capital.

Taxable Income

Gross income minus deductions and exemptions as permitted by law.

Sources of Income

Income is derived from the use or employment of labor and/or capital.

Income Tax Purposes

To fund government expenses and reduce wealth inequality.

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Income as a Measure

Income is the best measure of a taxpayer's ability to pay taxes.