Talk:Imputed income

Income Through Consumption

In "Concepts Federal Taxation" Part II, Chapter 3, Example 4, the book says that Cara experiences an increase in wealth of $35 by installing her own spark plugs at a cost of $15 instead of having a show do it at a cost of $50. The text says that through consumption of the "labor and overhead involved in the $50 charged by the shop, her net worth has increased." The book treats it under "What Constitutes income", a net increase in wealth over a particular time period, through either increase in net worth or through consumption. The first is widely known and understood. But the second is not and the book offers very little discussion or clarification. I don't even understand the logic. Also, web searches come up with nothing. can any one help? If this is a fundamental principle of income, then your net worth goes up infinitely every day that you could hire someone to do everything for you including picking you up out of bed and brushing your teeth. Of course I understand the concept of realization, but the book does not draw this distinction in the example of Cara and the spark plugs. It is clear, Cara has $35 of income once she has installed her own spark plugs. --Ryan Close (talk) 17:23, 10 December 2012 (UTC) — Preceding unsigned comment added by Ryan Close (talk • contribs)

You and the other fellow who are critical of the article's *concept" are correct IMHO. Look at what is not represented here -- Cara has given up time and hassle, and taken on the burden of risk in case the things are installed incorrectly. Her time must have some value attached to it, or she is a slave. Her work, likewise, and in a more tangible sense. How much? Oh, I'd say about $35 dollars worth of time, work, and carried-forward risk, all told.

The book's explanation seems even more muddled than the example. How can she gain net worth by consuming the goods and services, if she is PAYING for the goods and services? Haakondahl (talk) 09:40, 28 July 2013 (UTC)

Do I understand you to be saying that Cara does experience an increase in wealth equal to $35 but she also simultaneously experiences a corresponding decrease in wealth owing to the usually unacknowledged value of her time and assumed risk? So the fact that she saved money equals an increase in wealth. But the time spent and the risk assumed are like the basis. Therefore the the two sides of the equation cancel each other out and Cara has no "realized income." Is that right? So, am I right to say, that under this principle, our net worth does go up each day by doing things for ourselves but it also goes right back down by the same amount? Ryan Close (talk) 16:32, 29 August 2013 (UTC)

Sorry for the delay. I would say that her net worth does not go up in this context. After all, if it "goes up, then goes right back down", then the net is zero. If w=you are looking at a traditional bottom line, then her net worth does not go up, but falls by $35 less than it otherwise might have. But this is not an increase anymore than "honey, it was on sale!" means a real increase in net worth. Some salesman may wish you to believe that it is so, but your accountant will tell you straight. Haakondahl (talk) 17:07, 29 December 2013 (UTC)

This is Slavery

The concept of Imputed income or the justification of taxing what someone provides for themselves defines slavery almost perfectly. The very idea, that by avoiding services you owe the government something is so outrageous that one has to wonder what other lies are hidden by the ruling class. The concept of ownership is based on being freed from debt. This is why the ownership of property and liberty are but heads and tails on the same coin. When someone or government can punish or make you pay them because of what is supposed to belong to you they have converted ownership to slavery. — Preceding unsigned comment added by 174.131.59.66 (talk) 16:13, 14 September 2012 (UTC)

Dear user at IP174.131.59.66: Thank you for sharing that with us. The article as presently written probably needs additional work. The bottom line is that under U.S. federal income tax law, the general rule is that imputed income is not taxed. The relatively rare examples where imputed income IS taxed are exceptions to that general rule. The article doesn't really make that quite clear enough. However, Wikipedia articles tend to be "works in progress." I'm sorry that you got the wrong impression from reading the article. Famspear (talk) 17:40, 14 September 2012 (UTC)

I think part of the problem with the article is that it really gives examples of kinds of imputed income that are NOT taxed, but tends to leave the reader with the false impression that these kinds of income ARE taxed. The article would be better organized if it made clearer that some of these basic situations do not involve taxation -- such as the "ordinary" situation where a mother works only as a housewife at home.

An unusual example where imputed income IS taxed would be the situation where someone sells a property to someone else and takes, as payment, a non-interest bearing promissory note that provides for periodic monthly payments of principal over, say, a three year period. As the seller receives the monthly payments, under the terms of the note each payment is "all principal" -- that is, no interest income. However, under the Internal Revenue Code, the law would impute interest income by treating a portion of each principal payment as being interest. Of course, in this situation, a portion of the gain (if any) realized by the seller has really just been re-classified as another kind of income -- as interest income. So, imputation of interest income in this situation makes sense, and it does not really "penalize" the seller. In substance, the seller's sale price and his gain (if any) were simply a little lower than he thought they were. The key here is that the money he receives is being received over a three year period. Interest is, essentially the time value of money -- so, it make sense to re-classify a portion of what he receives as interest. Famspear (talk) 17:52, 14 September 2012 (UTC)

OK, I have made several additions to the article, mainly from the law school casebook written by the late William D. Andrews, who was a tax law professor at Harvard Law School. This gives a much clearer picture of what the U.S. federal income tax law is. Famspear (talk) 18:32, 14 September 2012 (UTC)

Imputed Income from What Others Provide

When I was in law school, and when I separately studied real estate taxation in advance of getting my California Broker's licence, we learned that "imputed income" also includes the value of goods given to you, and services performed for you, by other people - especially those with whom you have a strictly business relationship.

Example: You are a landlord who owns a house that was converted into flats. One of your tenants is a retiree who loves to garden. You and she plan a full makeover of the back yard, which she performs. She now spends a few hours a day doing maintenance work in the garden, and the two of you still meet weekly to plan further gardening work in the back yard. You do not pay her or give her any rent reduction for her work; and she is simply happy to have something to keep her busy now that she is retired. You thus have imputed business income from the work she does for you, computed at its fair market value.

So, I find it curious that this article only discusses imputed income from the perspective of work that people perform for themselves rather than hiring someone to do it. It seems the article pays rather too much attention to the abstract side of this concept than to the concrete side of it. 73.162.218.153 (talk) 19:25, 6 April 2015 (UTC)