Internal Revenue Code section 61
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Section 61 of the Internal Revenue Code (IRC 61, ) 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 "except 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 the Constitution of the United States, where such power is set forth under Article I, Section 8 (the Taxing and Spending Clause) and under the Sixteenth Amendment.
To avoid any doubt, IRC 61 lists a variety of sources of income which are taxable under the code, including "Compensation for services, including fees, commissions, fringe benefits, and similar items"; "Gross income derived from business"; and "Gains derived from dealings in property". Other sources of income specified under IRC 61 include interest and dividends, rent, royalty payments, alimony payments; life insurance, pensions, and inheritances.
One form of income listed in the Code, that of "discharge of indebtedness" is not often considered income by lay persons. However, if a taxpayer owes a debt to any other party, and that debt is forgiven without being fully repaid, the taxpayer must declare the amount that was forgiven as income, and must pay tax on it. (This provision does not apply to debts where the amount is unsettled, or to certain debts in bankruptcy, insolvency and certain other limited situations.) For example, suppose a party claims to be owed $1000, and the taxpayer insists that he only owes that party $500. If they agree to settle the dispute for $700, the taxpayer has not been relieved of any debt that was clearly owed.
Section 61 contains a rare example of intensive redundancy, or emphatic redundancy, in the Internal Revenue Code. That is, the parenthetical phrase "but not limited to" redundantly intensifies the significance of the phrase "all income" and the phrase "from whatever source derived." Under ordinary rules of statutory construction the list of fifteen specific items of income would not, even in the absence of the parenthetical intensive, be considered a complete list of all items of income included in "gross income" under the definition. The use of the word "including" also highlights this expansive definition of "gross income" (see Internal Revenue Code § 7701(c)).
The phrase "except as otherwise provided in this subtitle" generally refers to the items of income that are excluded from "gross income" under Internal Revenue Code sections 101 through 140. For example, § 101 excludes certain life insurance proceeds received by reason of the death of the insured. § 102 excludes certain gifts and inheritances. § 103 excludes interest income on state and municipal bonds. § 104 excludes certain amounts received on account of injuries or sickness.
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