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High-income tax returns for 2012.

The Tax Reform Act of 1976 requires annual publication of data on individual income tax returns reporting incomes of $200,000 or more, including the number of such returns reporting no income tax liability and the importance of various tax provisions in making these returns nontaxable. (1) This article presents detailed data for high-income returns for 2012 and summary data for the period 1977 to 2011. Detailed data for the years 1974 through 2011 were published previously. (See the References section for more details.)

Two income concepts are used in this article to classify tax returns as high income: the statutory concept of adjusted gross income (AGI) and the "expanded income" concept. (2) The expanded income concept uses items reported on tax returns to obtain a more comprehensive measure of income than AGI. Specifically, expanded income is AGI plus tax-exempt interest, nontaxable Social Security benefits, the foreign-earned income exclusion, and items of "tax preference" for alternative minimum tax (AMT) purposes less unreimbursed employee business expenses, moving expenses, investment interest expense to the extent it does not exceed investment income, and miscellaneous itemized deductions not subject to the 2-percent-of-AGI floor. (3,4,5)

AGI and expanded income differed for 43.5 million (30 percent) of the 144.9 million individual income tax returns filed in 2012 (Figure A). Expanded income exceeded AGI in two-thirds of these returns. The average difference between expanded income and AGI was $6,597, and the median difference was $3,310. Although expanded income is a more comprehensive measure of income than AGI, for some taxpayers the subtractions from AGI to arrive at expanded income exceed the additions, resulting in expanded income that is less than AGI. These returns where expanded income exceeded AGI were concentrated among returns with $50,000 or less of AGI, and the returns where AGI exceeded expanded income were concentrated among returns with more than $50,000 of AGI.

There are also two tax concepts in this article used to classify returns as taxable or nontaxable: "U.S. income tax" and "worldwide income tax." The first concept, "U.S. income tax," is total Federal income tax liability, which includes the AMT, less all credits against income tax, and does not include payroll or self-employment taxes. To be considered taxable, a return had to have a positive income tax liability after accounting for all credits (including refundable credits). A nontaxable return, on the other hand, could either have a zero or negative income tax liability after accounting for all credits (including refundable credits). Since the Federal income tax applies to worldwide income and allows a credit (subject to certain limits) for income taxes paid to foreign governments, a return could be classified as nontaxable under the U.S. income tax concept even though income taxes had been paid to a foreign government. The second tax concept, "worldwide income tax," addresses this circumstance by adding back the allowable foreign tax credit and foreign taxes paid on excluded foreign-earned income to U.S. income tax. (6,7) The sum of these two items is believed to be a reasonable proxy for foreign taxes actually paid.

Figure B shows a cross-tabulation of tax returns based on whether it has positive, zero, or negative U.S. income tax liability and whether it also had positive, zero, or negative worldwide income tax. By definition, returns with positive U.S. income tax liability have positive worldwide income tax liability; returns with zero U.S. tax liability have either positive or zero worldwide income tax liability; and returns with negative U.S. income tax liability have either positive or negative worldwide income tax liability. Almost 36 percent of the 144.9 million tax returns filed in 2012 had zero or negative U.S. income tax liability, and 97.1 percent of these returns had AGI of $50,000 or less--unsurprising given the progressive nature of the U.S. income tax. Roughly 3 out of every 1,000 returns with zero or negative U.S. income tax liability had positive worldwide income tax liability, and 57.8 percent of these returns had AGI of $50,000 or less.

For 2012, the number of expanded-income returns over $200,000 increased 11.6 percent to just over 5.3 million returns. Of these, 13,450 returns had no worldwide income tax liability. This was a 10.3-percent decline in the number of returns with no worldwide income tax liability from 2011, and the third decrease in a row since reaching an alltime high of 19,551 returns in 2009. (For comparison, the total number returns filed increased 3.2 percent from 2009 to 2012.) Tax-exempt interest was the primary reason for nontaxability on more than half (54.2 percent) of these returns.

The $200,000 threshold was fixed in statute in 1976 and not adjusted for inflation. In 2012 dollars, one would need to have $807,009 of income to have the same purchasing powers as having $200,000 of income in 1976. Using an inflation-adjusted threshold, there were 545,246 high expanded-income returns, a 23.8-percent increase from 2011. Despite this large increase, the number of expanded-income returns with no worldwide income tax using an inflation-adjusted threshold showed a decrease of 38.1 percent, from 884 to 547 returns. This was the fewest number of expanded-income returns with no worldwide income tax since 2007 when there were 314 returns.

Number of High-Income Returns

For 2012, there were nearly 5.3 million individual income tax returns with an AGI of at least $200,000, and slightly more than 5.3 million returns with an expanded income of $200,000 or more (Figure C). The number of returns with AGI above the $200,000 threshold increased 11.7 percent from 2011 and accounted for 3.6 percent of all returns in 2012. Similarly, the returns with expanded incomes above the $200,000 threshold increased 11.6 percent from 2011 and accounted for 3.7 percent of all returns in 2012.

The $200,000 threshold for high-income returns is measured in current-year (nominal) dollars. Because it is fixed in nominal terms, as time passes, more and more tax returns have had incomes exceeding this threshold simply due to inflation. Therefore, to facilitate a comparison of tax returns across time, Figure C shows what the $200,000 threshold in 1976 would be each year after adjusting for inflation and the number and share of returns above this threshold. (8) For Tax Year 2012, this inflation-adjusted threshold was $807,009.

Adjusting for inflation, the number of returns above the AGI threshold was 535,038 in Tax Year 2012--0.37 percent of all returns--a 24.4-percent increase from the previous year. Since 1977, the number of returns above this inflation-adjusted threshold has increased at a rate of approximately 7.3 percent per year. In comparison, the total number of returns has increased 1.5 percent per year since 1977. Similarly, the number of returns above the inflation-adjusted threshold using the expanded income concept was 545,246 in Tax Year 2012--0.38 percent of all returns--a 23.8-percent increase from the previous year. Since 1977, the number of returns above this threshold has increased 6.6 percent per year.

From 1977 to 2012, the number of returns reporting incomes of $200,000 or more generally increased annually. The exceptions to this reflect the economic downturns in Tax Years 2001, 2002, 2008, and 2009. The general trend of a rise in the number of returns is similar when using the inflation-adjusted income threshold. However, the increases are much smaller, and the number of returns above the inflation-adjusted threshold decreased in additional years, e.g., Tax Years 1980, 1981, 1989, 1990, 1991, and 1993. Many of these years also coincided with economic downturns. (9)

The difference in the number of high-income returns between the two income concepts significantly decreased beginning with 1987, when AGI began to include 100 percent of long-term capital gains. This change in the definition of AGI made it more comparable to the expanded-income concept. In addition, due to the inclusion of tax-exempt interest in expanded income in 1987, expanded income for years after 1986 is not strictly comparable to expanded income for years before 1987.

Nontaxable High-Income Returns

Of the 5.3 million income tax returns with an AGI of $200,000 or more, 20,304 showed no U.S. income tax liability (top panel of Figure D). Also, of the 5.3 million tax returns with expanded income of $200,000 or more, 32,326 had no U.S. income tax liability. This represents a 3.8-percent increase for high-AGI returns and 1.8-percent decrease for high expanded-income returns with no U.S. income tax from the number of returns for 2011.

Of the returns with an AGI of $200,000 or more, 7,408 returns showed no worldwide income tax liability. For returns with an expanded income of $200,000 or more, 13,450 had no worldwide income tax liability. This represents a 2.0-percent decrease for high-AGI returns and 10.3-percent decrease for highexpanded returns with no worldwide income tax, compared to the number of returns for 2011.

Tables 1 and 2 also show the number of all returns, taxable returns, and nontaxable returns, cross classified by broad AGI and expanded-income size classes. Most returns fall in the same broad income-size class under both income concepts, but the number of nontaxable returns under the expanded-income concept is generally greater than the AGI concept in each income class over $50,000. They also show that there were 5.2 million returns with incomes of $200,000 or more as measured by both AGI and expanded income, of which, 17,462 returns had no U.S. income tax liability and 4,669 returns had no worldwide income tax.

Of the roughly 535,000 returns with an AGI over the inflation-adjusted high-income threshold, 2,297 returns had no U.S. income tax liability in 2012, down 1.3 percent from the previous year (lower panel of Figure D). Additionally, 535 returns showed no worldwide income tax liability, down 15.5 percent from 2011. Measured using expanded income, of the 545,246 returns above the inflation-adjusted threshold, 2,450 returns had no U.S. income tax liability, an 11.0-percent decrease from the number of returns for 2011. Additionally, 547 returns showed no worldwide income tax liability, down 38.1 percent from the previous year.

Moving from the nominal $200,000 threshold to an inflationadjusted threshold does not generally change substantially the share of high-income returns that are nontaxable. Using AGI and both a nominal $200,000 threshold and an inflation-adjusted threshold, 0.4 percent of high-income returns had no U.S. income tax, and 0.1 percent had no worldwide income tax in 2012. When using expanded income with a nominal $200,000 threshold, 0.6 percent of high-income returns had no U.S. income tax, and 0.3 percent had no worldwide income tax in 2012, while an inflation-adjusted threshold showed that 0.4 percent had no U.S. income tax and 0.1 percent had no worldwide income tax.

Figure E shows the evolution of the number and share of returns with an expanded income of $200,000 or more with no worldwide income tax. The number of returns above the threshold is read off the left vertical axis, and the share of returns above the threshold is read off the right vertical axis. Two series are shown for each measure, one using a nominal $200,000 threshold and one using an inflation-adjusted threshold.

In this figure, the spread between the two shares was small for the late 1970s, showed an increase for the early 1980s, and then narrowed before widening again after 1988. The spread generally narrowed after 1993, but increased or stayed fairly consistent from 2002 to 2007. From 2007 to 2011, the spread widened considerably. The gap (more than 0.15 percentage points) for 2012 was still high compared with most of the years in this study. (10)

Reasons for Nontaxability

Taxpayers may have their tax liability reduced--possibly to zero or beyond--in a number of ways. These include claiming tax credits, which directly reduces an individual's tax liability; claiming various deductions, which reduce (weakly) taxable income; and receiving income that is excluded from the calculation of taxable income.

It is possible for certain itemized deductions and certain exclusions from income to lead to nontaxability by themselves, but high-income returns are more often nontaxable for a combination of reasons, none of which alone would result in nontaxability. Moreover, some items, either singly or in combination, may eliminate "regular tax" liability (i.e., income tax excluding the AMT), but cannot eliminate an AMT liability, since these items give rise to adjustments or preferences for AMT purposes.

Because they do not generate AMT adjustments or preferences, tax-exempt bond interest (not including private activity bonds), itemized deductions for interest expenses, miscellaneous itemized deductions not subject to the 2-percent-of-AGI floor, casualty or theft losses, and medical expenses (exceeding 10 percent of AGI) could, by themselves, produce nontaxability.

Due to the AMT exemption of $78,750 on joint returns ($50,600 on single and head-of-household returns and $39,375 on returns of married taxpayers filing separately), a return could have been nontaxable even though it included some items that produced AMT adjustments or preferences. (11) Further, since the starting point for "alternative minimum taxable income" was taxable income for regular tax purposes, a taxpayer could have adjustments and preferences exceeding the AMT exclusion without incurring AMT liability. This situation could occur if taxable income for regular tax purposes was sufficiently negative due to itemized deductions and personal exemptions exceeding AGI, such that the taxpayer's AMT adjustments and preferences are less than the sum of the AMT exclusion and the amount by which regular taxable income is below zero. Note that, because of the AMT, taxpayers may have found it beneficial to report additional deduction items on their tax returns, even if the items did not produce a benefit for regular tax purposes.

The most important item in eliminating tax on the 7,408 returns without any worldwide income tax and AGI of $200,000 or more was total miscellaneous deductions. This was the case in 28.3 percent (2,095 returns) of those returns (Figure F). The next three categories that most frequently had the largest effect in reducing taxes were: 1) medical and dental expense deduction (17.2 percent or 1,274 returns); 2) charitable contributions deduction (16.1 percent or 1,195 returns); and 3) net casualty or theft loss deduction (12.0 percent or 886 returns). The items that most frequently had the second largest effect in reducing regular tax liability for high-AGI returns with no worldwide income tax were the deduction for taxes paid (39.1 percent or 2,900 returns) and the interest paid deduction (17.1 percent or 1,263 returns).

Of the 13,450 returns without any worldwide income tax and expanded incomes of $200,000 or more, the most important item in eliminating tax, on 54.2 percent of returns, was the exclusion for interest income on State and local Government bonds ("tax-exempt interest") (Figure G). The next three categories that most frequently had the largest effect in reducing taxes were: 1) medical and dental expense deduction (14.2 percent or 1,906 returns); 2) charitable contributions deduction (9.0 percent or 1,216 returns); and 3) net casualty or theft loss deduction (6.7 percent or 906 returns). The most important items that most frequently had the second largest effect in reducing regular tax liability on high expanded-income returns with no worldwide income tax were the deduction for taxes paid (26.2 percent or 3,519 returns) and charitable contributions (13.3 percent or 1,789 returns).

Tables 7 and 8 in this article also classify tax returns by items having the largest and second largest effects in reducing or eliminating income tax. For returns on which each of the largest effects was identified, the tables show each of the second largest effects. (12) For example, Table 7 shows that on taxable returns with some U.S. income tax and expanded incomes of $200,000 or more, the taxes paid deduction was the most important item 60.0 percent of the time. Where this was the primary item, the interest paid deduction was the second most important item 59.3 percent of the time, and the charitable contributions deduction was the second most important item 26.6 percent of the time. The foreign tax credit was the largest reason for nontaxability for both AGI (60.0 percent of the time) and expanded-income returns with no income tax (48.2 percent of the time). However, in determining worldwide tax, this no longer has an effect (by definition).

Figure H presents another way of illustrating the importance of selected tax provisions in reducing or eliminating income tax liability. It shows the number of high-expanded income tax returns with no worldwide income tax utilizing selected tax provisions by the percentage of income reduced. For example, the itemized deduction for medical and dental expenses reduced income by greater than 60 percent of expanded income on 1,305 returns (or 9.7 percent) of the 13,450 returns, but there were no medical and dental expense deductions on 6,382 returns or 47.4 percent. Conversely, the taxes paid deduction reduced income between 0 and 30 percent of expanded income on 11,616 returns (or 86.4 percent) of the 13,450 returns, but only reduced income greater than 60 percent on 225 returns. Tables 9 and 10 report the frequencies of returns in finer detail by the percentage of income reduced and include a more comprehensive list of itemized deductions, deduction equivalents of tax credits and tax preferences excluded from income.

Distribution of Tax Levels

Figure I shows the distributions of high expanded-income returns with and without worldwide income tax by the ratio of "adjusted" taxable income to expanded income. Taxable income was adjusted for this figure by subtracting the deduction equivalents of tax credits and other items from taxable income. (13) Thus, the figure shows the extent to which expanded income is reduced before taxes are imposed on the remaining income. The figure illustrates three important facts about high-income tax returns:

* Only a small portion of all high-income taxpayers did not pay any worldwide income taxes (0.3 percent).

* Another group of high-income taxpayers--small, but larger than the nontaxable group--was able to offset a very substantial fraction of income before being subject to tax. This type of high-income taxpayer pays income tax equal to only a small share of his or her income. Such taxpayers may be called "nearly nontaxable." About 0.7 percent of high expanded-income taxpayers who reported at least some worldwide tax liability were able to reduce their adjusted taxable income to less than 25 percent of their expanded income.

* Overall, most high-income taxpayers were subject to tax on a large share of their income and, consequently, reported very substantial amounts of tax (66.3 percent of high expanded-income taxpayers had adjusted taxable income equal to 80 percent or more of expanded income; and 95.7 percent had adjusted taxable income equal to 50 percent or more of expanded income).

Figure J shows the distributions of all expanded-income returns by worldwide income tax burden. It classifies tax returns by size of expanded income and effective tax rate, i.e., income tax as a percentage of expanded income. This figure illustrates the wide dispersion of effective tax rates for all returns. For example, while 3.1 percent of returns with expanded incomes of $200,000 or more had worldwide income tax of less than 10 percent of adjusted gross income, 19.2 percent had effective tax rates of 25 percent or more. Also, 30.4 percent had effective tax rates between 20 and 25 percent. In contrast, only 2.8 percent of taxpayers with an expanded income between $100,000 and $200,000 had effective tax rates of 20 percent or more, including 0.1 percent with effective tax rates of 25 percent or more.

Characteristics of Tax Returns

By comparing nontaxable returns with taxable returns, some of the different characteristics of nontaxable returns can be deduced. For example, under the expanded-income concept, returns without worldwide income tax were much more likely (82.6 percent) than taxable returns (28.2 percent) to have taxexempt interest, and when they did, the average amount for nontaxable returns ($230,057) was much higher than the average amount for all taxable returns ($30,885) (Figure K). Similarly, nontaxable returns (32.1 percent) were much less likely than high-income taxable returns (87.3 percent) to have income from salaries and wages. Tables 5 and 6 show the aggregate frequencies and amounts of all the types of income, the items of tax preference, and the various deductions, credits, and income taxes shown on high-income returns.

More Detailed Data for 2012

Tables 1 through 12 present data based on income tax returns for 2012, mainly those with income of $200,000 or more (measured in current-year dollars) of AGI or expanded income. Most of the data are shown for taxable and nontaxable returns, both separately and combined. In summary, the tables show:

* The numbers of returns under the two tax concepts, crossclassified by broad AGI and expanded-income size classes (Tables 1 and 2);

* The distributions of taxable income as a percentage of AGI and expanded income (Tables 3 and 4);

* The frequencies and amounts of various sources of income, exclusions, deductions, taxes, and tax credits, as well as the relationship between the two income concepts (Tables 5 and 6);

* The frequencies with which various deductions and tax credits are the most important and second most important items in reducing (or eliminating) income tax (Tables 7 and 8);

* The frequencies with which various itemized deductions, tax credits, and tax preference items occur as certain percentages of income (Tables 9 and 10); and

* The distributions of effective tax rates, i.e., income tax under each definition as a percentage of income as well as the percentage of income that is subject to preferential tax rates, by broad income-size classes (Tables 11 and 12).

The odd-numbered tables use the U.S. income tax concept to classify returns as taxable or nontaxable, whereas the evennumbered tables use the worldwide income tax concept.

References

Lerman, Allen H., "High-Income Tax Returns: 1974 and 1975, A Report on High-Income Taxpayers Emphasizing Tax Returns with Little or No Tax Liability," U.S. Department of Treasury, Office of Tax Analysis, March 1977, and "HighIncome Tax Returns: 1975 and 1976, A Report Emphasizing Nontaxable and Nearly Nontaxable Income Tax Returns," U.S. Department of Treasury, Office of Tax Analysis, August 1978.

U.S. Department of Treasury, Internal Revenue Service, Statistics of Income--Individual Income Tax Returns for 1977 through 1982 and 1985 through 1988. (For 1977 and 1978, only the number of nontaxable, high-AGI returns was published.)

Lerman, Allen H., "High-Income Tax Returns, 1983," Statistics of Income Bulletin, Spring 1986, Volume 5, Number 4, pp. 31-61; "High-Income Tax Returns, 1984," Statistics of Income Bulletin, Spring 1987, Volume 6, Number 4, pp. 1-29; "High-Income Tax Returns for 1989," Statistics of Income Bulletin, Spring 1993, Volume 12, Number 4, pp. 23-50; "High-Income Tax Returns for 1990," Statistics of Income Bulletin, Winter 1993-1994, Volume 13, Number 3, pp. 104-132; "High-Income Tax Returns for 1991," Statistics of Income Bulletin, Winter 1994-1995, Volume 14, Number 3, pp. 96-130; and "High-Income Tax Returns for 1992," Statistics of Income Bulletin, Winter 1995-1996, Volume 15, Number 3, pp. 46-82.

Latzy, John, "High-Income Tax Returns for 1993," Statistics of Income Bulletin, Winter 1996-1997, Volume 16, Number 3, pp. 64-101; and "High-Income Tax Returns, 1994," Statistics of Income Bulletin, Winter 1997-1998, Volume 17, Number 3, pp. 31-69.

Cruciano, Therese, "High-Income Tax Returns for 1995," Statistics of Income Bulletin, Summer 1998, Volume 18, Number 1, pp. 69-108; "High-Income Tax Returns for 1996," Statistics of Income Bulletin, Winter 1998-1999, Volume 18, Number 3, pp. 7-59.

Parisi, Michael, "High-Income Tax Returns for 1997," Statistics of Income Bulletin, Winter 1999-2000, Volume 19, Number 3, pp. 6-58.

Balkovic, Brian, "High-Income Tax Returns for 1998," Statistics of Income Bulletin, Winter 2000-2001, Volume 20, Number 3, pp. 5-57; "High-Income Tax Returns for 1999," Statistics of Income Bulletin, Spring 2002, Volume 21, Number 4, pp. 7-58; "High-Income Tax Returns for 2000," Statistics of Income Bulletin, Spring 2003, Volume 22, Number 4, pp. 10-62; "High-Income Tax Returns for 2001," Statistics of Income Bulletin, Summer 2004, Volume 24, Number 1, pp. 65-117; "High-Income Tax Returns for 2002," Statistics of Income Bulletin, Spring 2005, Volume 24, Number 4, pp. 6-58; "High-Income Tax Returns for 2003," Statistics of Income Bulletin, Spring 2006, Volume 25, Number 4, pp. 8-57; "High-Income Tax Returns for 2004," Statistics of Income Bulletin, Spring 2007, Volume 26, Number 4, pp. 7-57; "High-Income Tax Returns for 2005," Statistics of Income Bulletin, Spring 2008, Volume 27, Number 4, pp. 16-67.

Bryan, Justin, "High-Income Tax Returns for 2006," Statistics of Income Bulletin, Spring 2009, Volume 28, Number 4, pp. 5-53; "High-Income Tax Returns for 2007," Statistics of Income Bulletin, Spring 2010, Volume 29, Number 4, pp. 3-51; "High-Income Tax Returns for 2008," Statistics of Income Bulletin, Spring 2011, Volume 30, Number 4, pp. 5-54; "High-Income Tax Returns for 2009," Statistics of Income Bulletin, Spring 2012, Volume 31, Number 4, pp. 6-61; "High-Income Tax Returns for 2010," Statistics of Income Bulletin, Spring 2013, Volume 32, Number 4, pp. 4-58; "High-Income Tax Returns for 2011," Statistics of Income Bulletin, Spring 2014, Volume 33, Number 4, pp. 51-110.

Appendix A: Income Concepts

Congress wanted data on high-income taxpayers classified by an income concept that was more comprehensive than adjusted gross income (AGI), but that was based entirely on items already reported on income tax returns. To derive such an income concept, it was necessary to begin with a broad, inclusive concept of income. AGI must then be compared to this broad income concept, and the differences (both additions and subtractions) that can be determined from items reported on tax returns identified. This appendix begins by defining "Haig-Simons income," a very broad concept of income used by economists and others as a standard. AGI is then compared to Haig-Simons income, and the major differences between the two income concepts are listed. The next section defines "expanded income," a more comprehensive income measure than AGI, based entirely on tax return data, and the final section explains in some detail the adjustment to income for investment expenses.

Haig-Simons Income

The broadest measure of annual income generally used by economists and others is defined as the value of a household's consumption plus the change, if any, in its net worth. This income concept is referred to as Haig-Simons income, or H-S income, after the two economists who wrote extensively about it [A1]. The H-S income of a household that consumed $25,000 and saved $2,000 in a year would be $27,000. Alternatively, the H-S income of a household that consumed $25,000 and had no additions to savings, but had assets that declined in value by $1,000 in a year, would be $24,000.

H-S income consists of three broad components: labor income, capital income (income from assets), and income from transfer payments. The major elements of each of these three components are as follows:

Labor income--This includes all forms of employee compensation (including wages and salaries), employee fringe benefits (such as employer-provided health insurance and accrued pension benefits or contributions), and the employer share of payroll taxes (such as Social Security taxes). Labor income also includes the labor share of self-employment income. Expenses of earning labor income would be deducted in arriving at H-S income. Deferred labor income (such as pension benefits) would be counted in the year it was earned, rather than in the year it was received.

Capital income--This includes all income from assets, including interest, dividends, rents, royalties, accrued capital gains (whether or not realized), the capital income share of selfemployment income, and the rental value of consumer durables (most importantly, the rental value of owner-occupied housing). Capital income is measured in real (inflation-adjusted) terms and is net of real, economic depreciation and all other expenses (which could exceed capital income).

Transfer payments--These include payments in cash such as Social Security benefits, workers' compensation, unemployment benefits, Aid to Families with Dependent Children (AFDC), and noncash benefits (such as Medicare, Medicaid, and the Supplemental Nutrition Assistance Program (SNAP)).

For purposes of tax analysis, H-S income should be measured on a pretax basis, the amount that would be earned if there were no Federal income tax in place. Most items of income are unaffected, or little affected, by the income tax and so these are reported on a pretax basis. However, certain income items from tax-preferred sources may be reduced because of their preferential treatment. An example is interest from tax-exempt State and local Government bonds. The interest rate on tax-exempt bonds is generally lower than the interest rate on taxable bonds of the same maturity and risk, with the difference approximately equal to the tax rate of the typical investor in tax-exempt bonds. Thus, investors in tax-exempt bonds are effectively paying a tax, referred to as an "implicit tax," and tax-exempt interest as reported is measured on an after tax, rather than a pretax, basis. Income from all tax-preferred sources should be "grossed up" by implicit taxes to measure H-S income properly.

Adjusted Gross Income

AGI is the statutory definition of income for Federal income tax purposes. AGI differs from H-S income by excluding some components of H-S income and by allowing accelerated business deductions and deductions unrelated to income, but also by disallowing or limiting certain expenses of earning income and certain losses. In addition, AGI is not "grossed up" for implicit taxes.

The components of H-S income excluded from AGI include most employee fringe benefits, the employer share of payroll taxes, accrued but deferred employee compensation, accrued but unrealized real capital gains, the rental value of consumer durables, nontaxable Social Security benefits, most other cash transfers, all noncash transfers, and the real income of borrowers due to inflation [A2].

Depreciation and certain other expenses allowed in determining AGI may be accelerated (relative to economic depreciation and other costs) in the early years of an investment, thus understating investment income. In later years, however, investment income in AGI will be overstated because depreciation and other accelerated expenses will then be understated. AGI also excludes some expenses not related to earning income, such as contributions to self-employed retirement (Keogh) plans, deductible contributions to Individual Retirement Arrangements (IRAs), the portion of Social Security contributions for selfemployed workers that is analogous to the employer share of such contributions for employees, and contributions to medical savings accounts.

AGI generally exceeds H-S income to the extent that expenses of earning income and losses are limited or disallowed. Most of the expenses of earning income are deductible from AGI in calculating taxable income, but only if the taxpayer "itemizes" deductions and then, in some cases, only to the extent that the sum of all such items exceeds 2 percent of AGI. Expenses incurred in the production of income that are itemized deductions include certain expenses of employees (such as union dues; expenditures for items used on the job but not reimbursed by the employer; and the employees' travel, meal, and entertainment expenses); and expenses attributable to a taxpayer's (passive) investments (as opposed to active participation in a trade or business, for example), including, but not limited to, interest expense incurred in connection with investments in securities [A3]. Note that there are limits on certain types of deductible expenses. In particular, deductible meal and entertainment expenses are limited to 50 percent of total meal and entertainment expenses.

Although net capital losses reduce economic income, only the first $3,000 of net realized capital losses may be deducted in computing AGI. Any additional realized losses must be carried forward to future years. In a somewhat similar manner, passive losses (from investments in a trade or business in which the taxpayer does not materially participate) can also reduce economic income, but, in computing AGI, they can only be deducted from passive income from other, similar investments (although a larger amount may be deducted when the losses are from rental real estate activities).

AGI can also exceed H-S income because of differences in the timing of income between the two concepts. For example, a taxpayer may realize more capital gains in a year than he or she accrues in capital gains. Since AGI includes only realizations of capital gains, whereas H-S income includes only accruals, AGI in this circumstance would exceed H-S income.

Finally, just as AGI understates the income of borrowers due to inflation, it overstates the income of lenders, who include bond owners and owners of bank deposits.

Expanded Income

Expanded income is meant to be a measure of income that is conceptually closer to H-S income than AGI, but which is derived entirely from items already reported on income tax returns. Figure L shows the adjustments made to AGI to arrive at expanded income. Since the definition of AGI was changed by legislation several times since 1977, and certain reporting requirements also changed, the adjustments differ over the years, as indicated for each item [A4]. Most of these adjustments are relatively straightforward, but the adjustment for investment requires some explanation.

Investment Expenses

In measuring H-S income, it generally would be appropriate to deduct all expenses incurred in the production of income, including those related to any income-producing investments, without limit. Investment expenses in excess of investment income would then represent net economic losses. However, such a liberal deduction for investment-related expenses is not necessarily correct when not all income items have been included currently. (Investment income includes interest, dividends, and capital gains.)

If all income has not been included currently, full deduction of investment expenses might represent a mismatching of receipts and expenses and might result in understating income. For example, if a taxpayer-borrowed funds to purchase securities, net income would be understated if the taxpayer deducted all interest payments on the loan, but did not include as income any accrued gains on the securities. A similar mismatching of income and expenses would occur if investment expenses that should properly be capitalized were deducted when paid. In these instances, a more accurate measure of income might be obtained by postponing the deduction of the expense until the income was recognized for tax purposes.

Additional problems are created when a person with a loan has both income-producing assets, such as securities, and nonincome-producing assets, such as a vacation home or yacht. It is not possible to determine what portion of the interest expense should be attributed to taxable income-producing assets, and therefore, ought to be deductible against the gross receipts from such taxable assets. As a result of these problems, it has been necessary to set arbitrary limits on the amount of investment expenses that are deductible in calculating expanded income.

Investment expenses that have not been deducted in determining AGI generally can appear on a Federal individual income tax return in two places. Investment interest expense is taken into account in the calculation of the itemized deduction for interest paid. Deductible investment interest expense is a separate part of the total interest deduction. Other investment expenses, such as management fees, are included in the miscellaneous category of itemized deductions [A5]. Beginning with 1987, most types of income-producing expenses included as miscellaneous itemized deductions are only deductible to the extent that their total exceeds 2 percent of AGI. To determine expenses that should be deductible in calculating an approximation of H-S income, investment expenses have been defined as deductible investment interest expense. Other investment expenses could not be separated from the remainder of miscellaneous deductions. Hence, they have not been used in the adjustment for investment expenses.

To the extent that interest expenses do not exceed investment income, they are generally allowed as a deduction in the computation of deductible investment interest expense and thus expanded income. Investment interest expenses that exceed investment income are not deductible in calculating expanded income. One consequence of this definition is that investment expenses can never turn positive investment income into investment losses. Generally, allowing investment expenses to offset all investment income is generous and tends to understate broadly measured income. However, in some instances, limiting investment expenses to investment income may overstate income by disallowing genuine investment losses.

Notes to Appendix A

[A1] Haig, Robert M. (ed.), The Federal Income Tax, Columbia University Press, 1921, and Simons, Henry C., Personal Income Taxation, University of Chicago Press, 1938.

[A2] Borrowers receive income due to inflation because the real value of debt is reduced by inflation. Even though inflation may be anticipated and reflected in interest rates, tax deductions for nominal interest payments overstate interest costs because part of these payments represent a return of principal to the lender, rather than interest.

[A3] See references and footnote A4.

[A4] For 1977, about 50 percent of net long-term capital gains were included in AGI. During 1978, the inclusion ratio was changed to 40 percent. This inclusion ratio remained unchanged through 1986. Beginning with 1987, there was no exclusion allowed for capital gains in computing AGI, and, thus, this adjustment was not made in computing expanded income for returns for years after 1986.

Beginning in 1987, taxpayers were required to report on their Federal income tax returns the amount of their taxexempt interest income from State and local Government bonds. Since 1987, tax-exempt interest has been included in expanded income.

Taxpayers are also required to report Social Security benefits. Since 1988, nontaxable Social Security benefits have been included in expanded income. However, if none of a particular taxpayer's Social Security benefits are taxable, then gross Social Security benefits are not required to be shown on the income tax return. In such instances, which generally only affect lower- and middle-income taxpayers, Social Security benefits are not included in expanded income.

The subtraction of unreimbursed employee business expense and the moving expense deduction is to make the concept of expanded income comparable to years prior to 1987. All current-year moving expenses beginning with Tax Year 1994 were deducted in the calculation of AGI as a statutory adjustment. Due to subtracting nonlimited miscellaneous deductions and not subtracting the nondeductible rental loss for 1989, the expanded income concept for 1989 is not strictly comparable to expanded income for 1988. Nor is the expanded income concept for 1990 strictly comparable to expanded income for 1989 because of the addition of the foreign-earned income exclusion. Specific details on the definition of expanded income for any given year are available in the reports and publications found under the References section.

[A5] Some income deferrals and accelerated expense deductions may also be involved in income or losses from rental property, from royalties, from partnerships, and from S Corporations, only the net amounts of which are included in adjusted gross income.

Appendix B: Tax Concepts

This appendix discusses in more detail two tax concepts used in this article. The first section provides a brief summary of the U.S. taxation of worldwide income and the foreign tax credit. The two tax concepts used in this article are then defined in the next section. This section is followed by an explanation of deduction equivalent of credits and other items. A final section discusses the possible implications of the use of unaudited tax return data for this article.

U.S. Taxation of Worldwide Income and the Foreign Tax Credit

Citizens and residents of the United States, regardless of where they physically reside, must generally include in income for Federal income tax purposes income from all geographic sources. Thus, for example, dividends and interest received from a foreign corporation or income earned working abroad is subject to Federal income tax in the same manner as income received from sources inside the United States [B1]. Income from sources outside the United States may also be subject to tax by foreign governments.

To reduce, if not eliminate, the possibility of double taxation of the foreign-source income of U.S. citizens and residents, the Federal income tax allows a credit for income taxes paid to foreign governments. This foreign tax credit is generally limited to the amount of (precredit) U.S. tax liability attributable to foreign-source income. This limit prevents the foreign tax credit from offsetting the U.S. tax on U.S.-source income.

As a result of taxing citizens and residents on a worldwide basis but allowing a foreign tax credit, some Federal income tax returns may report substantial income but little or no U.S. tax liability after credits. This may occur, for example, if a taxpayer has income only from foreign sources, for example, the taxpayer may live abroad the entire year and have no income-producing assets in the United States. It may also occur if a taxpayer has foreign-source income that exceeds a net loss from U.S. sources and pays income taxes comparable to the U.S. tax to a foreign government [B2].

For taxpayers with income from foreign sources, these procedures understate the taxpayers' true worldwide income tax liabilities and effective income tax rates. For such taxpayers, it does not seem appropriate to classify U.S. income tax credits for foreign tax payments as reducing tax liabilities. This is particularly true for tax filers who appear to be nontaxable because they do not have any U.S. tax liability, but who have paid foreign income taxes. A more accurate measure of overall income tax burden, as well as the numbers of nontaxable returns, can be obtained by considering all income taxes--U.S. as well as foreign. Thus, a second tax concept, worldwide income tax, has been used in addition to the traditional U.S. income tax.

Two Tax Concepts

Two tax concepts are used in this article to classify tax returns as taxable (i.e., returns showing an income tax liability) or nontaxable (i.e., returns showing no income tax liability) and to measure the tax burdens on taxable returns: U.S. income tax and worldwide income tax. Worldwide income tax is defined for purposes of this article as U.S. income tax,plus the foreign tax credits reported on the U.S. income tax return and foreign taxes paid on excluded foreign-earned income (obtained from Form 1116, Foreign Tax Credit). The amount of the foreign tax credits and foreign taxes paid on excluded foreign-earned income is used as a proxy for foreign tax liabilities [B3]. The relationship of U.S. income tax to tax items reported on individual income tax returns, and to worldwide income tax, is shown in Figure M.

Comparing Exclusions, Deductions, Tax Credits, and Special Tax Computations

To compare the importance of various exclusions, deductions, tax credits, and special tax computations (such as the alternative minimum tax on tax preferences), the different types of items must be placed on the same basis. One way of doing so is to calculate the size of the deduction that would reduce (or increase) income tax by the same amount as a tax credit or special computation. This amount is called the "deduction equivalent" of the tax credit or special computation.

The deduction equivalent of a tax credit or a special tax computation is the difference between the taxable income that, using the ordinary tax rate schedules, would yield the actual tax before the provision in question is considered and the actual tax after the provision. For example, the "deduction equivalent of all tax credits" is equal to the difference between "taxable income that would yield income tax before credits" and "taxable income that would yield income tax after credits."

Using this method of equating the value of deductions, exclusions, credits, and special tax computations, the order in which the various credits and special tax computations are calculated may affect the value of their deduction equivalents. Because the tax rate schedules are progressive, with successive increments to income taxed at successively higher tax rates, the deduction equivalent of the credit converted last to a deduction equivalent will be larger (for the same amount of a credit) than the item converted first, unless all relevant taxable income amounts are within a single tax-rate bracket.

The deduction equivalents of tax credits shown in Tables 9 and 10 were computed by assuming that deductions and exclusions reduce taxes before credits. As a result, the deduction equivalent of tax credits may be overstated.

Unaudited Data

Tax return data used for Statistics of Income have been tabulated as they were reported on tax returns filed with the Internal Revenue Service (IRS). Certain obvious arithmetic errors have been corrected and certain adjustments have been made to achieve consistent statistical definitions. Otherwise, the data have not been altered. In particular, the data do not reflect any changes that either may have or could have been made because of IRS audits. While this is true of data throughout the entire Statistics of Income program, it is particularly relevant for highincome tax returns. Because of the greater complexity of these returns, there is a higher probability of error and more scope for disagreement about the proper interpretation of tax laws.

The fact that the data have been drawn from unaudited returns is of even greater importance for those high-income returns that are nontaxable. Almost any audit changes would make such returns taxable. Even where the tax consequences are minor, such returns could be reclassified from nontaxable to taxable, thereby changing the counts of nontaxable returns.

Notes to Appendix B

[B1] An exception is that certain income earned abroad may be excluded from AGI. Any foreign taxes paid on such income are not creditable against U.S. income tax. The tables in this article include such excluded income in expanded income. Foreign taxes paid on such income are reflected in worldwide income tax, as discussed later. [B2] Although the foreign tax credit is an item of tax preference for AMT purposes, taxpayers below the AMT exclusion thresholds, or with preferences or deductions not subject to AMT, could completely offset precredit U.S. income tax liability with foreign tax credits.

[B3] Where foreign tax rates exceed U.S. rates, foreign tax credits will be less than foreign tax liabilities. In such cases, using foreign tax credits as a proxy for foreign tax liabilities understates worldwide income tax liability. In other cases, when foreign tax credits are for taxes paid on income from previous years, use of foreign tax credits as a proxy may overstate or understate worldwide taxes on current-year income.

(1) The statutory requirement is contained in section 2123 of the Tax Reform Act of 1976 (90 Stat. at 1915).

(2) The 1976 Act specified four income concepts for classifying tax returns: adjusted gross income (AGI), expanded income, AGI plus excluded tax preference items, and AGI less investment interest expense not in excess of investment income. Section 441 of the Deficit Reduction Act of 1984 (98 Stat. at 815) eliminated the requirement to use the last two income concepts.

(3) The definition of adjustments to AGI to obtain the expanded income given in the text is for the current year. See Appendix A for a discussion of AGI and expanded income and a list of adjustments covering all years since 1977.

(4) See Notes to Appendix A, note A4.

(5) Tax-exempt interest had to be reported on the individual income tax return starting with Tax Year 1987 and is included in expanded income starting with that year. Beginning with Tax Year 1991, tax-exempt interest was incorporated into the criteria used for sampling returns for Statistics of Income, thus increasing the reliability of the estimates of expanded income

(6) See Appendix B for a discussion of the tax concepts. In data published for years prior to 1989, either in articles presented in the Statistics of Income Bulletinor in chapters in Statistics of Income-Individual Income Tax Returns(see References section), the "U.S. income tax" concept was described as "total income tax," and the "worldwide income tax" concept was described as "modified total income tax."

(7) The inclusion of foreign taxes paid on excluded foreign-earned income, beginning with Tax Year 1990, represents an improvementin the worldwide income tax concept. However, it does represent a slight break in the year-to-year comparability of data for worldwide income tax. However, the number of returns with foreign taxes paid on excluded foreign-earned income is extremely small compared to the number of returns with the foreign tax credit.

(8) Inflation-adjusted dollars are based on the Consumer Price Index (CPI-U) as published by the U.S. Department of Labor, Bureau of Labor Statistics. The consumer price index approximates buying patterns of typical urban consumers. The annual index is the average of the monthly indices.

(9) See National Bureau of Economic Research list of business cycles at http ://www. nber.org/cycles. html.

(10) Note that before 1991, the number of nontaxable returns with an expanded income of $200,000 or more was based on samples. Year-to-year differences in the number and percentages of nontaxable returns with an expanded income of $200,000 or more may have represented sampling variability in addition to actual changes in the number of such returns. Beginning with Tax Year 1991, nontaxable returns with an expanded incomes of $200,000 or more were sampled at higher rates, which reduced the sampling variability of these returns and, therefore, provided improved estimates. Thus, the data for returns prior to 1991 are not entirely comparable with data for more recent years.

(11) The AMT exclusion phases out above certain levels of "alternative minimum taxable income," based on filing status. But, since taxpayers will have some AMT liability in the phase-out range, the phase-out income is not relevant for nontaxable, high-income returns.

(12) Tax-exempt interest and the foreign-earned income exclusion were not included in Tables 7 and 8 as possible tax effects before Tax Year 1994. Thus, caution should be exercised in making comparisons between data prior to 1994 and after 1993.

(13) See Appendix B for a description of how the deduction equivalent of credits was computed.

Justin Bryan is an economist with the Individual Returns Analysis Section. This article was prepared under the direction of Michael Strudler, Chief, Individual Research Section.

Table 1. Returns With and Without U.S. Income Tax: Number of
Returns, by Size of Income Under Alternative Concepts, Tax
Year 2012

[All figures are estimates based on samples]

Returns by tax status,    All returns     Returns by size of adjusted
size of expanded income                          gross income

                                        Under $50,000      $50,000
                                             [1]        under $100,000

                              (1)            (2)             (3)
All returns
Total                     144,928,472     92,940,570       31,089,262
Under $50,000 [1]         90,550,444      89,812,197          725,114
$50,000 under $100,000    33,448,930       3,052,198       29,918,923
$100,000 under $200,000   15,620,227          72,361          438,118
$200,000 or more           5,308,871           3,813            7,107
Returns with U.S.
  income tax
Total                     93,109,721      42,641,865       29,683,169
Under $50,000 [1]         40,838,221      40,235,562          593,471
$50,000 under $100,000    31,515,992       2,376,303       28,665,135
$100,000 under $200,000   15,478,963          29,086          420,343
$200,000 or more           5,276,545             914            4,219
Returns without U.S.
  income tax
Total                     51,818,751      50,298,705        1,406,093
Under $50,000 [1]         49,712,223      49,576,635          131,643
$50,000 under $100,000     1,932,939         675,896        1,253,787
$100,000 under $200,000      141,264          43,275           17,775
                              32,326           2,899            2,888

Returns by tax status,      Returns by size of adjusted
size of expanded income            gross income

                            $100,000       $200,000 or
                          under $200,000      more

                               (4)             (5)
All returns
Total                        15,646,648     5,251,992
Under $50,000 [1]                 8,857         4,276
$50,000 under $100,000          472,212         5,597
$100,000 under $200,000      15,024,159        85,588
$200,000 or more                141,421     5,156,531
Returns with U.S.
  income tax
Total                        15,552,998     5,231,689
Under $50,000 [1]                 6,703         2,485
$50,000 under $100,000          469,280         5,273
$100,000 under $200,000      14,944,673        84,860
$200,000 or more                132,343     5,139,069
Returns without U.S.
  income tax
Total                            93,650        20,304
Under $50,000 [1]                 2,154         1,791
$50,000 under $100,000            2,932           324
$100,000 under $200,000          79,486           727
                                  9,078        17,462

[1] Includes returns with adjusted gross deficit or
with negative expanded income.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of U.S. income tax. Starting in
2009, the portion of refundable credits that offset income taxes
before credits was factored in to determine tax liability. As a
result, data may not be comparable to data in Tax Years 2007 and
2008 published tables. Prior to 2007, the portion of refundable
credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.

Table 2. Returns With and Without Worldwide Income Tax: Number of
Returns, by Size of Income Under Alternative Concepts, Tax Year 2012

[All figures are estimates based on samples]

Returns by tax status,    All returns        Returns by size of
size of expanded                           adjusted gross income
income
                                           Under         $50,000
                                        $50,000 [1]   under $100,000

                              (1)           (2)            (3)

All returns
Total                     144,928,472   92,940,570       31,089,262
Under $50,000 [1]         90,550,444    89,812,197          725,114
$50,000 under $100,000    33,448,930     3,052,198       29,918,923
$100,000 under $200,000   15,620,227        72,361          438,118
$200,000 or more           5,308,871         3,813            7,107
Returns with worldwide
  income tax
Total                     93,287,106    42,744,512       29,727,498
Under $50,000 [1]         40,923,929    40,319,973          594,759
$50,000 under $100,000    31,561,984     2,385,355       28,702,049
$100,000 under $200,000   15,505,772        37,961          425,798
$200,000 or more           5,295,421         1,223            4,892
Returns without
  worldwide income tax
Total                     51,641,366    50,196,058        1,361,764
Under $50,000 [1]         49,626,515    49,492,224          130,355
$50,000 under $100,000     1,886,946       666,844        1,216,873
$100,000 under $200,000      114,455        34,400           12,321
$200,000 or more              13,450         2,590            2,215

Returns by tax status,         Returns by size of
size of expanded             adjusted gross income
income
                            $100,000       $200,000 or
                          under $200,000      more

                               (4)             (5)

All returns
Total                        15,646,648     5,251,992
Under $50,000 [1]                 8,857         4,276
$50,000 under $100,000          472,212         5,597
$100,000 under $200,000      15,024,159        85,588
$200,000 or more                141,421     5,156,531
Returns with worldwide
  income tax
Total                        15,570,511     5,244,584
Under $50,000 [1]                 6,703         2,494
$50,000 under $100,000          469,292         5,287
$100,000 under $200,000      14,957,072        84,940
$200,000 or more                137,444     5,151,862
Returns without
  worldwide income tax
Total                            76,137         7,408
Under $50,000 [1]                 2,154         1,782
$50,000 under $100,000            2,920           310
$100,000 under $200,000          67,087           647
$200,000 or more                  3,976         4,669

[1] Includes returns with adjusted gross deficit or with negative
expanded income.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of worldwide income tax. Starting
in 2009, the portion of refundable credits that offset income
taxes before credits was factored in to determine tax liability.
As a result, data may not be comparable to data in Tax Years 2007
and 2008 published tables. Prior to 2007, the portion of
refundable credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.

Table 3. Returns With and Without U.S. Income Tax and With Income
of $200,000 or More Under Alternative Concepts: Distribution of
Returns by Ratio of Adjusted Taxable Income to Income Per
Concept, Tax Year 2012

[All figures are estimates based on samples]

Tax status, ratio of         Adjusted gross income concept
adjusted taxable
income to income         Number of   Percentage   Cumulative
per concept               returns     of total    percentage
                                                   of total

                            (1)         (2)          (3)

Total                    5,251,992       100.0        100.0
Returns without            20,304          0.4          0.4
  U.S. income tax
Returns with U.S.        5,231,689        99.6          N/A
  income tax: Total
Ratio of adjusted
  taxable income to
  income per concept:
Over 0 under 5 percent     12,361          0.2          0.2
5 under 10 percent         10,346          0.2          0.4
10 under 15 percent         9,719          0.2          0.6
15 under 20 percent        12,053          0.2          0.8
20 under 25 percent        10,426          0.2          1.0
25 under 30 percent        14,741          0.3          1.3
30 under 35 percent        18,319          0.3          1.7
35 under 40 percent        24,754          0.5          2.1
40 under 45 percent        40,149          0.8          2.9
45 under 50 percent        70,136          1.3          4.2
50 under 60 percent       177,554          3.4          7.6
60 under 70 percent       348,124          6.6         14.3
70 under 80 percent      1,039,525        19.8         34.0
80 percent or more       3,443,482        65.6         99.6

Tax status, ratio of             Expanded income concept
adjusted taxable
income to income         Number of   Percentage   Cumulative
per concept               returns     of total    percentage
                                                   of total

                            (4)         (5)          (6)

Total                    5,308,871       100.0        100.0
Returns without            32,326          0.6          0.6
  U.S. income tax
Returns with U.S.        5,276,545        99.4          N/A
  income tax: Total
Ratio of adjusted
  taxable income to
  income per concept:
Over 0 under 5 percent     15,826          0.3          0.3
5 under 10 percent         13,992          0.3          0.6
10 under 15 percent        12,306          0.2          0.8
15 under 20 percent        12,093          0.2          1.0
20 under 25 percent        17,052          0.3          1.3
25 under 30 percent        20,161          0.4          1.7
30 under 35 percent        25,707          0.5          2.2
35 under 40 percent        31,552          0.6          2.8
40 under 45 percent        53,986          1.0          3.8
45 under 50 percent        76,988          1.5          5.3
50 under 60 percent       200,690          3.8          9.0
60 under 70 percent       372,897          7.0         16.1
70 under 80 percent      1,019,965        19.2         35.3
80 percent or more       3,403,332        64.1         99.4

N/A-Not applicable.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of U.S. income tax. Starting in
2009, the portion of refundable credits that offset income taxes
before credits was factored in to determine tax liability. As a
result, data may not be comparable to data in Tax Years 2007 and
2008 published tables. Prior to 2007, the portion of refundable
credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.

Table 4. Returns With and Without Worldwide Income Tax and With
Income of $200,000 or More Under Alternative Concepts:
Distribution of Returns by Ratio of Adjusted Taxable Income to
Income Per Concept, Tax Year 2012

[All figures are estimates based on samples]

Tax status, ratio         Adjusted gross income concept
of adjusted taxable
income to income      Number of   Percentage   Cumulative
per concept            returns     of total    percentage
                                                of total

                         (1)         (2)          (3)

Total                 5,251,992       100.0        100.0
Returns without          7,408          0.1          0.1
  worldwide
  income tax
Returns with          5,244,584        99.9          N/A
  worldwide income
  tax: Total
Ratio of adjusted
  taxable income
  to income per
  concept:
Over 0 under             3,037          0.1          0.1
  5 percent
5 under 10 percent       3,900          0.1          0.1
10 under 15 percent      3,523          0.1          0.2
15 under 20 percent      6,463          0.1          0.3
20 under 25 percent      7,611          0.1          0.5
25 under 30 percent      9,237          0.2          0.6
30 under 35 percent     12,410          0.2          0.9
35 under 40 percent     20,414          0.4          1.3
40 under 45 percent     34,732          0.7          1.9
45 under 50 percent     64,420          1.2          3.2
50 under 60 percent    169,525          3.2          6.4
60 under 70 percent    336,310          6.4         12.8
70 under 80 percent   1,024,461        19.5         32.3
80 percent or more    3,548,541        67.6         99.9

Tax status, ratio             Expanded income concept
of adjusted taxable
income to income      Number of   Percentage   Cumulative
per concept            returns     of total    percentage
                                                of total

                         (4)         (5)          (6)

Total                 5,308,871       100.0        100.0
Returns without         13,450          0.3          0.3
  worldwide
  income tax
Returns with          5,295,421        99.7          N/A
  worldwide income
  tax: Total
Ratio of adjusted
  taxable income
  to income per
  concept:
Over 0 under             3,796          0.1          0.1
  5 percent
5 under 10 percent       4,882          0.1          0.2
10 under 15 percent      7,488          0.1          0.3
15 under 20 percent      5,486          0.1          0.4
20 under 25 percent     13,021          0.2          0.7
25 under 30 percent     13,240          0.2          0.9
30 under 35 percent     20,251          0.4          1.3
35 under 40 percent     26,150          0.5          1.8
40 under 45 percent     45,369          0.9          2.6
45 under 50 percent     73,083          1.4          4.0
50 under 60 percent    188,165          3.5          7.6
60 under 70 percent    362,069          6.8         14.4
70 under 80 percent   1,011,612        19.1         33.4
80 percent or more    3,520,811        66.3         99.7

N/A-Not applicable.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of worldwide income tax. Starting
in 2009, the portion of refundable credits that offset income
taxes before credits was factored in to determine tax liability.
As a result, data may not be comparable to data in Tax Years 2007
and 2008 published tables. Prior to 2007, the portion of
refundable credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.

Table 5. Returns With and Without U.S. Income Tax and With Income
of $200,000 or More Under Alternative Concepts: Income,
Deductions, Credits, and Tax, Tax Year 2012

[All figures are estimates based on samples-money amounts are in
thousands of dollars]

Income concept, item                Returns with income of
                                       $200,000 or more

                                              Total

                                  Number of      Amount
                                   returns

Adjusted Gross                       (1)           (2)
Income Concept

Salaries and wages                4,630,603   1,453,486,928
Business or profession:
  Net income                       950,043     107,337,147
  Net loss                         332,749       7,745,131
Farm:
  Net income                        50,676       6,772,074
  Net loss                         103,783       4,802,220
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                      1,567,853    537,482,087
  Net loss                         463,240      43,006,669
Sales of capital assets:
  Net gain                        1,996,723    564,404,027
  Net loss                        1,497,210      3,740,815
Sales of property other
    than capital assets:
  Net gain                         257,884      13,439,055
  Net loss                         287,792       6,036,894
Taxable interest received         4,521,070     60,777,094
Tax-exempt interest               1,408,440     40,430,886
Dividends                         3,650,440    169,775,859
  Qualified dividends             3,484,552    142,188,028
Pensions and annuities in         1,185,671     63,797,788
  adjusted gross income
Rent:
  Net income                       616,793      28,981,945
  Net loss, total (deductible      729,550      12,650,165
      and nondeductible)
    Nondeductible rental loss      585,627       8,779,928
Royalty:
  Net income                       371,590      16,266,035
  Net loss                          16,086         120,568
Estate or trust:
  Net income                       139,669      21,286,446
  Net loss                          16,476       1,548,708
State income tax refunds          1,768,535      8,980,871
Alimony received                     9,575       1,288,375
Social Security benefits in        876,022      21,245,963
  adjusted gross income
Social Security benefits           876,446       3,758,102
  (nontaxable)
Unemployment compensation          160,831       1,207,791
Other income                       699,973      20,730,928
Other loss                          55,612       1,829,278
Foreign-earned income               48,597       4,191,434
  exclusion
Total income                      5,251,992   3,090,698,001
Statutory adjustments, total      2,133,742     47,604,970
  Payments to Individual           132,783       1,146,009
    Retirement Arrangements
  Payments to self-employed        426,365      14,455,984
    retirement (Keogh) plans
  Moving expenses adjustment        56,864         364,033
Adjusted gross income             5,251,992   3,043,093,030
Investment interest expense        690,898      12,665,451
  deduction
Total tax preferences excluded    1,421,685     42,558,829
  from adjusted gross
  income [2]
Total alternative minimum tax       26,438       2,226,662
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss              658,259         514,555
  (alternative minimum tax
  adjustment)
Expanded income                   5,251,841   3,061,872,513
Exemption amount                  5,248,778     57,943,162
Itemized deductions:
  Total per adjusted gross        4,980,948    411,964,352
    income concept
  Charitable contributions        4,617,091     96,829,656
    deduction
  Interest paid deduction:
    Total per adjusted gross      4,069,707     76,845,119
      income concept
    Total home mortgage           3,864,405     63,746,802
      interest
  Medical and dental               136,019       3,490,596
    expense deduction
  Net casualty or theft             13,480       1,648,378
    loss deduction
  Taxes paid deduction            4,976,744    203,437,148
  Net limited miscellaneous        760,610      17,438,087
    deductions per adjusted
    gross income concept
  Non-limited                      262,647      12,288,896
    miscellaneous deductions
Excess of exemptions and             7,539       2,085,473
  deductions over adjusted
  gross income
Taxable income                    5,244,431   2,572,104,282
Tax at regular rates              5,240,739    644,435,849
Alternative minimum tax           3,447,020     30,803,938
  (Form 6251)
Income tax before credits         5,245,632    675,333,707
Tax credits, total                2,491,191     20,605,017
  Child care credit                460,168         248,701
  Minimum tax credit                97,377         475,910
  Foreign tax credit              1,826,959     17,010,249
  General business credit          191,008       2,060,833
  Refundable credits used to       168,008         391,615
    offset income tax
    before credits
U.S. total income tax             5,231,689    654,728,717
Taxable income which
    would yield:
  Income tax before credits       5,245,632   2,326,772,918
  Income tax after credits        5,231,689   2,264,211,099
  U.S. total income tax           5,231,689   2,264,211,299
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income           5,251,992   3,043,093,030
    plus:  Total tax              1,421,685     42,558,829
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security         876,446       3,758,102
             benefits
             (nontaxable)
           Foreign-earned           48,597       4,191,434
             income exclusion
    minus: Investment interest     690,898      12,665,451
             expense deduction
           Non-limited             262,647      12,288,896
             miscellaneous
             deductions
           Unreimbursed            954,347       6,774,535
             employee business
             expenses
  Equals: Expanded income         5,251,841   3,061,872,513
Expanded Income Concept           4,628,162   1,450,047,026
  Salaries and wages
Business or profession:
  Net income                       957,084     107,683,743
  Net loss                         331,063       7,806,584
Farm:
  Net income                        50,794       6,799,173
  Net loss                         103,270       4,759,072
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                      1,582,764    538,080,437
  Net loss                         475,085      43,245,904
Sales of capital assets:
  Net gain                        2,033,747    565,548,044
  Net loss                        1,540,394      3,872,118
Sales of property other than
    capital assets:
  Net gain                         261,588      13,419,852
  Net loss                         295,254       6,059,824
Taxable interest received         4,593,858     61,539,716
Tax-exempt interest               1,503,102     48,635,908
Dividends                         3,731,094    173,108,753
  Qualified dividends             3,561,825    144,745,236
Pensions and annuities in         1,237,415     66,662,202
  adjusted gross income
Rent:
  Net income                       629,397      29,334,180
  Net loss, total (deductible      733,110      12,689,345
      and nondeductible)
    Nondeductible rental loss      586,116       8,788,012
Royalty:
  Net income                       383,952      16,362,270
  Net loss                          18,186         121,815
Estate or trust:
  Net income                       145,170      21,429,059
  Net loss                          16,544       1,563,404
State income tax refunds          1,765,061      8,990,294
Alimony received                     9,584       1,288,521
Social Security benefits in        955,391      23,335,252
  adjusted gross income
Social Security benefits           955,851       4,127,626
  (nontaxable)
Unemployment compensation          156,932       1,196,334
Other income                       711,744      20,945,598
Other loss                          67,828       2,073,234
Foreign-earned income               78,965       7,285,420
  exclusion
Total income                      5,308,871   3,092,477,670
Statutory adjustments, total      2,144,540     47,896,498
  Payments to Individual           134,821       1,160,129
    Retirement Arrangements
  Payments to self-employed        431,165      14,603,516
    retirement (Keogh) plans
  Moving expenses adjustment        57,899         371,017
Adjusted gross income             5,308,871   3,044,581,172
Investment interest expense        698,575      11,925,593
  deduction
Total tax preferences             1,516,382     50,855,115
  excluded from adjusted
  gross income [2]
Total alternative minimum tax       27,703       2,312,873
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss              674,302         537,440
  (alternative minimum
  tax adjustment)
Expanded income                   5,308,871   3,082,745,968
Exemption amount                  5,305,344     58,132,095
Itemized deductions:
  Total per adjusted gross        5,005,163    406,301,781
    income concept
  Total per expanded              5,004,371    384,823,885
    income concept
  Charitable contributions        4,640,944     97,431,059
    deduction
  Interest paid deduction:
    Total per adjusted gross      4,048,981      75,539,382
      income concept
    Total per expanded            3,840,995      63,613,789
      income concept
    Total home mortgage           3,831,907     63,183,642
      interest
  Medical and dental               163,185       4,114,686
    expense deduction
  Net casualty or theft             12,950       1,630,350
    loss deduction
  Taxes paid deduction            5,000,178    203,976,030
  Net limited miscellaneous        750,661      17,258,272
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous        236,251       6,365,446
    deductions
Excess of exemptions and            11,023       1,907,048
  deductions over adjusted
  gross income
Taxable income                    5,297,843   2,578,515,917
Tax at regular rates              5,290,447    645,692,113
Alternative minimum tax           3,432,652     30,734,896
  (Form 6251)
Income tax before credits         5,296,740    676,520,881
Tax credits, total                2,552,766     21,046,840
    Child care credit              454,307         245,942
    Minimum tax credit             100,622         482,805
    Foreign tax credit            1,896,180     17,442,983
    General business credit        192,397       2,060,029
    Refundable credits used        172,612         394,990
      to offset income tax
      before credits
U.S. total income tax             5,276,545    655,474,069
Taxable income which
    would yield:
  Income tax before credits       5,296,740   2,332,407,886
  Income tax after credits        5,276,545   2,267,975,425
  U.S. total income tax           5,276,545   2,267,975,624
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income           5,308,871   3,044,581,172
    plus:  Total tax              1,516,382     50,855,115
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security         955,851       4,127,626
             benefits
             (nontaxable)
           Foreign-earned           78,965       7,285,420
             income exclusion
    minus: Investment interest     698,575      11,925,593
             expense deduction
           Non-limited             236,251       6,365,446
             miscellaneous
             deductions
           Unreimbursed            900,927       5,797,994
             employee business
             expenses
Equals: Expanded income           5,308,871   3,082,745,968

Income concept, item                Returns with income of
                                       $200,000 or more

                                       Returns with U.S.
                                          income tax

                                  Number of      Amount
                                   returns

Adjusted Gross                       (3)           (4)
Income Concept

Salaries and wages                4,616,287   1,447,942,257
Business or profession:
  Net income                       947,100     106,874,941
  Net loss                         331,413       7,552,993
Farm:
  Net income                        50,502       6,754,452
  Net loss                         103,358       4,760,316
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                      1,564,524    536,192,335
  Net loss                         459,665      41,665,893
Sales of capital assets:
  Net gain                        1,990,084    561,842,357
  Net loss                        1,490,561      3,723,136
Sales of property other
    than capital assets:
  Net gain                         256,628      13,349,306
  Net loss                         286,053       5,908,474
Taxable interest received         4,505,067     59,947,743
Tax-exempt interest               1,403,510     39,995,062
Dividends                         3,637,227    168,142,783
  Qualified dividends             3,472,761    140,936,395
Pensions and annuities in         1,182,453     63,642,228
  adjusted gross income
Rent:
  Net income                       614,254      28,846,590
  Net loss, total (deductible      726,124      12,531,646
      and nondeductible)
    Nondeductible rental loss      582,752       8,710,218
Royalty:
  Net income                       369,580      16,177,077
  Net loss                          15,983         118,282
Estate or trust:
  Net income                       139,050      21,217,528
  Net loss                          16,285       1,516,959
State income tax refunds          1,765,943      8,935,675
Alimony received                     9,540       1,282,032
Social Security benefits in        872,079      21,155,236
  adjusted gross income
Social Security benefits           872,429       3,740,916
  (nontaxable)
Unemployment compensation          160,638       1,205,813
Other income                       696,444      20,478,672
Other loss                          53,959       1,759,388
Foreign-earned income               43,523       3,686,872
  exclusion
Total income                      5,231,689   3,079,106,747
Statutory adjustments, total      2,128,610     47,506,127
  Payments to Individual           132,413       1,143,065
    Retirement Arrangements
  Payments to self-employed        426,040      14,443,819
    retirement (Keogh) plans
  Moving expenses adjustment        56,693         362,595
Adjusted gross income             5,231,689   3,031,600,620
Investment interest expense        686,643      12,002,419
  deduction
Total tax preferences excluded    1,416,690     42,142,196
  from adjusted gross
  income [2]
Total alternative minimum tax       26,279       2,222,479
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss              655,780         556,807
  (alternative minimum tax
  adjustment)
Expanded income                   5,231,689   3,051,754,065
Exemption amount                  5,228,526     57,749,646
Itemized deductions:
  Total per adjusted gross        4,967,018    407,154,988
    income concept
  Charitable contributions        4,606,496     96,174,008
    deduction
  Interest paid deduction:
    Total per adjusted gross      4,059,536     75,971,075
      income concept
    Total home mortgage           3,855,842     63,536,707
      interest
  Medical and dental               133,727       3,151,869
    expense deduction
  Net casualty or theft             12,531       1,182,010
    loss deduction
  Taxes paid deduction            4,964,025    202,888,906
  Net limited miscellaneous        756,127      17,149,097
    deductions per adjusted
    gross income concept
  Non-limited                      259,416      10,651,096
    miscellaneous deductions
Excess of exemptions and             3,036         891,198
  deductions over adjusted
  gross income
Taxable income                    5,228,650   2,564,481,236
Tax at regular rates              5,226,942    642,389,499
Alternative minimum tax           3,446,223     30,792,218
  (Form 6251)
Income tax before credits         5,231,689    673,275,422
Tax credits, total                2,477,247     18,546,733
  Child care credit                459,945         248,619
  Minimum tax credit                97,023         465,517
  Foreign tax credit              1,813,793     15,005,886
  General business credit          190,273       2,041,720
  Refundable credits used to       167,687         374,529
    offset income tax
    before credits
U.S. total income tax             5,231,689    654,728,717
Taxable income which
    would yield:
  Income tax before credits       5,231,689   2,319,932,548
  Income tax after credits        5,231,689   2,264,211,099
  U.S. total income tax           5,231,689   2,264,211,299
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income           5,231,689   3,031,600,620
    plus:  Total tax              1,416,690     42,142,196
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security         872,429       3,740,916
             benefits
             (nontaxable)
           Foreign-earned           43,523       3,686,872
             income exclusion
    minus: Investment interest     686,643      12,002,419
             expense deduction
           Non-limited             259,416      10,651,096
             miscellaneous
             deductions
           Unreimbursed            953,059       6,763,025
             employee business
             expenses
  Equals: Expanded income         5,231,689   3,051,754,065
Expanded Income Concept           4,607,317   1,443,118,285
  Salaries and wages
Business or profession:
  Net income                       953,354     107,169,423
  Net loss                         329,265       7,590,807
Farm:
  Net income                        50,598       6,781,612
  Net loss                         102,747       4,703,972
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                      1,578,324    536,824,140
  Net loss                         469,417      41,811,257
Sales of capital assets:
  Net gain                        2,023,642    563,130,873
  Net loss                        1,527,958      3,838,234
Sales of property other than
    capital assets:
  Net gain                         259,696      13,342,376
  Net loss                         292,697       5,924,936
Taxable interest received         4,567,601     60,734,441
Tax-exempt interest               1,489,902     45,974,264
Dividends                         3,708,128    171,065,495
  Qualified dividends             3,541,278    143,191,348
Pensions and annuities in         1,231,805     66,451,651
  adjusted gross income
Rent:
  Net income                       625,982      29,189,913
  Net loss, total (deductible      727,996      12,548,949
      and nondeductible)
    Nondeductible rental loss      582,409       8,709,024
Royalty:
  Net income                       380,620      16,263,235
  Net loss                          18,011         120,083
Estate or trust:
  Net income                       144,063      21,352,187
  Net loss                          16,255       1,530,453
State income tax refunds          1,761,268      8,940,652
Alimony received                     9,542       1,282,208
Social Security benefits in        946,900      23,143,926
  adjusted gross income
Social Security benefits           947,252       4,091,968
  (nontaxable)
Unemployment compensation          156,719       1,194,051
Other income                       706,713      20,696,420
Other loss                          64,742       1,978,918
Foreign-earned income               67,762       6,053,624
  exclusion
Total income                      5,276,545   3,080,944,209
Statutory adjustments, total      2,137,620     47,777,214
  Payments to Individual           134,211       1,155,387
    Retirement Arrangements
  Payments to self-employed        430,753      14,588,921

    retirement (Keogh) plans
  Moving expenses adjustment        57,644         368,980
Adjusted gross income             5,276,545   3,033,166,995
Investment interest expense        693,196      11,667,592
  deduction
Total tax preferences             1,503,098     48,193,585
  excluded from adjusted
  gross income [2]
Total alternative minimum tax       27,431       2,293,954
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss              670,479         578,705
  (alternative minimum
  tax adjustment)
Expanded income                   5,276,545   3,067,773,784
Exemption amount                  5,273,088     57,831,474
Itemized deductions:
  Total per adjusted gross        4,984,179    402,768,731
    income concept
  Total per expanded              4,983,450    381,649,369
    income concept
  Charitable contributions        4,624,058     96,670,639
    deduction
  Interest paid deduction:
    Total per adjusted gross      4,035,650      75,038,217
      income concept
    Total per expanded            3,830,257      63,370,625
      income concept
    Total home mortgage           3,821,225     62,941,570
      interest
  Medical and dental               155,530       3,532,985
    expense deduction
  Net casualty or theft             11,933       1,151,651
    loss deduction
  Taxes paid deduction            4,980,714    203,264,399
  Net limited miscellaneous        740,733      16,849,737
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous        234,316       6,274,168
    deductions
Excess of exemptions and             3,584       1,021,263
  deductions over adjusted
  gross income
Taxable income                    5,272,961   2,570,160,712
Tax at regular rates              5,270,458    643,466,578
Alternative minimum tax           3,431,729     30,722,965
  (Form 6251)
Income tax before credits         5,276,545    674,283,273
Tax credits, total                2,532,571     18,809,232
    Child care credit              453,929         245,800
    Minimum tax credit             100,130         472,582
    Foreign tax credit            1,876,947     15,260,354
    General business credit        191,609       2,041,367
    Refundable credits used        172,218         377,311
      to offset income tax
      before credits
U.S. total income tax             5,276,545    655,474,069
Taxable income which
    would yield:
  Income tax before credits       5,276,545   2,324,737,157
  Income tax after credits        5,276,545   2,267,975,425
  U.S. total income tax           5,276,545   2,267,975,624
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income           5,276,545   3,033,166,995
    plus:  Total tax              1,503,098     48,193,585
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security         947,252       4,091,968
             benefits
             (nontaxable)
           Foreign-earned           67,762       6,053,624
             income exclusion
    minus: Investment interest     693,196      11,667,592
             expense deduction
           Non-limited             234,316       6,274,168
             miscellaneous
             deductions
           Unreimbursed            899,146       5,785,726
             employee business
             expenses
Equals: Expanded income           5,276,545   3,067,773,784

Income concept, item               Returns with income of
                                      $200,000 or more

                                    Returns without U.S.
                                          income tax

                                  Number of     Amount
                                   returns

Adjusted Gross                       (5)         (6)
Income Concept

Salaries and wages                  14,316    5,544,671
Business or profession:
  Net income                         2,943      462,205
  Net loss                           1,336      192,138
Farm:
  Net income                           174       17,622
  Net loss                             425       41,903
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                         3,329    1,289,752
  Net loss                           3,575    1,340,776
Sales of capital assets:
  Net gain                           6,639    2,561,670
  Net loss                           6,648       17,679
Sales of property other
    than capital assets:
  Net gain                           1,256       89,749
  Net loss                           1,739      128,421
Taxable interest received           16,003      829,351
Tax-exempt interest                  4,931      435,824
Dividends                           13,212    1,633,076
  Qualified dividends               11,791    1,251,633
Pensions and annuities in            3,218      155,560
  adjusted gross income
Rent:
  Net income                         2,539      135,355
  Net loss, total (deductible        3,426      118,519
      and nondeductible)
    Nondeductible rental loss        2,875       69,710
Royalty:
  Net income                         2,010       88,958
  Net loss                             103        2,286
Estate or trust:
  Net income                           618       68,918
  Net loss                             191       31,750
State income tax refunds             2,591       45,196
Alimony received                        35        6,343
Social Security benefits in          3,943       90,727
  adjusted gross income
Social Security benefits             4,017       17,186
  (nontaxable)
Unemployment compensation              193        1,977
Other income                         3,529      252,256
Other loss                           1,652       69,890
Foreign-earned income                5,074      504,561
  exclusion
Total income                        20,304    11,591,254
Statutory adjustments, total         5,132       98,844
  Payments to Individual               370        2,944
    Retirement Arrangements
  Payments to self-employed            325       12,164
    retirement (Keogh) plans
  Moving expenses adjustment           171        1,438
Adjusted gross income               20,304    11,492,410
Investment interest expense          4,256      663,033
  deduction
Total tax preferences excluded       4,996      416,633
  from adjusted gross
  income [2]
Total alternative minimum tax          159        4,183
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss                2,479      -42,252
  (alternative minimum tax
  adjustment)
Expanded income                     20,153    10,118,447
Exemption amount                    20,253      193,516
Itemized deductions:
  Total per adjusted gross          13,931    4,809,363
    income concept
  Charitable contributions          10,595      655,647
    deduction
  Interest paid deduction:
    Total per adjusted gross        10,170      874,043
      income concept
    Total home mortgage              8,562      210,095
      interest
  Medical and dental                 2,291      338,727
    expense deduction
  Net casualty or theft                949      466,368
    loss deduction
  Taxes paid deduction              12,719      548,242
  Net limited miscellaneous          4,483      288,990
    deductions per adjusted
    gross income concept
  Non-limited                        3,231    1,637,800
    miscellaneous deductions
Excess of exemptions and             4,503    1,194,274
  deductions over adjusted
  gross income
Taxable income                      15,782    7,623,045
Tax at regular rates                13,798    2,046,350
Alternative minimum tax                797       11,720
  (Form 6251)
Income tax before credits           13,944    2,058,284
Tax credits, total                  13,944    2,058,284
  Child care credit                    223           82
  Minimum tax credit                   353       10,393
  Foreign tax credit                13,166    2,004,363
  General business credit              734       19,113
  Refundable credits used to           321       17,085
    offset income tax
    before credits
U.S. total income tax                    0            0
Taxable income which
    would yield:
  Income tax before credits         13,944    6,840,369
  Income tax after credits               0            0
  U.S. total income tax                  0            0
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income             20,304    11,492,410
    plus:  Total tax                 4,996      416,633
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security           4,017       17,186
             benefits
             (nontaxable)
           Foreign-earned            5,074      504,561
             income exclusion
    minus: Investment interest       4,256      663,033
             expense deduction
           Non-limited               3,231    1,637,800
             miscellaneous
             deductions
           Unreimbursed              1,288       11,510
             employee business
             expenses
  Equals: Expanded income           20,153    10,118,447
Expanded Income Concept             20,845    6,928,741
  Salaries and wages
Business or profession:
  Net income                         3,730      514,320
  Net loss                           1,798      215,777
Farm:
  Net income                           196       17,561
  Net loss                             523       55,100
Partnership and S Corporation
    net income after Section
    179 property
    deduction: [1]
  Net income                         4,439    1,256,297
  Net loss                           5,667    1,434,647
Sales of capital assets:
  Net gain                          10,106    2,417,171
  Net loss                          12,436       33,884
Sales of property other than
    capital assets:
  Net gain                           1,892       77,477
  Net loss                           2,557      134,888
Taxable interest received           26,256      805,275
Tax-exempt interest                 13,200    2,661,644
Dividends                           22,966    2,043,259
  Qualified dividends               20,547    1,553,887
Pensions and annuities in            5,610      210,551
  adjusted gross income
Rent:
  Net income                         3,415      144,266
  Net loss, total (deductible        5,115      140,396
      and nondeductible)
    Nondeductible rental loss        3,707       78,989
Royalty:
  Net income                         3,333       99,035
  Net loss                             175        1,732
Estate or trust:
  Net income                         1,107       76,873
  Net loss                             289       32,952
State income tax refunds             3,793       49,642
Alimony received                        42        6,313
Social Security benefits in          8,491      191,325
  adjusted gross income
Social Security benefits             8,599       35,658
  (nontaxable)
Unemployment compensation              213        2,283
Other income                         5,031      249,177
Other loss                           3,086       94,316
Foreign-earned income               11,204    1,231,796
  exclusion
Total income                        32,326    11,533,461
Statutory adjustments, total         6,920      119,284
  Payments to Individual               610        4,742
    Retirement Arrangements
  Payments to self-employed            412       14,596
    retirement (Keogh) plans
  Moving expenses adjustment           255        2,037
Adjusted gross income               32,326    11,414,176
Investment interest expense          5,379      258,001
  deduction
Total tax preferences               13,284    2,661,531
  excluded from adjusted
  gross income [2]
Total alternative minimum tax          273       18,920
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss                3,822      -41,265
  (alternative minimum
  tax adjustment)
Expanded income                     32,326    14,972,184
Exemption amount                    32,256      300,621
Itemized deductions:
  Total per adjusted gross          20,984    3,533,051
    income concept
  Total per expanded                20,921    3,174,516
    income concept
  Charitable contributions          16,885      760,420
    deduction
  Interest paid deduction:
    Total per adjusted gross         13,331      501,165
      income concept
    Total per expanded               10,738      243,164
      income concept
    Total home mortgage             10,682      242,072
      interest
  Medical and dental                 7,655      581,701
    expense deduction
  Net casualty or theft              1,017      478,699
    loss deduction
  Taxes paid deduction              19,465      711,631
  Net limited miscellaneous          9,928      408,535
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous          1,935       91,278
    deductions
Excess of exemptions and             7,438      885,785
  deductions over adjusted
  gross income
Taxable income                      24,882    8,355,205
Tax at regular rates                19,988    2,225,535
Alternative minimum tax                923       11,932
  (Form 6251)
Income tax before credits           20,195    2,237,608
Tax credits, total                  20,195    2,237,608
    Child care credit                  378          142
    Minimum tax credit                 493       10,223
    Foreign tax credit              19,233    2,182,629
    General business credit            788       18,662
    Refundable credits used            394       17,679
      to offset income tax
      before credits
U.S. total income tax                    0            0
Taxable income which
    would yield:
  Income tax before credits         20,195    7,670,730
  Income tax after credits               0            0
  U.S. total income tax                  0            0
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income             32,326    11,414,176
    plus:  Total tax                13,284    2,661,531
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security           8,599       35,658
             benefits
             (nontaxable)
           Foreign-earned           11,204    1,231,796
             income exclusion
    minus: Investment interest       5,379      258,001
             expense deduction
           Non-limited               1,935       91,278
             miscellaneous
             deductions
           Unreimbursed              1,781       12,268
             employee business
             expenses
Equals: Expanded income             32,326    14,972,184

[1] Section 179 of the Internal Revenue Code permits certain
taxpayers to elect to deduct all or part of the cost of certain
qualifying property in the year they place it in service, instead
of taking depreciation deductions over a specified recovery
period.

[2] Includes tax-exempt interest and tax preference items subject
to alternative minimum tax.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of U.S. income tax. Starting in
2009, the portion of refundable credits that offset income taxes
before credits was factored in to determine tax liability. As a
result, data may not be comparable to data in Tax Years 2007 and
2008 published tables. Prior to 2007, the portion of refundable
credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.

Table 6. Returns With and Without Worldwide Income Tax and With
Income of $200,000 or More Under Alternative Concepts: Income,
Deductions, Credits, and Tax, Tax Year 2012

[All figures are estimates based on samples-money amounts are in
thousands of dollars]

Income concept, item                 Returns with income of
                                        $200,000 or more

                                               Total

                                   Number of      Amount
                                    returns

Adjusted Gross Income Concept         (1)           (2)

Salaries and wages                 4,630,603   1,453,486,928
Business or profession:
  Net income                        950,043     107,337,147
  Net loss                          332,749       7,745,131
Farm:
  Net income                         50,676       6,772,074
  Net loss                          103,783       4,802,220
Partnership and S Corporation
    net income after Section
    179 property deduction: [1]
  Net income                       1,567,853    537,482,087
  Net loss                          463,240      43,006,669
Sales of capital assets:
  Net gain                         1,996,723    564,404,027
  Net loss                         1,497,210      3,740,815
Sales of property other than
    capital assets:
  Net gain                          257,884      13,439,055
  Net loss                          287,792       6,036,894
Taxable interest received          4,521,070     60,777,094
Tax-exempt interest                1,408,440     40,430,886
Dividends                          3,650,440    169,775,859
  Qualified dividends              3,484,552    142,188,028
Pensions and annuities in          1,185,671     63,797,788
  adjusted gross income
Rent:
  Net income                        616,793      28,981,945
  Net loss, total (deductible       729,550      12,650,165
      and nondeductible)
    Nondeductible rental loss       585,627       8,779,928
Royalty:
  Net income                        371,590      16,266,035
  Net loss                           16,086         120,568
Estate or trust:
  Net income                        139,669      21,286,446
  Net loss                           16,476       1,548,708
State income tax refunds           1,768,535      8,980,871
Alimony received                      9,575       1,288,375
Social Security benefits            876,022      21,245,963
  in adjusted gross income
Social Security benefits            876,446       3,758,102
  (nontaxable)
Unemployment compensation           160,831       1,207,791
Other income                        699,973      20,730,928
Other loss                           55,612       1,829,278
Foreign-earned income                48,597       4,191,434
  exclusion
Total income                       5,251,992   3,090,698,001
Statutory adjustments, total       2,133,742     47,604,970
  Payments to Individual            132,783       1,146,009
    Retirement Arrangements
  Payments to self-employed         426,365      14,455,984
    retirement (Keogh) plans
  Moving expenses adjustment         56,864         364,033
Adjusted gross income              5,251,992   3,043,093,030
Investment interest expense         690,898      12,665,451
  deduction
Total tax preferences excluded     1,421,685     42,558,829
  from adjusted gross
  income [2]
Total alternative minimum tax        26,438       2,226,662
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss               658,259         514,555
  (alternative minimum tax
  adjustment)
Expanded income                    5,251,841   3,061,872,513
Exemption amount                   5,248,778     57,943,162
Itemized deductions:
  Total per adjusted gross         4,980,948    411,964,352
    income concept
  Charitable contributions         4,617,091     96,829,656
    deduction
  Interest paid deduction:
    Total per adjusted gross       4,069,707     76,845,119
      income concept
    Total home mortgage            3,864,405     63,746,802
      interest
  Medical and dental                136,019       3,490,596
    expense deduction
  Net casualty or theft              13,480       1,648,378
    loss deduction
  Taxes paid deduction             4,976,744    203,437,148
  Net limited miscellaneous         760,610      17,438,087
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous         262,647      12,288,896
    deductions
Excess of exemptions and              7,539       2,085,473
  deductions over adjusted
  gross income
Taxable income                     5,244,431   2,572,104,282
Tax at regular rates               5,240,739    644,435,849
Alternative minimum tax            3,447,020     30,803,938
  (Form 6251)
Income tax before credits          5,245,632    675,333,707
Tax credits, total                 2,491,191     20,605,017
  Child care credit                 460,168         248,701
  Minimum tax credit                 97,377         475,910
  Foreign tax credit                      0               0
  General business credit           191,008       2,060,833
  Refundable credits used to        168,008         391,615
    offset income tax before
    credits
Worldwide total income tax         5,244,584    672,626,681
Foreign taxes paid [3]             1,827,444     17,899,767
  Foreign taxes paid on              31,969         889,519
    excluded foreign-earned
    income (Form 1116)
Taxable income which would
    yield:
  Income tax before credits        5,245,632   2,326,772,918
  Income tax after credits [3]     5,244,857   2,318,488,613
  Worldwide total income           5,244,857   2,318,488,695
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income            5,251,992   3,043,093,030
    plus:  Total tax               1,421,685     42,558,829
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security          876,446       3,758,102
             benefits
             (nontaxable)
           Foreign-earned            48,597       4,191,434
             income exclusion
    minus:  Investment              690,898      12,665,451
              interest expense
              deduction
            Non-limited             262,647      12,288,896
              miscellaneous
              deductions
            Unreimbursed            954,347       6,774,535
              employee business
              expenses
  Equals: Expanded income          5,251,841   3,061,872,513
Expanded Income Concept
Salaries and wages                 4,628,162   1,450,047,026
Business or profession:
  Net income                        957,084     107,683,743
  Net loss                          331,063       7,806,584
Farm:
  Net income                         50,794       6,799,173
  Net loss                          103,270       4,759,072
Partnership and S Corporation
    net income after Section
    179 property deduction:
    [1]
  Net income                       1,582,764    538,080,437
  Net loss                          475,085      43,245,904
Sales of capital assets:
  Net gain                         2,033,747    565,548,044
  Net loss                         1,540,394      3,872,118
Sales of property other than
    capital assets:
  Net gain                          261,588      13,419,852
  Net loss                          295,254       6,059,824
Taxable interest received          4,593,858     61,539,716
Tax-exempt interest                1,503,102     48,635,908
Dividends                          3,731,094    173,108,753
  Qualified dividends              3,561,825    144,745,236
Pensions and annuities in          1,237,415     66,662,202
  adjusted gross income
Rent:
  Net income                        629,397      29,334,180
  Net loss, total (deductible       733,110      12,689,345
      and nondeductible)
    Nondeductible rental loss       586,116       8,788,012
Royalty:
  Net income                        383,952      16,362,270
  Net loss                           18,186         121,815
Estate or trust:
  Net income                        145,170      21,429,059
  Net loss                           16,544       1,563,404
State income tax refunds           1,765,061      8,990,294
Alimony received                      9,584       1,288,521
Social Security benefits in         955,391      23,335,252
  adjusted gross income
Social Security benefits            955,851       4,127,626
  (nontaxable)
Unemployment compensation           156,932       1,196,334
Other income                        711,744      20,945,598
Other loss                           67,828       2,073,234
Foreign-earned income                78,965       7,285,420
  exclusion
Total income                       5,308,871   3,092,477,670
Statutory adjustments, total       2,144,540     47,896,498
  Payments to Individual            134,821       1,160,129
    Retirement Arrangements
  Payments to self-employed         431,165      14,603,516
    retirement (Keogh) plans
  Moving expenses adjustment         57,899         371,017
Adjusted gross income              5,308,871   3,044,581,172
Investment interest                 698,575      11,925,593
  expense deduction
Total tax preferences excluded     1,516,382     50,855,115
  from adjusted gross
  income [2]
Total alternative minimum            27,703       2,312,873
  tax preference items
  (excluding tax-exempt
  interest from private
  activity bonds)
Passive activity loss               674,302         537,440
  (alternative minimum
  tax adjustment)
Expanded income                    5,308,871   3,082,745,968
Exemption amount                   5,305,344     58,132,095
Itemized deductions:
  Total per adjusted gross         5,005,163    406,301,781
    income concept
  Total per expanded               5,004,371    384,823,885
    income concept
  Charitable contributions         4,640,944     97,431,059
    deduction
  Interest paid deduction:
    Total per adjusted gross       4,048,981     75,539,382
      income concept
    Total per expanded             3,840,995     63,613,789
      income concept
    Total home mortgage            3,831,907     63,183,642
      interest
  Medical and dental                163,185       4,114,686
    expense deduction
  Net casualty or theft              12,950       1,630,350
    loss deduction
  Taxes paid deduction             5,000,178    203,976,030
  Net limited miscellaneous         750,661      17,258,272
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous         236,251       6,365,446
    deductions
Excess of exemptions and             11,023       1,907,048
  deductions over adjusted
  gross income
Taxable income                     5,297,843   2,578,515,917
Tax at regular rates               5,290,447    645,692,113
Alternative minimum tax            3,432,652     30,734,896
  (Form 6251)
Income tax before credits          5,296,740    676,520,881
Tax credits, total                 2,552,766     21,046,840
  Child care credit                 454,307         245,942
  Minimum tax credit                100,622         482,805
  Foreign tax credit                      0               0
  General business credit           192,397       2,060,029
  Refundable tax credits used       172,612         394,990
    to offset income tax
    before credits
Worldwide total income tax         5,295,421    674,148,910
Foreign taxes paid [3]             1,896,709     18,676,705
  Foreign taxes paid on              44,181       1,233,722
    excluded foreign-earned
    income (Form 1116)
Taxable income which
    would yield:
  Income tax before credits        5,296,740   2,332,407,886
  Income tax after credits [3]     5,295,825   2,325,185,817
  Worldwide total income           5,295,825   2,325,185,899
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income            5,308,871   3,044,581,172
    plus:  Total tax               1,516,382     50,855,115
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security          955,851       4,127,626
             benefits
             (nontaxable)
           Foreign-earned            78,965       7,285,420
             income exclusion
    minus: Investment interest      698,575      11,925,593
             expense deduction
           Non-limited              236,251       6,365,446
             miscellaneous
             deductions
           Unreimbursed             900,927       5,797,994
             employee business
             expenses
  Equals: Expanded income          5,308,871   3,082,745,968

Income concept, item                 Returns with income of
                                        $200,000 or more

                                     Returns with worldwide
                                            income tax

                                   Number of      Amount
                                    returns

Adjusted Gross Income Concept         (3)           (4)

Salaries and wages                 4,627,270   1,452,960,249
Business or profession:
  Net income                        948,689     107,247,796
  Net loss                          331,978       7,586,599
Farm:
  Net income                         50,550       6,756,715
  Net loss                          103,535       4,768,954
Partnership and S Corporation
    net income after Section
    179 property deduction: [1]
  Net income                       1,565,888    537,105,171
  Net loss                          460,840      42,001,015
Sales of capital assets:
  Net gain                         1,993,203    563,113,757
  Net loss                         1,494,700      3,733,705
Sales of property other than
    capital assets:
  Net gain                          256,952      13,367,498
  Net loss                          286,653       5,940,661
Taxable interest received          4,514,704     60,190,157
Tax-exempt interest                1,405,003     40,049,307
Dividends                          3,645,027    169,152,187
  Qualified dividends              3,479,330    141,738,049
Pensions and annuities in          1,183,566     63,708,054
  adjusted gross income
Rent:
  Net income                        615,555      28,916,845
  Net loss, total (deductible       728,366      12,593,395
      and nondeductible)
    Nondeductible rental loss       584,662       8,750,706
Royalty:
  Net income                        370,178      16,226,555
  Net loss                           16,025         119,433
Estate or trust:
  Net income                        139,215      21,251,283
  Net loss                           16,317       1,521,713
State income tax refunds           1,766,987      8,951,728
Alimony received                      9,561       1,286,814
Social Security benefits            872,722      21,168,621
  in adjusted gross income
Social Security benefits            873,146       3,744,453
  (nontaxable)
Unemployment compensation           160,703       1,206,602
Other income                        698,192      20,664,485
Other loss                           55,506       1,813,588
Foreign-earned income                48,587       4,190,693
  exclusion
Total income                       5,244,584   3,087,284,220
Statutory adjustments, total       2,130,787     47,556,487
  Payments to Individual            132,664       1,145,011
    Retirement Arrangements
  Payments to self-employed         426,199      14,450,497
    retirement (Keogh) plans
  Moving expenses adjustment         56,847         363,917
Adjusted gross income              5,244,584   3,039,727,734
Investment interest expense         688,045      12,053,801
  deduction
Total tax preferences excluded     1,418,201     42,181,078
  from adjusted gross
  income [2]
Total alternative minimum tax        26,320       2,222,984
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss               656,679         566,091
  (alternative minimum tax
  adjustment)
Expanded income                    5,244,584   3,060,352,682
Exemption amount                   5,241,386     57,876,394
Itemized deductions:
  Total per adjusted gross         4,973,576    407,747,215
    income concept
  Charitable contributions         4,611,022     96,388,489
    deduction
  Interest paid deduction:
    Total per adjusted gross       4,064,644     76,114,506
      income concept
    Total home mortgage            3,860,320     63,628,401
      interest
  Medical and dental                133,984       3,161,785
    expense deduction
  Net casualty or theft              12,547       1,185,116
    loss deduction
  Taxes paid deduction             4,969,487    203,043,809
  Net limited miscellaneous         757,333      17,199,088
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous         259,882      10,667,839
    deductions
Excess of exemptions and              3,039         891,482
  deductions over adjusted
  gross income
Taxable income                     5,241,542   2,571,830,217
Tax at regular rates               5,239,834    644,402,159
Alternative minimum tax            3,446,505     30,795,189
  (Form 6251)
Income tax before credits          5,244,582    675,291,262
Tax credits, total                 2,490,141     20,562,572
  Child care credit                 460,143         248,686
  Minimum tax credit                 97,148         470,712
  Foreign tax credit                      0               0
  General business credit           190,469       2,044,734
  Refundable credits used to        167,703         374,912
    offset income tax before
    credits
Worldwide total income tax         5,244,584    672,626,681
Foreign taxes paid [3]             1,827,171     17,899,002
  Foreign taxes paid on              31,969         889,519
    excluded foreign-earned
    income (Form 1116)
Taxable income which would
    yield:
  Income tax before credits        5,244,582   2,326,601,303
  Income tax after credits [3]     5,244,584   2,318,485,308
  Worldwide total income           5,244,584   2,318,485,390
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income            5,244,584   3,039,727,734
    plus:  Total tax               1,418,201     42,181,078
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security          873,146       3,744,453
             benefits
             (nontaxable)
           Foreign-earned            48,587       4,190,693
             income exclusion
    minus:  Investment              688,045      12,053,801
              interest expense
              deduction
            Non-limited             259,882      10,667,839
              miscellaneous
              deductions
            Unreimbursed            953,705       6,769,636
              employee business
              expenses
  Equals: Expanded income          5,244,584   3,060,352,682
Expanded Income Concept
Salaries and wages                 4,623,843   1,449,463,406
Business or profession:
  Net income                        955,513     107,598,132
  Net loss                          329,987       7,626,637
Farm:
  Net income                         50,653       6,783,912
  Net loss                          102,958       4,713,730
Partnership and S Corporation
    net income after Section
    179 property deduction:
    [1]
  Net income                       1,579,916    537,748,589
  Net loss                          470,874      42,156,524
Sales of capital assets:
  Net gain                         2,027,804    564,421,220
  Net loss                         1,533,695      3,852,783
Sales of property other than
    capital assets:
  Net gain                          260,068      13,360,529
  Net loss                          293,424       5,961,116
Taxable interest received          4,581,046     60,988,643
Tax-exempt interest                1,491,994     46,080,435
Dividends                          3,718,990    172,118,075
  Qualified dividends              3,550,350    144,021,892
Pensions and annuities in          1,233,299     66,529,952
  adjusted gross income
Rent:
  Net income                        627,729      29,266,418
  Net loss, total (deductible       731,301      12,626,309
      and nondeductible)
    Nondeductible rental loss       584,961       8,758,791
Royalty:
  Net income                        381,376      16,313,660
  Net loss                           18,063         121,268
Estate or trust:
  Net income                        144,273      21,387,212
  Net loss                           16,299       1,535,588
State income tax refunds           1,762,630      8,957,615
Alimony received                      9,565       1,287,103
Social Security benefits in         947,804      23,162,829
  adjusted gross income
Social Security benefits            948,261       4,097,110
  (nontaxable)
Unemployment compensation           156,816       1,195,235
Other income                        708,912      20,896,672
Other loss                           67,513       2,061,023
Foreign-earned income                78,512       7,205,018
  exclusion
Total income                       5,295,421   3,089,921,891
Statutory adjustments, total       2,140,575     47,839,432
  Payments to Individual            134,622       1,158,517
    Retirement Arrangements
  Payments to self-employed         430,950      14,596,591
    retirement (Keogh) plans
  Moving expenses adjustment         57,884         370,920
Adjusted gross income              5,295,421   3,042,082,459
Investment interest                 694,818      11,709,803
  expense deduction
Total tax preferences excluded     1,505,209     48,286,347
  from adjusted gross
  income [2]
Total alternative minimum            27,483       2,294,516
  tax preference items
  (excluding tax-exempt
  interest from private
  activity bonds)
Passive activity loss               671,627         588,087
  (alternative minimum
  tax adjustment)
Expanded income                    5,295,421   3,077,877,795
Exemption amount                   5,291,929     58,018,460
Itemized deductions:
  Total per adjusted gross         4,992,656    403,407,386
    income concept
  Total per expanded               4,991,864    382,229,580
    income concept
  Charitable contributions         4,629,733     96,897,257
    deduction
  Interest paid deduction:
    Total per adjusted gross       4,042,205     75,195,304
      income concept
    Total per expanded             3,836,099     63,485,501
      income concept
    Total home mortgage            3,827,046     63,055,965
      interest
  Medical and dental                156,115       3,547,891
    expense deduction
  Net casualty or theft              11,952       1,154,934
    loss deduction
  Taxes paid deduction             4,987,752    203,434,491
  Net limited miscellaneous         742,528      16,906,409
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous         234,805       6,284,516
    deductions
Excess of exemptions and              3,634       1,021,983
  deductions over adjusted
  gross income
Taxable income                     5,291,787   2,578,151,410
Tax at regular rates               5,289,287    645,658,428
Alternative minimum tax            3,432,063     30,726,064
  (Form 6251)
Income tax before credits          5,295,374    676,478,363
Tax credits, total                 2,551,400     21,004,322
  Child care credit                 454,275         245,923
  Minimum tax credit                100,345         477,810
  Foreign tax credit                      0               0
  General business credit           191,874       2,044,817
  Refundable tax credits used       172,235         377,694
    to offset income tax
    before credits
Worldwide total income tax         5,295,421    674,148,910
Foreign taxes paid [3]             1,896,306     18,675,912
  Foreign taxes paid on              44,181       1,233,722
    excluded foreign-earned
    income (Form 1116)
Taxable income which
    would yield:
  Income tax before credits        5,295,374   2,332,232,632
  Income tax after credits [3]     5,295,421   2,325,182,228
  Worldwide total income           5,295,421   2,325,182,310
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income            5,295,421   3,042,082,459
    plus:  Total tax               1,505,209     48,286,347
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security          948,261       4,097,110
             benefits
             (nontaxable)
           Foreign-earned            78,512       7,205,018
             income exclusion
    minus: Investment interest      694,818      11,709,803
             expense deduction
           Non-limited              234,805       6,284,516
             miscellaneous
             deductions
           Unreimbursed             900,055       5,793,918
             employee business
             expenses
  Equals: Expanded income          5,295,421   3,077,877,795

Income concept, item               Returns with income of
                                      $200,000 or more

                                       Returns without
                                    worldwide income tax

                                   Number of    Amount
                                    returns

Adjusted Gross Income Concept         (5)         (6)

Salaries and wages                    3,333     526,679
Business or profession:
  Net income                          1,354      89,351
  Net loss                              771     158,532
Farm:
  Net income                            126      15,359
  Net loss                              248      33,266
Partnership and S Corporation
    net income after Section
    179 property deduction: [1]
  Net income                          1,964     376,916
  Net loss                            2,400    1,005,654
Sales of capital assets:
  Net gain                            3,520    1,290,270
  Net loss                            2,510       7,110
Sales of property other than
    capital assets:
  Net gain                              932      71,557
  Net loss                            1,139      96,233
Taxable interest received             6,366     586,937
Tax-exempt interest                   3,438     381,579
Dividends                             5,413     623,672
  Qualified dividends                 5,222     449,978
Pensions and annuities in             2,105      89,734
  adjusted gross income
Rent:
  Net income                          1,238      65,099
  Net loss, total (deductible         1,184      56,769
      and nondeductible)
    Nondeductible rental loss           966      29,222
Royalty:
  Net income                          1,412      39,480
  Net loss                               61       1,135
Estate or trust:
  Net income                            454      35,163
  Net loss                              159      26,995
State income tax refunds              1,548      29,142
Alimony received                         14       1,561
Social Security benefits              3,300      77,342
  in adjusted gross income
Social Security benefits              3,300      13,648
  (nontaxable)
Unemployment compensation               128       1,188
Other income                          1,781      66,443
Other loss                              106      15,690
Foreign-earned income                    10         741
  exclusion
Total income                          7,408    3,413,780
Statutory adjustments, total          2,955      48,484
  Payments to Individual                119         998
    Retirement Arrangements
  Payments to self-employed             166       5,487
    retirement (Keogh) plans
  Moving expenses adjustment             17         116
Adjusted gross income                 7,408    3,365,296
Investment interest expense           2,853     611,650
  deduction
Total tax preferences excluded        3,485     377,751
  from adjusted gross
  income [2]
Total alternative minimum tax           118       3,678
  preference items (excluding
  tax-exempt interest from
  private activity bonds)
Passive activity loss                 1,580     -51,536
  (alternative minimum tax
  adjustment)
Expanded income                       7,257    1,519,830
Exemption amount                      7,393      66,767
Itemized deductions:
  Total per adjusted gross            7,372    4,217,137
    income concept
  Charitable contributions            6,069     441,166
    deduction
  Interest paid deduction:
    Total per adjusted gross          5,062     730,613
      income concept
    Total home mortgage               4,085     118,400
      interest
  Medical and dental                  2,034     328,812
    expense deduction
  Net casualty or theft                 933     463,262
    loss deduction
  Taxes paid deduction                7,257     393,339
  Net limited miscellaneous           3,277     238,999
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous           2,765    1,621,057
    deductions
Excess of exemptions and              4,500    1,193,990
  deductions over adjusted
  gross income
Taxable income                        2,889     274,064
Tax at regular rates                    905      33,690
Alternative minimum tax                 516       8,748
  (Form 6251)
Income tax before credits             1,050      42,445
Tax credits, total                    1,050      42,445
  Child care credit                      25          15
  Minimum tax credit                    228       5,198
  Foreign tax credit                      0           0
  General business credit               539      16,099
  Refundable credits used to            305      16,703
    offset income tax before
    credits
Worldwide total income tax                0           0
Foreign taxes paid [3]                  272         765
  Foreign taxes paid on                   0           0
    excluded foreign-earned
    income (Form 1116)
Taxable income which would
    yield:
  Income tax before credits           1,050     171,615
  Income tax after credits [3]          272       3,305
  Worldwide total income                272       3,305
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income               7,408    3,365,296
    plus:  Total tax                  3,485     377,751
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security            3,300      13,648
             benefits
             (nontaxable)
           Foreign-earned                10         741
             income exclusion
    minus:  Investment                2,853     611,650
              interest expense
              deduction
            Non-limited               2,765    1,621,057
              miscellaneous
              deductions
            Unreimbursed                642       4,899
              employee business
              expenses
  Equals: Expanded income             7,257    1,519,830
Expanded Income Concept
Salaries and wages                    4,319     583,620
Business or profession:
  Net income                          1,571      85,611
  Net loss                            1,076     179,946
Farm:
  Net income                            141      15,262
  Net loss                              312      45,342
Partnership and S Corporation
    net income after Section
    179 property deduction:
    [1]
  Net income                          2,848     331,848
  Net loss                            4,210    1,089,380
Sales of capital assets:
  Net gain                            5,944    1,126,824
  Net loss                            6,698      19,335
Sales of property other than
    capital assets:
  Net gain                            1,520      59,324
  Net loss                            1,830      98,708
Taxable interest received            12,812     551,073
Tax-exempt interest                  11,108    2,555,473
Dividends                            12,104     990,678
  Qualified dividends                11,475     723,344
Pensions and annuities in             4,116     132,250
  adjusted gross income
Rent:
  Net income                          1,668      67,761
  Net loss, total (deductible         1,810      63,036
      and nondeductible)
    Nondeductible rental loss         1,155      29,222
Royalty:
  Net income                          2,577      48,610
  Net loss                              123         547
Estate or trust:
  Net income                            896      41,847
  Net loss                              245      27,816
State income tax refunds              2,431      32,679
Alimony received                         19       1,418
Social Security benefits in           7,587     172,423
  adjusted gross income
Social Security benefits              7,590      30,516
  (nontaxable)
Unemployment compensation               116       1,099
Other income                          2,831      48,925
Other loss                              315      12,211
Foreign-earned income                   453      80,402
  exclusion
Total income                         13,450    2,555,779
Statutory adjustments, total          3,965      57,066
  Payments to Individual                199       1,612
    Retirement Arrangements
  Payments to self-employed             215       6,926
    retirement (Keogh) plans
  Moving expenses adjustment             15          97
Adjusted gross income                13,450    2,498,713
Investment interest                   3,758     215,790
  expense deduction
Total tax preferences excluded       11,173    2,568,769
  from adjusted gross
  income [2]
Total alternative minimum               221      18,357
  tax preference items
  (excluding tax-exempt
  interest from private
  activity bonds)
Passive activity loss                 2,675     -50,647
  (alternative minimum
  tax adjustment)
Expanded income                      13,450    4,868,173
Exemption amount                     13,415     113,635
Itemized deductions:
  Total per adjusted gross           12,507    2,894,396
    income concept
  Total per expanded                 12,507    2,594,306
    income concept
  Charitable contributions           11,211     533,802
    deduction
  Interest paid deduction:
    Total per adjusted gross          6,776     344,078
      income concept
    Total per expanded                4,896     128,288
      income concept
    Total home mortgage               4,861     127,677
      interest
  Medical and dental                  7,070     566,795
    expense deduction
  Net casualty or theft                 998     475,416
    loss deduction
  Taxes paid deduction               12,426     541,539
  Net limited miscellaneous           8,132     351,863
    deductions per adjusted
    gross income concept
  Non-limited miscellaneous           1,446      80,930
    deductions
Excess of exemptions and              7,388     885,065
  deductions over adjusted
  gross income
Taxable income                        6,056     364,507
Tax at regular rates                  1,159      33,685
Alternative minimum tax                 589       8,833
  (Form 6251)
Income tax before credits             1,366      42,518
Tax credits, total                    1,366      42,518
  Child care credit                      32          19
  Minimum tax credit                    278       4,996
  Foreign tax credit                      0           0
  General business credit               523      15,213
  Refundable tax credits used           378      17,296
    to offset income tax
    before credits
Worldwide total income tax                0           0
Foreign taxes paid [3]                  403         793
  Foreign taxes paid on                   0           0
    excluded foreign-earned
    income (Form 1116)
Taxable income which
    would yield:
  Income tax before credits           1,366     175,254
  Income tax after credits [3]          403       3,589
  Worldwide total income                403       3,589
    tax [3]
Reconciliation of adjusted
    gross income and
    expanded income:
  Adjusted gross income              13,450    2,498,713
    plus:  Total tax                 11,173    2,568,769
             preferences
             excluded from
             adjusted gross
             income [2]
           Social Security            7,590      30,516
             benefits
             (nontaxable)
           Foreign-earned               453      80,402
             income exclusion
    minus: Investment interest        3,758     215,790
             expense deduction
           Non-limited                1,446      80,930
             miscellaneous
             deductions
           Unreimbursed                 872       4,075
             employee business
             expenses
  Equals: Expanded income            13,450    4,868,173

[1] Section 179 of the Internal Revenue Code permits certain
taxpayers to elect to deduct all or part of the cost of certain
qualifying property in the year they place it in service, instead
of taking depreciation deductions over a specified recovery
period.

[2] Includes tax-exempt interest and tax preference items subject
to alternative minimum tax.

[3] For returns without worldwide income tax, refundable credits
offset the amount of foreign taxes paid.

NOTES: Detail may not add to totals because of rounding. This
table is based on U.S. Individual Income Tax Returns. See
Appendix A: Income Concepts of this article for a discussion of
adjusted gross income and expanded income. See also Appendix B:
Tax Concepts for a discussion of worldwide income tax. Starting
in 2009, the portion of refundable credits that offset income
taxes before credits was factored in to determine tax liability.
As a result, data may not be comparable to data in Tax Years 2007
and 2008 published tables. Prior to 2007, the portion of
refundable credits used to offset income taxes had no effect.

Source: IRS, Statistics of Income Division, High-Income Tax
Returns, May 2015.
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Author:Bryan, Justin
Publication:Statistics of Income. SOI Bulletin
Date:Jun 22, 2015
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