CEO 77-44 -- March 9, 1977

GROSS INCOME

DEFINITION OF TERM FOR PURPOSES OF DISCLOSURE LAW

To: Kathryn M. Borgemenke, Town Clerk, Highland Beach

Prepared by: Bonnie Johnson

SUMMARY:

Section 112.3145(3), F. S. (1976 Supp.) provides that the statement of financial interests, required to be filed annually by subject persons, include the disclosure of "[a]ll sources of income in excess of 5 percent of the gross income received during the disclosure period by the person in his own name or by any other person for his use or benefit, excluding public salary." Although the term "gross income" is not defined within the Florida Statutes, the Code of Ethics defines the "disclosure period" to be the taxable year, whether calendar or fiscal, immediately preceding the date on which one is required to file disclosure. The "taxable year" is deemed to refer to that for federal income tax purposes, and it thus is reasonable to assume that, by the use of the term "gross income" in conjunction with a reference to the federal income tax, the Legislature intended that such term have the same meaning as it has for income tax purposes. Accordingly, the commission subscribes to the definition of "gross income" contained in the Internal Revenue Code at 26 U.S.C.A. s. 61(a), which deems gross income to mean "all income from whatever source derived." Although s. 112.3145(3)(a) excludes from disclosure any public salary received by the reporting person, such salary must be included in the computation of the reporting person's gross income. To the extent that this interpretation of the law contradicts that of earlier opinions CEO's 74-39 and 74-42, those opinions hereby are deemed to be superseded.

QUESTION:

For purposes of the financial disclosure mandated by s. 112.3145(3)(a), F. S. 1975, what constitutes the "gross income" of a reporting person?

Section 112.3145(3), F. S. (1976 Supp.), provides that the statement of financial interests, required to be filed annually by subject persons, include the disclosure of "[a]ll sources of income in excess of 5 percent of the gross income received during the disclosure period by the person in his own name or by any other person for his use or benefit, excluding public salary." In light of this provision of the law, as well as the instructions for completion of Part C on the Statement of Financial Interests (CE Form 1), you seek the advice of this commission as to the meaning of the term "gross income."

"Gross income" is not defined in the Code of Ethics for Public Officers and Employees; nor does it appear to be defined elsewhere in the Florida Statutes. However, the code does define the term "disclosure period" as follows:

. . . the taxable year for the person or business entity, whether based on a calendar or fiscal year, immediately preceding the date on which, or the last day of the period during which, the financial disclosure statement required by this part is required to be filed.

Inasmuch as there is no personal income tax in Florida, the "taxable year" contained in the above definition doubtless refers to the income tax imposed by the federal government. Thus, it is reasonable to assume, unless and until otherwise clarified by the Legislature or the courts, that by the use of the term "gross income" in conjunction with a reference to the federal income tax, the Legislature intended that such term have the same meaning as it has for purposes of the federal income tax. Accordingly, we subscribe to the definition of "gross income" contained in the Internal Revenue Code at 26 U.S.C.A. s. 61(a), which deems gross income to mean "all income from whatever source derived," including (but not limited to) the following examples:

(1) Compensation for services, including fees, commissions, and similar items;

(2) Gross income derived from business;

(3) Gains derived from dealings in property;

(4) Interest;

(5) Rents;

(6) Royalties;

(7) Dividends;

(8) Alimony and separate maintenance payments;

(9) Annuities;

(10) Income from life insurance and endowment contracts;

(11) Pensions;

(12) Income from discharge of indebtedness;

(13) Distributive share of partnership gross income;

(14) Income in respect of a decedent; and

(15) Income from an interest in an estate or trust.

Further guidelines as to items specifically included in or excluded from gross income appear at 26 U.S.C.A. ss. 101-123, as well as in the rules and regulations of the Internal Revenue Service.

Note that s. 112.3145(3)(a) excludes from disclosure any public salary received by the reporting person. Public salary should be included, however, in the computation of gross income. The gross income figure need not be disclosed, of course, but is needed in order to ascertain those sources of income in excess of 5 percent of the gross, which sources (with the exception of public salary) must be disclosed.

To the extent that the interpretation contained herein contradicts that of earlier opinions CEO's 74-39 and 74-42, those opinions hereby are deemed to be superseded.