Intuit Academy Tax Practice Exam 2025 – All-in-One Guide for Exam Mastery!

Question: 1 / 400

Which types of income are excluded from gross income?

Gifts and inheritances

Gifts and inheritances are excluded from gross income under the Internal Revenue Code. This exclusion recognizes that gifts and wealth passed down from one individual to another shouldn't be taxed as ordinary income. It promotes the idea that these transfers are forms of personal benevolence, rather than qualifying earnings generated through a person's labor or investment activities.

Other types of income, such as wages and salaries, are considered taxable and must be included in gross income because they are earned through employment. Interest from savings accounts is also taxable, as it represents a return on investment for the funds deposited. Similarly, capital gains from investments are included in gross income because they reflect profits realized from the sale of assets. Thus, gifts and inheritances stand out as a category that does not contribute to one's gross income, serving a unique purpose in the tax framework.

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All wages and salaries

Interest from savings accounts

Capital gains from investments

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