Personal Finance Assignment 2

Answer the questions below. When you are finished, turn in your assignment for grading. Use complete sentences and answer each part of the assignment.

Inequality exists around us. One of the inequalities is the income received by a person or member of a family. This income includes wages, salaries, pensions, and interest derived from assets. Income inequality refers to the various income within a given population. This inequality is especially high in the United States.

Now that you have completed Section 1 of your Assessment, remember to save the work you have done so far – you will need to send your work to your tutor for marking once you have completed all 3 Sections of this Assessment.

3 Arthur B. Kennickell. “Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007,” Federal Reserve. 2009. Accessed January 13, 2013.

Section 61 of the Internal Revenue Code defines income as “income from whatever source derived unless otherwise excluded” (2014, IRC Code). In determining income, several key concepts have evolved from this definition. Explain the following concepts, and provide at least one example of each. Explain which concept you think is most beneficial from a taxpayer’s point of view and which concept is most beneficial from IRS’s point of view.

The process of transferring the cost of metal ores and other minerals removed from the earth to an

1. (TCOs 2, 3, and 5) As we know, Congress devised a very broad definition of income and codified this definition in Section 61 of the Internal Revenue Code. Explain the Code’s definition of income and how it

In today’s capitalist economy, where economic transactions and business in general is centered on self-interest, there is a natural tendency for some people to make more than others. That is the basis for the “American Dream,” where people, if they worked hard, could make money proportional to their effort. However, what happens when this natural occurrence grows disproportional in its allocation of wealth within a society? The resulting issue becomes income inequality. Where a small portion of the population, own the majority of the wealth and the majority of the population own only a fraction of what the rich own. This prominent issue has always been the subject of social tension

Type the answers to the assignment questions below. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment. At the end of each day, be sure to save your progress.

4) Explain the differences between statutory and ordinary income. Give examples of either category in your answer.

Identify one major exclusion and one tax credit. Find the relevant Internal Revenue Code Section that provides for the exclusion or credit using IRS.GOV, copy the first paragraph, including the Code Section, and paste it into your post. Please answer this question for each: Did Congress enact this exclusion or credit for a social or economic purpose? Or both? For your third post this week, identify one of your colleagues' posts and respond to their observations with a concurrence or not; either way, support your position. Discuss which provides a greater tax advantage to the taxpayer, deductions or tax credits.

Spending and Revenue are divided into ten categories, such as Investments, General Government, etc. Choose three spending categories and one revenue category to write about. What decisions to spend or cut did you make in each of the categories that you chose? Explain your choices. Be sure to read the pro/con arguments for each decision. Which arguments did you find most convincing?

There are five local sources of income that schools rely on for revenue, and there are advantages and disadvantages to each with respect to equity, yield, and acceptance. Property tax, income tax, sales tax, “sin”

2. Why is it important to think about "needs" and "wants"? What are the differences between these?

Looking more closely at a university stand-point, revenue produced from a non-exempt purpose is subject to potential taxation from the unrelated business income. With the formal definition in place, the following will provide a few specific examples of regular activities that universities participate in that may or may not qualify as unrelated business income: