Travis earned and was paid interest income in 2020. Because he had an economic benefit and the interest was realized it would always be included in gross income.

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When considering the sale of an asset, return of capital and basis are two related and important concepts you should consider to determine the amount of gross income.

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Joseph G. Hub owned his own delivery business while attending OSU. He delivered food for local establishments on his bike. After graduation, he sold his bike for $3,000 (he got a great deal on the bike when he purchased it for $2,500). He must include the entire $3,000 in gross income (ignore depreciation).

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James Rogers paid $5,000 in state taxes in his incorporated business in 2020 that was deducted on his Form 1120. In 2021, he received a $1,000 refund and reported it as gross income. This is an example of the constructive receipt doctrine.

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