1.6 Gross Income - Exclusion

1. Items that are NOT Income

1) Return of Capital
2) Amounts Obtained by a Loan
3) Unrealized Income

2. Major Statutory Exclusions

1) Scholarships and Fellowships

Excludable only spent on tuition, fees, books, and supplies (not room and board)
(a) The grant is made to a degree-seeking student.
(b) No services are to be performed as a condition of receiving the grant.
(c) The grant is not made in consideration for past, present, or future services of the grantee.

2) Employee Fringe Benefit

(1) Taxable Fringe Benefits (Non-Statutory)

(2) Partially Taxable Fringe Benefits
a) Group term life insurance premiums (employer-paid): $50,000 of coverage

(3) Non-Taxable Fringe Benefits
a) Accident, medical, and health insurance premiums (employer-paid)
b) De minimis fringe benefits
c) Meal and lodging
d) Employer payment of employee's educational expenses
e) Qualified tuition reductions
f) Qualified transportation
g) Flexible spending arrangements (FSAs)
h) Qualified profit-sharing, and stock bonus plans

(4) Cafeteria plans

3) Insurance Proceeds

(1) Life insurance proceeds (nontaxable)
(2) Accidents insurance proceeds (nontaxable)
(3) Recoveries of lost profit (taxable)
(4) Personal (physical) injury award (nontaxable)
(5) Punitive damages (taxable)
(6) Workers' compensation (nontaxable)
(7) Medicare benefits (nontaxable)

4) Gift and Inheritances

5) Foreign Earned Income Exclusion