Question

What determines gross income in accordance with federal tax law? How does the timing of income affect the inclusion of income on the tax return? What is meant by constructive receipt? What are the various sources of income?

Answer 1

A.

gross income means all income from whatever source derived, including (but not limited to) the following items:(1)

Compensation for services, including fees, commissions, fringe benefits, and similar items;

(2)

Gross income derived from business;

(3)

Gains derived from dealings in property;

(4)

Interest;

(5)

Rents;

(6)

Royalties;

(7)

Dividends;

(8)

?[1] 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 partnershipgross income;

(14)

Income in respect of a decedent; and

(15)

Income from an interest in an estate or trust.

B. Accrual basis is used to include income in the tax return.

C. Constructive receipt is when cash has not been physically received, but the individual or business can still control or utilize the money.

D.

Salaries and Wages

Capital Gains Less Losses

Taxable Pensions and Annuities

Partnerships and S-Corporation Net Income

Business Net Income

Dividends

Taxable IRA Distributions

Taxable Social Security Benefits

Taxable Interest

Unemployment Compensation