Two days before Halloween, Gene was driving in his car and noticed that he was low on fuel. He stopped at a gas station which offered a free pumpkin with the purchase of a full tank of gas. The pumpkin has a fair market value of $2.00, and the price of the gasoline was the same as at another station located across the street. Gene knew that this deal was too good to be true and so he took advantage of the offer before the station owner realized what a giveaway this was. How much should Gene include in his gross income?
Gross income is a term used in taxation to determine which sources of revenue should be included in taxable income. Code Sec 61 includes a list of typical types of income, but the list is not limited to the 15 types of income shown. http://www.law.cornell.edu/uscode/uscode26/usc_sec_26_00000061----000-.html
Gross income is further defined as income before deductions and expenses used to arrive at net income, or taxable income.
In this case, the $2 is technically income because the price of fuel was the same as another station without the offer. Gene would have paid ...
The solution explains the types of items that are include-able in income including the criteria that define income. Approximately 410 words with references.