Under the United States Internal Revenue Code, the type of income is defined by its character. Ordinary income is usually characterized as income other than long-term capital gains. Ordinary income can consist of income from wages, salaries, tips, commissions, bonuses, and other types of compensation from employment, interest, dividends, or net income from a sole proprietorship, partnership or LLC. Rents and royalties, after certain deductions, depreciation or depletion allowances, and gambling winnings are also treated as ordinary income. A "short term capital gain", or gain on the sale of an asset held for less than one year of the capital gains holding period, is taxed as ordinary income.
Ordinary income stands in contrast to capital gain, which is defined as gain from the sale or exchange of a capital asset. A personal residence is a capital asset to the homeowner. By contrast, a land developer who had many houses for sale on many lots would treat each of those lots (and homes) as inventory when they are sold. For the developer, each lot and home would not be a capital asset. Similarly, clothing held by a retail store for sale in the ordinary course of business would be inventory -- and not a capital asset -- for the store.
Another case where income is not taxed as ordinary income is the case of qualified dividends. The general rule taxes dividends as ordinary income. A change allowing use of the same tax rates as is used for long term capital gains rates for qualified dividends was made with the Jobs and Growth Tax Relief Reconciliation Act of 2003.[1] Qualified dividends are dividends paid by domestic corporations or by corporations from foreign countries that have a tax treaty with the United States. This rule applies under the condition that the corporation has included the dividends in its own taxable income. Thus pass-through corporations like REITs and REMICs would not distribute qualified dividends, and the dividends from those entities would be taxed at the ordinary income rates.
type of income is defined by its character. Ordinaryincome is usually characterized as income other than long-term capital gains. Ordinaryincome can consist...
investment was held. Short-term capital gains are taxed at the investor's ordinaryincome tax rate and are defined as investments held for a year or less before...
individual's ordinaryincome. The rates on qualified dividends range from 0 to 23.8%. The category of qualified dividend (as opposed to an ordinary dividend)...
of revenue – are VAT, income tax in the petroleum sector, employers' social security contributions and tax on "ordinaryincome" for persons. Most direct...
taxed as ordinaryincome at the federal level, and at the cantonal and municipal level, depending on the canton, either as ordinaryincome or at a special...
income. Any amount not deducted in the year he makes the contribution may be carried forward and taken the next year for up to five years. Ordinary assets...
voluntary income and gifts are not classified as ordinaryincome. Normal or ordinary proceeds from a business activity are classified as ordinaryincome. A business...
not increase Adjusted Gross Income. This differs from a traditional IRA, where all withdrawals are taxed as ordinaryincome, and a penalty applies for...
federal income tax collected by the United States, most individual U.S. states collect a state income tax. Some local governments also impose an income tax...
The management fee, unlike the 20% carried interest, is treated as ordinaryincome in the United States. As the sizes of both private equity and hedge...
impose an income tax. They are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less...
rate instead of the ordinaryincome rate. The current tax rate on dividends in the United States is 20% for taxpayers in the top income tax bracket, and...
lower rate than is ordinaryincome. Currently, the long term capital gains tax rate is 20% compared with the 37% top ordinaryincome tax rate for individuals...
is no tax impact. When the payout is made, however, it is taxed as ordinaryincome to the grantee and is deductible to the employer. Generally, phantom...
collecting income tax on a gain realized by a taxpayer when the taxpayer disposes of an asset that had previously provided an offset to ordinaryincome for the...
origins of the income tax on gains from capital assets did not distinguish capital gains from ordinaryincome. From 1913 to 1921, income from capital gains...
act set tax rates on capital gains at the same level as the rates on ordinaryincome like salaries and wages, with both topping out at 28%. Reagan significantly...
States and Canada impose a lower tax rate on dividend income than ordinaryincome, on the assertion that company profits had already been taxed as corporate...
taxpayers, mostly in the upper income ranges. An alternative minimum taxable income (AMTI) is calculated by taking the ordinaryincome and adding disallowed items...
cash surrenders, any gain over total premiums paid will be taxable as ordinaryincome. The same is true in the case of a matured endowment. This is why most...
Gifts are subject to ordinaryincome taxation. Ireland 33% India Income tax rates Italy 8% Japan 55% Kosovo Taxable as ordinaryincome Lebanon 45% Mexico...
protection Annuity Income shares: very high and rising yield, but virtually no capital protection OrdinaryIncome shares (AKA Income & Residual Capital...
untaxable basis. Policy loans will be realized as ordinaryincome to the policy owner and could be subject to income taxes in the year the loan is made. Distributions...
Global Information
United States portal