Opinion ID: 603772
Heading Depth: 3
Heading Rank: 4

Heading: Inclusion in Gross Income of Cost of Sales and Goods

Text: 80 Chadwick argues that money it paid in commissions to sales representatives who sold interests in the limited partnerships should have been excluded from the gross income base of the penalty assessed against Chadwick. Similarly, Townsend and Universal contend that the cash portion of the purchase prices of the Properties should have been excluded from the gross income base of the penalties assessed against them. Their arguments are meritless. 81 Unless an exclusion is specifically provided, gross income is all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, and similar items; ... (5) rents. I.R.C. § 61(a). All of the income Chadwick derived from the tax shelter promotion was in the form of sales commissions from the limited partnerships, an item expressly included in gross income. Chadwick cites no Internal Revenue Code provision that authorizes an exclusion from gross income for commissions it paid to sales representatives. The district court thus did not err in failing to deduct from Chadwick's gross income base the amount of the commissions paid. As to Townsend and Universal, the income they derived from the tax shelter program was in the form of rent payments from the limited partnerships. Such payments are also expressly listed as a form of gross income. Id. Because the Internal Revenue Code does not provide an exclusion from gross income for the cost of leased goods, the district court correctly declined to grant a reduction equal to the cash downpayments made on the Properties from Townsend's and Universal's gross income. 82