​Gross Income: Exclusions

Gross Income: Exclusions

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Individuals who own homes may take a tax deduction for interest paid. Many individuals believe that this tax law discriminates against individuals who rent. Do you think this deduction is discriminatory? Explain and share your thoughts.

Additionally, gifts and inheritances have been excluded from gross income since 1913. Discuss the tax consequences of gifts made of property and any income produced by the property. What, if any, are the exclusions and taxable income according to Section 102?

Can you do make response # 1 to 3 each posted below.

1. From: Rebecca Willis posted May 12, 2018 1:59 AM

Absolutely, this is something I feel very passionate about. I do believe this is discriminatory. We live in a very different age right now. We watched our parents pay off houses in their life time and a very small percentage of my generation will even afford to do that. The generation coming up now, my children’s generation will likely never afford a house in our state. A two-bedroom run down house will sell on the average of $350,000 and will likely be in a bad neighborhood, making it almost impossible for the young families want to invest in a house. The flip side of this is, almost all tax deductions are discriminatory, as they allow some deductions and not others.

Receipt of any gift is a taxable event. You will owe the tax on the fair market value of any gift you receive. Any and all income produced by the gift will also be subject to tax. Both of these are subject to the taxpayer’s marginal tax rate.

2. From: Carolyn Holland posted May 11, 2018 3:02 PM

Hello Professor and Classmates,

I don’t believe that the tax deduction law allowing home owners to take a tax deduction is discriminatory. I believe that each person’s tax situation is different and will be taxed accordingly. If it was discriminatory, then so would the homestead exemption that taxpayers are allowed on their property tax. That would open a whole new discrimination can of worms.

I believe that gifts and inheritances should not be taxable to the recipient. If the recipient of an inheritance in which property is received and that recipient in the future decides to sell the property for a profit, they should be required to pay taxes on the gain. Which is one of the limitations in IRS section 102 code.

3. From: Alexandra Moraitis posted May 11, 2018 12:33 AM

On your home mortgage interest is any interest you pay on the loan of your home. It could be a, mortgage to buy a home, a second mortgage, a line of credit or a home equity loan. This can be done if you met all the conditions of a deduction home mortgage interest.

  • Filing a 1040 form and itemizing deductions on schedule A.
  • The mortgage is secured debt on a qualified home in which you have ownership interest.

All of the home mortgage interest can be deducted depending on your date of the mortgage, the amount of the mortgage and how you use the mortgage proceeds.

For tax deductions landlord benefit it more than tenants. Renters cannot deduct rent payments from federal returns. In some states offer a rental tax deduction and there be other federal deductions renters can claim. Overall,I do not see it as a deduction discriminatory because not everyone can reap from the same benefits.

If money was received from an inherited property is determined basis in the property for it to be taxable. The FMV of the property on the date of the decedent’s death. If the executor of the estate chooses to use the alternate valuation date.