Essay About Irs Codes And Internal Revenue Code

Tax Research Question
Ms. Jones,
You have asked my opinion regarding the IRS stating that you must include an additional $50,000 worth of income on your most recent tax return. I understand that you were the beneficiary of your stepmothers annuity and, when she passed away, you received a check from the insurance company for $400,000. It is also my understanding that the insurance company informed you that $50,000 of this amount was considered taxable by the IRS. I am aware that you did not keep this money because you were convinced by your father that the money was meant for him and gave him all $400,000. I also know that you discovered recently that the money was not actually meant for him and have filed a lawsuit to get your money back. I am also aware that, because you thought the money was not yours, you did not include the $50,000 on your most recent tax return. Unfortunately, the IRS codes that give us direction on this matter do not work in your favor. The two codes most relevant to your case are sections 62 and 72 of the Internal Revenue Code. Section 72 states, “Except as otherwise provided in this chapter [26 USCS §§ 1 et seq.], gross income includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, endowment, or life insurance contract.” Section 62 goes on to say, “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:”

(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;