Individuals are eligible for a reduced rate of federal income tax on capital gains and qualifying dividends. Some states and localities impose an income tax at a graduated rate, and some at a flat rate on all taxable income. Federal individual tax rates vary from 10% to 37%. The rate of tax at the federal level is graduated that is, the tax rates on higher amounts of income are higher than on lower amounts. The definition of net taxable income for most sub-federal jurisdictions mostly follows the federal definition. Income tax is imposed on individuals, corporations, estates, and trusts. Treaties serve in an international realm.Ī tax is imposed on net taxable income in the United States by the federal, most state, and some local governments. Revenue Rulings, for example, serves as an interpretation of how the statutes apply to a very specific set of facts. Additionally, various sources of law attempt to do the same thing. Regulations and case law serve to interpret the statutes. As the name implies, the "last-in-time rule" states that the authority that was issued later in time is controlling. Where conflicts exist between two authorities in the same tier, the "last-in-time rule" is applied. Similarly, an authority in Tier 2 outweighs an authority in Tier 3. Where conflicts exist between various sources of tax authority, an authority in Tier 1 outweighs an authority in Tier 2 or 3.
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