Question

Using www.irs.gov, find the publication related to Form 1040 and research how to calculate taxable income for individuals. Discuss whether this source is a primary or a secondary source of federal income tax law. Also research the Internal Revenue Code and find the section that defines gross income. Then find another section of the Internal Revenue Code that specifically excludes an item of income from the definition of gross income. Discuss whether the Internal Revenue Code is a primary or secondary source of tax law.

Answer 1

form 1040 related to u. s individual income only

to calculate taxable income for individuals:-

gross total income............... ... xxxx

less:deduction u/s 80c to 80u.(xxx)

total income,. ...................... xxxx

tax on total income at slab rates

The rate of surcharge is shown below:

Applicant Surcharge Rate

Other than Company

Total income – Rs. 50 Lakhs to Rs. 1 crore @10%

Total income – More than Rs. 1 crore @15%

Domestic Company: The tax applicable on a domestic company is 30%. However, tax rate is 25% if turnover of the company is less than Rs. 50 crore. Plus surcharge:

Total income >Rs.1crore but <10 crore @7%

Total income >Rs. 10 crore @12%

Foreign Company : The tax applicable on a domestic company is 40%. Plus surcharge:

Total income >Rs.1crore but <10 crore @2%

Total income >Rs. 10 crore @5%

There is no change in the rate of education cess i.e. 3%

Income tax rate chart of corporates for financial year 2017 – 18

Particulars Tax (%) Surcharge (%) E. Cess (%) SHE. Cess (%) Effective Tax (%)

Domestic companies (if total income less than 1 Cr.) 30 – 2 1 30.90

Domestic companies (if total income more than1 cr. but less than 10 Cr.) 30 7 2 1 33.063

Other domestic companies 30 12 2 1 34.608

Foreign companies (if total income less than 1 Cr.) 40 – 2 1 41.20

Foreign companies (if total income more than1 cr. but less than 10 Cr.) 40 2 2 1 42.024

Other foreign companies 40 5 2 1 43.26

Normal tax rates applicable for an individual

The normal tax rates will depend on the age of the resident individual. However, for a non-resident individual, the tax rates will remain same irrespective of the age. To ascertain applicable tax slab, an individual is classified as:

Resident individual below 60 years.

Resident individual of age 60 years or above but less than 80 years of age.

Resident individual of 80 years or above age .

Non-resident individual, irrespective of the age.

Note: Those who live in rented houses and do not get allowance for that from their employer, the tax deduction is 60,000.

3) section that defines gross incone:-

Section 61 of the Internal Revenue Code (IRC 61, 26 U.S.C. § 61) defines "gross income

4). another section..........

Section 61 contains a rare example of intensive redundancy, or emphatic redundancy, in the Internal Revenue Code. ... The phrase "except as otherwise provided in this subtitle" generally refers to the items of income that are excluded from "gross income" under Internal Revenue Code sections 101 through 140.

5) internal revenue code is secondary source of ax

whether, federal income tax is primary source of tax