What does earned income mean on the CPA exam?
Earned income. Compensation for personal services -- wages, or net earnings from self-employment. Several credits and contribution limits are measured against it rather than total income.
Defined against Sec. 32(c)(2).
Which CPA exam sections use earned income?
Earned income appears in the TCP section of the CPA exam.
Related terms
- ordinary income: Income taxed at the regular graduated rates rather than at preferential capital gain rates.
- qualified business income: The net income from a domestic pass-through trade or business, excluding investment income and reasonable compensation.
- net income: What is left after every revenue and expense of the period, including tax and discontinued operations.
- gross income: All income from whatever source derived, unless the Code specifically excludes it.
- net investment income: Interest, dividends, capital gains, rents, royalties and income from passive businesses, less the deductions allocable to them.
- other comprehensive income: Gains and losses that bypass net income and sit in equity until realized, such as unrealized gains on available-for-sale debt securities and foreign currency translation.