502. What items are included in gross income? What items are excluded from gross income?Nuco Employeercline202014-07-24T14:54:00Z2014-07-24T14:54:00Z23992275UMKC185266914Site Map/General Income Taxation/Individuals/Gross IncomeTaxFactsDefaultArticle2005-07-08T00:00:00Z123761404-00-tf2.xml1404.00;#1727;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2What items are included in gross income? What items are excluded from gross income?19100.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-14T22:27:35Z502. What items are included in gross income? What items are excluded from gross income?Gross income includes all income (whether derived from labor or capital) less those items that are excludable by law. Thus, gross income includes salary, fees, commissions, business profits, interest and dividends, rents, alimony received, and gains from the sale of property–but not the mere return of capital.IRC Sec. 61(a). Some of the items that can be excluded from gross income and received tax-free by an individual taxpayer are: gifts and inheritances;IRC Sec. 102. gain (within limits) from the sale of a personal residence (see Q 7778); at least 50% of gain (within limits) from the sale of certain qualified small business stock held for more than five years (see Q 7520 and Q 7521); interest on many bonds of a state, city or other political subdivision (see Q 7641); Social Security and railroad retirement benefits (within limits–see Q 516); veterans’ benefits (but retirement pay is taxable);IRC Sec. 104(a)(4). Workers’ Compensation Act payments (within limits);IRC Sec. 104(a)(1). death proceeds of life insurance and, as to death proceeds of insurance on the life of an insured who died before October 23, 1986, up to $1,000 annually of interest received under a life income or installment option by a surviving spouse;IRC Secs. 101(a), 101(d). amounts paid or expenses incurred by an employer for qualified adoption expenses in connection with the adoption of a child by an employee if the amounts are furnished pursuant to an adoption assistance program;IRC Sec. 137. contributions to a “Medicare Advantage MSA” by the Department of Health and Human Services;IRC Sec. 138. exempt-interest dividends from mutual funds (see Q 7848); interest on certain U.S. savings bonds purchased after 1989 and used to pay higher education expenses (within limits–see Q 7665);See IRC Sec. 135. contributions paid by an employer to Health Savings Accounts;IRC Sec. 106(d). distributions from Health Savings Accounts used to pay qualified medical expenses;IRC Sec. 223(f)(1). and federal subsidies for prescription drug plans.IRC Sec. 139A.