Chapter 5 of the text contains a list of items excluded from gross income. Pick one or two of these items, and explain the policy (rationale) for not taxing them. Is the practice of implementing or revising tax law to exclude or include certain items within gross income subject to fairness? Why or why not?
The item that is excluded from gross income is all items of a capital nature (income generated from the disposal of capital assets. They are not taxed because they are not income in revenue nature but item used to generate gross income. Tax laws are revised from time to time and try to inculcate new developments and changes in technology and try to control loopholes that might be used by taxpayers to avoid paying taxes by exploiting the tax laws. Tax laws always focus on two things: one, the fairness of every new legislation that take into account promoting business growth and second, collecting reasonable taxes in the long run.
Get Answers For Free
Most questions answered within 1 hours.