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When you sell a life insurance policy, the money you receive can be taxed in three different ways: as ordinary income, as long-term capital gains or as tax-free income.
An employee must include in gross income for Federal income tax purposes an amount equal to the cost of group-term life insurance coverage on the employee's life to the extent that the cost of the coverage exceeds the sum of $50,000 plus the amount (if any) paid by the employee to purchase the coverage. [2]
Rental Income: Owning a rental property and earning income from it can be a lucrative passive income stream. However, rental income is generally subject to taxation at your ordinary income tax ...
"Life insurance is an essential source of financial security for tens of millions of middle-class families in America, so we cannot have a bunch of ultra-rich tax dodgers abusing its special tax ...
A modified endowment contract (MEC) is a cash value life insurance contract in the United States where the premiums paid have exceeded the amount allowed to keep the full tax treatment of a cash value life insurance policy. In a modified endowment contract, distributions of cash value are taken from taxable gains first as compared to ...
Because the taxpayer received a deduction from ordinary income for the depreciation of the asset, any gain the taxpayer receives, up to the depreciation amount, must be included as ordinary income to offset the earlier deduction. Any gain above that is a capital gain subject to capital gains tax rates (usually more favorable).
A 1035 exchange is a like-kind exchange that allows a tax-free exchange of a life insurance policy, annuity contract, long-term care product or endowment for another of a similar structure.
Character is the type of income to calculate the taxpayer's tax liability. In the United States, the Supreme Court decided ( Commissioner v. Glenshaw Glass Co.) that income is an accession to wealth, however capital gain is of different character from ordinary income. Ordinary income includes earned wage income and interest income from lending.