Welcome to David in Taxland - a series of tax articles written for business owners. Spoilers: all income is taxable unless it’s not and the moral to the story is to pay and file your taxes on time.
Taxable income is cleverly defined by the IRS. Instead of making certain types of income taxable, and leaving the rest not taxable, it took an opposite position: all income is taxable—unless it’s not. The basic idea is this: any increase in wealth for a taxpayer (individual or business) is taxable unless the IRS provides a specific exclusion or deduction. Note: income can be cash or non-cash (such as fringe benefits).