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Politics : Formerly About Advanced Micro Devices
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To: combjelly who wrote (686543)11/30/2012 6:43:31 PM
From: i-node  Read Replies (2) of 1584565
 
>> Why? It is income.

It is previously taxed income.

>> That is done in many places in the tax code.

Like where?

I would argue, correctly, that the tax code takes extraordinary steps to prevent precisely these situations -- in both directions. Taxpayers regularly get adjustments to basis whenever they spend [additional] money on an investment, the entire point of which is to avoid double taxation. Code section 706(b) deals extensively with adjustments to partners' capital accounts, both to prevent double taxation and deductions of losses in excess of basis. Subchapter S, in code sections 1301, et.seq., presents the "Accumulated Adjustments Account" -- a tax only phenomenon -- to track shareholder's basis in the pass-through entity.

Several sections dealing with capital assets, including but not limited to 1231, 1245 and 1250 take substantial measures to insure that just the correct amount of capital gain (not too much, not too little) is recognized on the disposition of depreciable property. And of course, even IRAs have a meticulously kept basis, the point of which is to provide that every bit of money earned is taxed while none of it is taxed twice.

I would hesitate to say there is NO other provision where double taxation is supported, but I don't think it is correct to characterize it as "many".

Perhaps you had some examples in mind?
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