For households and individuals, gross income is the sum of all wages, salaries, profits, interest payments, rents, and other forms of earnings, before any deductions or taxes. It is opposed to net income, defined as the gross income minus taxes and other deductions.
Section 61 of the Internal Revenue Code defines "gross income," the starting point for determining which items of income are taxable for federal income tax purposes in the United States. Section 61 states that "[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived [. .. ]". The United States Supreme Court has interpreted this to mean that Congress intended to express its full power to tax incomes to the extent that such taxation is permitted under Article I, Section 8, Clause 1 of the Constitution of the United States and under the Constitution's Sixteenth Amendment.
For federal income tax purposes, the doctrine of constructive receipt is used to determine when a cash-basis taxpayer has received gross income. A taxpayer is subject to tax in the current year if he or she has unfettered control in determining when items of income will or should be paid. Unlike actual receipt, constructive receipt does not require physical possession of the item of income in question.
Hornung v. Commissioner is a case heard by the United States Tax Court in 1967.
In United States income tax law, an installment sale is generally a "disposition of property where at least 1 loan payment is to be received after the close of the taxable year in which the disposition occurs." The term "installment sale" does not include, however, a "dealer disposition" or, generally, a sale of inventory. The installment method of accounting provides an exception to the general principles of income recognition by allowing a taxpayer to defer the inclusion of income of amounts that are to be received from the disposition of certain types of property until payment in cash or cash equivalents is received. The installment method defers the recognition of income when compared with both the cash and accrual methods of accounting. Under the cash method, the taxpayer would recognize the income when it is received, including the entire sum paid in the form of a negotiable note. The deferral advantages of the installment method are the most pronounced when comparing to the accrual method, under which a taxpayer must recognize income as soon as he or she has a right to the income.
Zaninovich v. Commissioner, 616 F.2d 429, is a United States court case about the deductibility of advance payments for tax purposes.
The Doctrine of Cash Equivalence states that the U.S. Federal income tax law treats certain non-cash payment transactions like cash payment transactions for federal income tax purposes. The doctrine is used most often for deciding when cash method taxpayers are to include certain non-cash income items. Another doctrine often used when trying to determine the timing of the inclusion of income is the constructive receipt doctrine.
Flamingo Resort, Inc. v. United States, 664 F.2d 1387, was a case decided before the United States Court of Appeals for the Ninth Circuit that decided the question of when the right to receive income represented by "markers", or gambling credit lines, become "fixed" for tax purposes based on the "all events" test.
Teschner v. Commissioner, 38 T.C. 1003 (1962) was a tax-law case involving the United States IRS in 1962.
A basis of accounting is the time various financial transactions are recorded. The cash basis and the accrual basis are the two primary methods of tracking income and expenses in accounting.
The all-events test, under U.S. federal income tax law, is the requirement that all the events fixing an accrual-method taxpayer's right to receive income or incur expense must occur before the taxpayer can report an item of income or expense.
Commissioner v. Boylston Market Association, 131 F.2d 966 was a taxation case decided by the United States Court of Appeals for the First Circuit.
The installment sales method is one of several approaches used to recognize revenue under the US GAAP, specifically when revenue and expense are recognized at the time of cash collection rather than at the time of sale. Under the US GAAP, it is the principal method of revenue recognition when the recognition occurs subsequently to the sale.
Gold Coast Hotel & Casino v. United States, 158 F.3d 484, was a court case that addressed whether a casino, using the accrual method of accounting, could deduct the value of slot club points earned by slot club members in the tax year in which the members accumulated the minimum points required to redeem a prize, or whether the casino had to wait to deduct the value of the slot club points until the members actually redeemed them.
Grynberg v. Commissioner, 83 T.C. 255 (1984) was a case in which the United States Tax Court held that one taxpayer's prepaid business expenses were not ordinary and necessary expenses of the years in which they were made, and therefore the prepayments were not tax deductible. Taxpayers in the United States often seek to maximize their income and decrease their tax liability by prepaying deductible expenses and taking a deduction earlier rather than in a later tax year.
Schlude v. Commissioner, 372 U.S. 128 (1963), is a decision by the United States Supreme Court in which the Court held that, under the accrual method, taxpayers must include as income in a particular year advance payments by way of cash, negotiable notes, and contract installments falling due but remaining unpaid during that year. In doing so, the Court tossed aside the matching principle in favor of the earlier-of test.
Warren Jones Company v. Commissioner of Internal Revenue, 524 F.2d 788 was a taxation decision by the United States Court of Appeals for the Ninth Circuit.
In the United States, the question whether any compensation plan is qualified or non-qualified is primarily a question of taxation under the Internal Revenue Code (IRC). Any business prefers to deduct its expenses from its income, which will reduce the income subject to taxation. Expenses which are deductible ("qualified") have satisfied tests required by the IRC. Expenses which do not satisfy those tests ("non-qualified") are not deductible; even though the business has incurred the expense, the amount of that expenditure remains as part of taxable income. In most situations, any business will attempt to satisfy the requirements so that its expenditures are deductible business expenses.
American Automobile Association v. United States, 367 U.S. 687 (1961), was an income tax case before the United States Supreme Court.
Amend v. Commissioner, 13 T.C. 178 is a United States Tax Court decision concerning the timing of the realization of gains.
Samuel A. Donaldson, Federal Income Taxation of Individuals 399 (2005).
