LO.1
Explain the differences between the economic, accounting, and tax concepts of gross income.
Code § 61(a) of the Internal Revenue Code defines the term gross income as follows:
⦁ Except as otherwise provided in this subtitle, gross income means all income from whatever source derived.
This definition, taken from the Sixteenth Amendment to the Constitution, provides perhaps the broadest definition of gross income possible. It clearly requires that all income be included in a taxpayer’s gross income unless it is explicitly excluded elsewhere in the Code. However, neither the Sixteenth Amendment nor the Code provides a definition of income itself. Rather, Congress left it to the judicial and administrative branches to specifically determine the meaning of income. Some of the most important issues related to the meaning of income are discussed below.
⦁ What is gross income?
⦁ When is gross income recognized?
⦁ To whom is gross income taxable?
