1. Income Taxes General information Individual income taxes
Corporate income taxes

2. Income Taxes Federal Income Tax System—established in 1913
Tax rates are progressive
U.S. Tax Code is divided into two major sections:
Individuals
Corporations

3. Individual Income Taxes
Taxable income
Gross income (salary, dividends, etc.)
Less: Personal exemptions ($3,500 per dependent)
Less: Deductions (standard = $5,450/$9,000)

4. Individual Income Taxes
Capital gains
Taxable income
Tax liability = taxes paid to IRS
Average tax rate
Average tax rate
Marginal tax rate = tax bracket percent

5. Corporate Income Taxes
Interest and dividends
Paid/received
Dividend received = $100; tax rate = 40%
Taxable amount of dividend = [$100(0.3)] = $30
Tax = $30(0.40) = $12
% tax = $12/$100 = 0.12 = 12% = 40%(0.30)

6. Corporate Income Taxes
Capital gains
Carryback and carryover—two years back/forward 20 years
Accumulated earnings tax—$250,000
Consolidated corporate tax returns
S Corporations—fewer than 100 stockholders
Depreciation