Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-3-14 - GROSS INCOME OF INDIVIDUALS › Section 810-3-14-.01 - Gross Income In General

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The term "gross income" means all wealth
			 flowing to the taxpayer from whatever source derived other than as a return of
			 his capital and other than those items exempted by Section
			 40-18-14(2),
Code of Ala. 1975
. Gross income includes income
			 realized in any form, whether in money, property, or services. Income may be
			 realized in the form of services, meals, accommodations, stock, or other
			 property, as well as in cash. Such income is to be reported for the year in
			 which received, or accrued and reported in accordance with accepted accounting
			 procedures applicable to the taxpayer's particular type of business. See Reg.
			 810-3-13-.03 for discussion of accounting methods.
(2) In the case of a manufacturing,
			 merchandising, or mining business, gross income means the total sales less the
			 cost of goods sold, plus any income from investments and from incidental or
			 outside operations or sources. In determining the gross income of a business,
			 subtraction should not be made for losses, or for items not ordinarily used in
			 computing the cost of goods sold.
(3) Earnings constitute gross income before
			 deductions for withholding for federal income tax, social security tax,
			 insurance and retirement programs (including those allowable as a deduction
			 under
Code of Ala. 1975
, Section
			 40-18-15(11)) or other voluntary or involuntary withholdings.
(4) Income actually received or accrued must
			 be included in gross income, although losses may later incur against this
			 income. An exception to this general rule occurs in situations involving the
			 renegotiation of war contracts under federal statutes. Where repayment is made
			 to the government as a result of renegotiation, the amount of income for the
			 year of original payment is the amount of such payment less the amount refunded
			 to the government, even though the repayment is made to the government in a
			 later year. As long as the matter of renegotiation is open, the extent of the
			 gain or profit of the contractor, if any, for that year of payment remains
			 undetermined.
(5) If services are
			 paid for with something other than money, the fair market value of the property
			 or services taken in payment is the amount to be included as gross income. If
			 living quarters or meals are furnished to employees for the convenience of the
			 employer, the ratable value need not be added to the compensation of the
			 employees, but if a person receives a compensation for service rendered
			 compensation in the form of living quarters or meals, the value to such person
			 of the quarters furnished constitutes income subject to tax. For living
			 quarters furnished to ministers, see Reg. 810-3-14.02(1)(g).
(6)
(a) An
			 employee who is given an annuity by his employer must pay income tax on the
			 amount of the premium in the year in which the premium is paid. The annuity is
			 considered as additional compensation for services rendered and not as a
			 gratuity. The payments that qualify as a deduction under
Code of
			 Ala. 1975
, §
									40-18-15(11) shall be included in gross income.
(b) An employee who is the insured or owner
			 of a group life insurance policy with a face value in excess of $50,000, and
			 the premiums on such policy are paid by the employer, must include in gross
			 income the value of such premiums for coverage in excess of $50,000.