How is "income" defined for tax purposes?

For tax purposes, "income" is defined as the gain derived from capital, labor, or both. This definition encompasses a wide range of income types, including wages earned from employment (labor), profits gained from investments (capital), dividends, interest, rental income, and various other sources. The key aspect of this definition is that it focuses on the increase in wealth that results from different activities and resources.

This definition includes not just cash transactions but also non-cash benefits, thereby providing a comprehensive view of what constitutes income. It aligns with the IRS's guidelines that state income can come from various sources and is taxable unless explicitly exempted by law. This understanding is essential for accurately reporting income on tax returns and calculating tax liability.