Gross Income Law and Legal Definition
Gross income is a tax term meaning the income of an individual from all sources before deducting allowable expenses. After deducting allowable expenses from gross income, the result is called net income. For companies, it is their revenue minus cost of goods sold (also called gross margin).
Adjusted gross income ("AGI") represents your total income reduced by certain deductions known as "adjustments," but before you take your itemized deduction or standard deduction, and before you take the deduction for your exemptions.
Federal tax law defines gross income as the following:
"Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
- Compensation for services, including fees, commissions, fringe benefits, and similar items;
- Gross income derived from business;
- Gains derived from dealings in property;
- Alimony and separate maintenance payments;
- Income from life insurance and endowment contracts;
- Income from discharge of indebtedness;
- Distributive share of partnership gross income;
- Income in respect of a decedent; and
- Income from an interest in an estate or trust."