Also known as: gain from capital or labor · income · gross income
Written by attorneys · grounded in primary & secondary sources — see below
A constitutional definition of income under the Sixteenth Amendment that encompasses the gain derived from capital, from labor, or from both combined. Realization through a taxable event converts the gain into income subject to federal taxation.
Marcus Lane declined to maintain an emergency savings account. The Treasury assessed the yearly financial resilience exaction as a percentage of his taxable income and collected it with his federal return. The exaction operated as a tax on gain derived from capital and labor because it varied with income and raised revenue through the tax system.
Gloria Green earned wages from her employment during marriage after the determination date. Those wages constituted gain derived from labor and therefore qualified as marital property subject to equal division upon dissolution.
Select any source to read its text and confirm it supports the definition.
Gulfstream Aviation held a senior mortgage on an office building that also encumbered rents. When the court appointed a receiver at the senior mortgagee's request, the receiver collected rental payments that represented gain derived from capital and applied them according to the mortgage priority rules.
Gerald Gibson owed child support. The court ordered income withholding from his wages, which were gain derived from labor, and directed the employer to remit the withheld amounts to the support agency.
Griffin Industries borrowed funds and pledged future revenues from its operations as security. The pledged amounts represented anticipated gain derived from capital and labor that the corporation could use to satisfy the secured obligations.
George Garcia and his spouse accumulated stock appreciation and business profits during their marriage. In the dissolution proceeding the court apportioned those assets, which embodied gain derived from capital and labor, without regard to marital misconduct.
Income consists of the gain derived from capital, from labor, or from both combined. Realization through a taxable event converts the gain into constitutionally taxable income.
Supporting sources
No. Courts examine the operation and effect of the exaction rather than its label. An exaction collected with income tax returns that varies with income and raises revenue functions as a tax on gain derived from capital or labor even if called a penalty.
Supporting sources
Income earned by a spouse during marriage qualifies as marital property when it constitutes gain derived from labor or capital. The classification occurs automatically upon accrual after the determination date under uniform marital property rules.
Yes. Rents collected under a mortgage on rents represent gain derived from capital. The receiver applies those receipts according to mortgage priority without altering their character as income.