TAX 3300 Chapter Notes - Chapter 4: Constructive Receipt, Basis Of Accounting, Tax Rate
Document Summary
Definition of gi: except as otherwise provided in this subtitle, gi means all income from whatever source derived. Although congress does allow certain deductions, none are constitutionally required. On the other hand, the supreme court has held that there is no income subject to tax until the taxpayer has recovered the capital invested. This concept is known as recovery of capital doctrine. In its simplest application, this doctrine means that sellers can reduce their gross receipts (selling price) by adjusted basis of property sold to determine the amount of gi. To arrive at economic income, this change in net worth is increased by the value of the goods and services that person actually consumed during the period. Economic income also includes imputed values for such items as the rental value of an owner-occupied home and the value of food taxpayer might grow for personal consumption.
