As you read the chapter, you will see that there are general rules, then there are exceptions to the rules, and even exceptions to the exceptions. For example, generally, inheritances and gifts are not taxable income to the recipient. But if you inherit income for which tax has not been paid by the decedent, that is a taxable inheritance. IRA distributions are the perfect example. I have included Internal Revenue Code Section 61. It basically states that all income is taxable unless specifically excluded under a different Code Section. What surprised you about some of the exclusions from income? Should unemployment benefits be excluded from tax, for example?