Gross proceeds

At the beginning we have to determine the taxpayer's gross proceeds. How does the Code define gross proceeds? Section 61 provides that gross income includes all income from whatever source derived." Although this circular definition, standing alone, would not help us much, case law and other specific Code provisions have embellished the statutory definition. Early this century, in Eisner v. Macomber, 252 U.S. 189, 207 (1920), income was narrowly defined as "gain derived from capital, from labor, or from both combined." However, in a later case, Commissioner v. Glenshaw Glass, 348 U.S. 426 (1955) income was defined much more broadly to include all "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." The Code also explicitly provides, in $61 and 8871-140, that certain items are to be included in or excluded from gross income. For example, $61 provides that gross income includes wages, interest, dividends, rents, and gains from dealings in property. In this chapter, we will consider whether various specific items are included or excluded for purposes of computing gross income. As we will see, the current law is not entirely coherent.

Regarding to Section 61

Gross income means all income from whatever source derived, unless excluded by law. Gross income includes income realized in any form, whether in money, property, or services, meals, accommodations, stock, or other property, as well as in cash. Section 61 lists the more common items of gross income for purpose of illustration. For purposes of further illustration, $1.61-14 mentions several miscellaneous items of gross income not listed specifically in section 61. Gross income, however, is not limited the items so enumerated.

General definition

According to Martin B. Dickinson gross income means all income from whatever source derived, including, but not limited to the following items:

• Compensation for services, including fees, commissions, fringe benefits, and similar items
• Gross income derived from business
• Gains derived from dealings in property
• Interest
• Rents
• Royalties
• Dividends
• Alimony and separate maintenance payments
• Annuities
• Income from life insurance and endowment contracts
• Pensions
• Income from discharge of indebtedness
• Distributive share of partnership gross income
• Income in respect of a decedent
• Income from an interest in an estate or trust

Author: Michał Augustyński

Footnotes

Gross proceeds — recommended articles

Grantor trust — Exempt supply — Depreciation vs. amortization — Absolute assignment — Modified gross lease — In-kind distribution — Rollover relief — Patronage Dividend — Residual payment

References

• Bankman, J., Griffith, T. D., Pratt, K., (2008), Federal Income Tax: Examples & Explanations , Aspen Publishers Online, New York, USA
• Burman, L. E., Gale, W. G., Gault, S., Kim, B., Nunns, J., & Rosenthal, S. (2016), Financial transaction taxes in theory and practice, National Tax Journal, Washington, DC, USA
• Dickinson, M. B., CCH, Chicago, USA, (2008), Federal Income Tax: Code and Regulations--Selected Sections as of June 1, 2008, CCH, Chicago, USA
• Griffith-Jones, S., & Persaud, A. (2012), Financial transaction taxes, Study prepared for-and presented to-the Committee on Economic and Monetary Affairs of the European Parliament.
• Kooli, M., & Suret, J. M. (2002), How cost-effective are Canadian IPO markets?, Montreal
• Seidl, C., Pogorelskiy, K., Traub, S., (2012), Tax Progression in OECD Countries: An Integrative Analysis of Tax Schedules and Income Distributions, Springer Science & Business Media
• Code of Federal Regulations, (2006), U.S. General Services Administration, National Archives and Records Service, Office of the Federal Register, Washington, DC, USA
• Income Tax Regulations: Winter 2008 Edition (2007), CCH Tax Law Editors, Chicago, USA