Search:

What is the legal definition of "taxable income"?

by Sheryl Rowling, CPA 

All sources of income are taxable unless there is a specific exception in the law. Some of these exceptions include municipal bond interest, unemployment compensation, the receipt of gifts, and certain gains from the sale of a personal residence. The Internal Revenue Code section 61(a) defines gross income as "all income from whatever source derived, including (but not limited to) the following items [unless specifically excluded]:

  1. Compensation for services;
  2. Gross income derived from business;
  3. Gains derived from dealings in property;
  4. Interest;
  5. Rents;
  6. Royalties;
  7. Dividends;
  8. Alimony and separate maintenance payments;
  9. Annuities;
  10. Income from life insurance and endowment contracts;
  11. Pensions;
  12. Income from discharge of indebtedness;
  13. Distributive share of partnership gross income;
  14. Income in respect of a decedent; and
  15. Income from an interest in an estate or trust."

Sheryl Rowling is a San Diego CPA. You can reach her at (619) 294-4800.

Have a question for a CPA? Ask it here.