What is Gross Income: Internal Revenue Code Definition

Glenn Tyndall, CPA

Glenn Tyndall, CPA

glenn@tyndallcpa.com

Tel: (904)568-2839

The Internal Revenue Code states that "gross income means all income from whatever source derived,” except for those items specifically excluded by the Internal Revenue Code Sec. Gross income is the starting point for determining federal and state income tax of individuals, corporations, and estates and trusts

What is Income?

15 most common types of “gross income” are from (IRC Sec. 61):

  1. Compensation for services
  2. Gross income from businesses
  3. Gains from dealing in property
  4. Interest
  5. Rents
  6. Royalties
  7. Dividends
  8. Alimony and separate contracts
  9. Annuities
  10. Income from life insurance and endowment contracts
  11. Pension
  12. Income from discharge of debt
  13. Partner’s share of partnership income
  14. Income “in respect of a decedent”
  15. Income from interest in estate or trust

Although the definition of income is comprehensive so that all income items seem to fall into the definition, there is a detailed list of income and exclusions included in the Internal Revenue Code.

Year of inclusion

A taxpayer must include income as part of taxable income in the year recognized under the taxpayer's method of accounting.

What is not considered income?

In addition to items specifically excluded from income, there are items that are not considered income.

The following are examples of items that are not considered income: