What is gross receipt and what does it mean?

The income they are a fundamental economic indicator, both in the family economy and in business. If we had to define them we would say that, broadly speaking, it is about the total earnings reported by an entity, family or person during a given time; regardless of the nature of its economic activity or its public or private nature.

However, income has various classifications. One of them divides the income depending on the application of the deductions for taxes or the payment of merchandise, for example. Others only take into account the money obtained from a commercial activity. This is how we fall into the term gross receipt or gross income and, of course, in its counterpart, the net income.

What is it and what does it mean gross receipt?

Gross receipt is a term used in the United States to refer to gross receipts, that is, the amount of money obtained from the sales or services provided by a business plus that generated by other sources, called non-revenues. commercial. This figure is what will become the basis for the application of various taxes, including corporate, some individual and certain tax taxes at the local level.

The denominators that make up the gross receipts vary depending on the state and the counties or districts, as each region has its own well-clarified rules. In summary, we could affirm that the gross income or gross receipt they are nothing more than all the income that a business obtains for the development -or not- of its commercial activity, but before the deductions are applied.

As you can see, and unlike gross sales, gross receipt they also capture all those incomes that do not come from a commercial source, for example:

Observations

Take into account that when we talk about gross income, discounts or adjustments made to prices are not taken into account.

Gross sales are made up of the total sales of a company. The difference between gross sales or gross income and gross income or gross receipt is that the latter also include money or goods obtained from any source, including non-commercial sources, such as a donation.

What is gross receipt and what does it mean?

Examples of gross receipt or gross income in the United States

Per Section 171.103 of the Texas Tax Code, gross income is defined as the sum of the following:

  1. The money you get for the sale of tangible personal property, even if it is not in Texas, but is being delivered or shipped to a buyer residing in the state. Neither the Free On Board (FOB) nor any other condition of sale or shipment of merchandise is taken into account.
  2. Each service performed in the state, except those received as a result of the delivery of a loan secured by real property that is in Texas.
  3. Each rent charged for the rental of a property that is located in the state.
  4. The use of a patent, copyright, registered trademark, franchise or license formalized in the state.
  5. Each of the sales of properties located in Texas, including royalties obtained from doing business with oil, gas or any other mineral.
  6. The earnings from any other business completed within the state of Texas.

Section 5731.01 of the Ohio Revised Code defines gross receipts for purposes of the Business Activity Tax (CAT) as the total amount generated by an individual without deductions for cost of goods sold or other expenses incurred.

Note: Tangible property is a tax term for personal property that can be easily relocated, like furniture and office equipment, for example. It could be argued that, in certain cases, we are talking about something similar to the classification of personal property.

A broader definition

It can also be income that contributes to the generation of earnings of individuals, such as fair market value of any property, equipment or service marketed; the value of any debt that has been transferred or forgiven as consideration; etc.

Observation: Fair Market Value, better known by its acronym (FMV), is the price an asset would sell for on the open market. This factor allows for a simple valuation of any property, personal property or asset; including stocks or foreign currencies.

As you can see, these different definitions of gross income are closely related to the adjusted gross income, and are issued, in essence, by the competent tax authorities to be used as a basis in the calculation of different federal, regional, state or local taxes. Some laws and regulations may also help taxpayers determine the amount of their gross income by giving them a list of exclusions..

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