Chapter 4: Gross Income from Personal and Investment Activities

01.Core Concepts

• Follows realization principal from accounting • Income is recognized (taxed) when realized unless an exception applies. • Generally, any accretion to wealth is income. • Mere appreciation in wealth (economic income) that is not fixed and measurable at a particular point in time (i.e., objectively determined) is not considered realized income. • Congress has excluded certain accretions of wealth from the definition of income for tax purposes.