Gross Income

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Gross Income

One of the most important decisions you have to make in determining your correct taxable income is what payments to include. Keep in mind that a taxable payment is not limited to cash. It may be property, stock, or other assets. Also, you must include in your gross income the fair market value of payments in kind. For example, if your employer provides you with a car that is used for both business and personal purposes, then the value of the personal use of the car is included in your earnings and is taxable to you. Or, assume you assist a group of investors in purchasing a piece of real estate. In consideration for your services, the investors award you an unconditional percentage of ownership in the acquired asset, and you have not invested any of your personal funds. The fair market value of your ownership interest is considered as wages taxable to you in the year of transfer.

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