Answer these question using this book

( please mention the paragraph number right next to each answer!!!)

THEORY QUESTIONS One of the objectives of this course is to prepare you to do research in an ever-changing tax environment. The answers to the below questions can be found in your text in Chapter 5: Gross Income-Exclusions; Chapter 6: Deductions: General Concepts and Trade or Business Deductions; Chapter 9: Tax Credits, Prepayments, and Alternative Minimum Tax; or Chapter 13: Tax Accounting. 1. Define the term "income," as defined by the courts. 2. Generally, when does a cash basis taxpayer realize income? 3. Generally, when does an accrual basis taxpayer realize income? 4. Define the term "exclusion." 5. Is interest income earned on state or local government bonds always tax-exempt? Explain. 6. Define the term "gross income." 7. What are the four categories of tax deductions for individual taxpayers? 8. What is the primary difference between a trade or business and a nonbusiness (investing) activity? 9. Generally, when does a cash basis taxpayer take a tax deduction? 10. A cash basis taxpayer cannot deduct certain items when they are paid. Which items are they and how must they be treated? 11. Generally, when does an accrual basis taxpayer take a tax deduction? 12. Generally, how must a taxpayer substantiate deductions in an audit before the IRS. 13. What are the two types of credits and briefly explain the difference in each. 14. List the nonrefundable credits available to individuals who do not own a business. 15. List the refundable credits available to individuals who do not own a business