Is a gift gross income?

To the recipient, generally no — §102 excludes gifts. But the §61 starting point means you need the exclusion; without §102 it would be income.

Are lawsuit settlements taxable?

Most are, unless excluded — physical-injury recoveries under §104, for example. Punitive damages and lost wages are §61 income.

What if income was never reported to me on a form?

Still income. Information returns are the IRS's copy, not the trigger — cash, crypto, and barter all count.

IRC §61 · 26 U.S.C. §61

IRC §61: Gross Income Defined

By Paul D. Diaz, EA, MBA · Updated September 20, 2026

IRC §61 defines gross income as all income from whatever source derived — wages, business profit, gains, rents, and everything else Congress hasn't specifically excluded. It is the starting line of every return: if money or value came in, §61 includes it first and asks questions later.

What it governs

Compensation for services — wages, salaries, bonuses, commissions
Business profit and gains from dealings in property
Interest, rents, royalties, and dividends
The catch-all: everything else includible unless a specific statute excludes it

In the GuideFull treatment in Chapter 2 of the Guide — THE TAX CUTTERY® Guide to Federal Income Taxation, Professional Edition (564 pages, 24 chapters).

From the practiceUnreported income: the compliance path →

Questions this section answers

Is a gift gross income?: To the recipient, generally no — §102 excludes gifts. But the §61 starting point means you need the exclusion; without §102 it would be income.
Are lawsuit settlements taxable?: Most are, unless excluded — physical-injury recoveries under §104, for example. Punitive damages and lost wages are §61 income.
What if income was never reported to me on a form?: Still income. Information returns are the IRS's copy, not the trigger — cash, crypto, and barter all count.

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