Monday, December 15, 2008


A common dictionary definition of income is the amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments. (The American Heritage® Dictionary of the English Language, Third Edition copyright © 1992 by Houghton Mifflin Company.)

This definition, however, is not expansive enough as it pertains to income taxes in the United States of America. For example, let's say that you inherit a piano. Inside the piano you find $10,000.

Now, you didn't get the piano due to labor or services that you performed to work for anyone, nor perhaps do you plan to sell the piano, and the piano was certainly not a financial investment that you made. However, your retention of the piano may end up being an investment if you retain it, and it increases or decreases in value. In the United States, the value of the piano you receive in an inheritance is income. The same is true of the $10,000 windfall. Whether or not you will end up paying tax and in what amount though is another matter altogether.

In the United States the concept of income is intended to be as expansive as is possible. At first blush, such expansiveness seems overblown. The politicians who designed the system, though, made it work to their advantage. Relief from taxes on income could only come from grace granted by elected officials. Senators and Representatives. The President of the United States.

How convenient. Now, the critical question is what are the most important graces granted to help writers, artisans, and freelancers? That's coming up.

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