Individual Gross Income and Exclusions

This chapter covers the starting point for individual taxation: identifying what belongs in gross income and what may be excluded. REG questions in this area reward careful categorization, because the treatment of one item often affects later deductions, rates, and limitations.

In This Chapter

• Wages, Dividends, Pensions, and Gross Income Inclusions explains the broad inclusion rule and common taxable items.
• Taxable and Tax-Exempt Interest and Dividends distinguishes fully taxable items from favored exceptions.
• Short-Term and Long-Term Capital Gains and Losses covers classification, netting, and carryforward mechanics.
• Gross Income Exclusions for Gifts, Insurance, Scholarships, and Fringe Benefits explains the common statutory exclusions tested on REG.
• Kiddie Tax on Minor Children’s Unearned Income addresses the special rate framework for a child’s unearned income.

How to Use This Chapter

• Read this chapter when individual-tax questions are going wrong at the inclusion or exclusion stage.
• Focus on why an item is taxable, excluded, or given special rate treatment.
• Return here when later deductions or credits seem wrong because the income base was built incorrectly.

In this section

• Wages, Dividends, Pensions, and Gross Income Inclusions
  How common compensation, investment, and retirement items enter individual gross income.
• Taxable and Tax-Exempt Interest and Dividends
  Tax treatment for interest, municipal bond income, ordinary dividends, and qualified dividends.
• Short-Term and Long-Term Capital Gains and Losses
  Holding-period classification, netting, annual loss limits, and carryforward mechanics for individuals.
• Gross Income Exclusions for Gifts, Insurance, Scholarships, and Fringe Benefits
  Major statutory exclusions from individual gross income and the facts that can make them taxable.
• Kiddie Tax on Minor Children's Unearned Income
  When a child's unearned income is taxed using the parent-rate framework.