Income baskets

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Income baskets

Category to which certain income is allocated. Losses in one basket may not be used to offset gains in another basket. Specified in U.S. tax code.

Income Baskets

Several categories of income used for tax purposes. Unless the U.S. Tax Code states otherwise, a loss in one income basket can be used to offset a profit in another income basket. Thus, one only owes taxes on the net income after all, relevant baskets have been offset.
References in periodicals archive ?
are included in the General Income basket. (271) Figure 1 summarizes the
Foreign taxes arising from foreign branches should also be a new area of focus, given the new foreign branch income basket. The proposed FTC regulations generally define foreign branch by reference to the Section 989 regulations, including providing that a foreign branch must carry on a trade or business outside the United States and maintain a separate set of books and records.
the income basket nave enE[degrees] raw materials are transported via redler conveyors to adjacent storage silos.
The foreign tax credit limitation is applied separately to income in the passive income basket and to the general income basket; credits for foreign tax in one basket cannot be used to offset U.S.
As has been the case for several years, corporations allocated the majority of their foreign-source taxable incomes (75.9 percent) and foreign taxes (80.5 percent) to the general limitation income basket. The financial services income basket was responsible for the second-largest share of these amounts, with 18.3 percent of the foreign-source taxable income and 14.7 percent of foreign taxes.
In the international area, one provision reduces the number of income baskets for foreign tax credits from nine to two--one passive income basket and one general one.
The legislation also consolidates the foreign tax credit baskets to two; a passive basket and a general income basket (effective in 2007), and provides for elective worldwide interest expense apportionment (effective in 2009).
The new law also reduces the old law's nine foreign tax credit limitation baskets to only a general category income basket and a passive category income basket, generally effective for tax years beginning after 2006, subject to a transition rule for tax years beginning after 2004.
taxpayer to such income); such high-taxed income is excluded from the passive income basket and included in the general limitation basket.
Congress was concerned about the use of conduit entities to manipulate the new source rules, and in the 1986 Act amended section 954(f) to include SPOCI within the definition of "foreign base company shipping income." Thus, SPOCI is Subpart F income and falls in the shipping income basket under section 904.(3) Congress gave Treasury authority to prescribe other appropriate anti-conduit rules.
Royalties usually are subject to low tax rates and generally are included in the passive income basket. However, current law contains exceptions for royalties from unrelated parties earned in an active trade or business and for certain royalties from foreign affiliates.
The latter allocates $30 of the dividend (75% x $40) to its residual basket and $10 to its passive income basket.