In the interpretation of the meaning of “gross income” as used in Section 143.170, the term should be limited to “income” as defined in Section 143.100.

INCOME TAX.: In the interpretation of the meaning of "gross income" as used in Section 143. 170, the term should be limited to "income" as defined in Section 143. 100. June 6, 1962 OPINION NO. 7 (1962) 2b7 (1961 ) Honorable M. E. Morris Director, Department of Revenue Jeftereon Building FILE 0 • , r Jefferson City, Missouri Dear Mr. Morriea j Thia ia in repl;y to ;your letter requesting an of- ficial opinion from this office. Your letter reada aa followa: "We should like to have 7our ott1cial interpretation of Section• 1-3.100 and 1~3.170 RSMo 59. "Section 114-3.170 in part apeoitiea that 'No person can be claiae4 aa a dependent who baa • croaa income of tour hundred dollars or more during the taxable 1ear tor which the return 1a tiled ••• • "In 1nterpret1n& the meaning of 'groas inoOIIle • should any i ncome other than that def~ned 1n Section 143.100 be considered in determining a dependency credit?" Section 143.100 referred to in your opinion request reads aa tollon: "Income defined---net 1ncome.---l. Income &hall include gaina, prot1ta, and earninga derived troaa aalar1ea, wagea or compensation ror personal aerv1cea ot whatever kind and in what- ever form pa1dJ and trom proteaa1ons, Honorable M. B. Morr1a vocations. bus1neseea, trade, com- merce, or sales or de-.:L1nge in prop.. erty whether real or peraonal, grow- 1Rg out of the ownership or the uee or any ioterettt in real or persotlal property. In any case ot sale or capital aaaets, cona1at1ng of real or personal prope~y wht~h has been helcl tor less than s1.x months one hundred per cent of the s•in or less shall be taken 1nto coneideration in computing net i&come; whe~ real or ~ersonal property has been held for more than s1x lflOntha only titty per cent ot the s•1n or lose resulting from sale or exchange shall be \&ken into account in eomput1ng net income, but 1n such eases ang loas used in computing the net income ~hall not exceed two thoasand tive hundred dol- lars over and above gain tor tne eame period. The term • capital asset s •, as used in this subaeotlon means prop- erty held by the taxpa:Jer (whether or not eooneeted wit h hie t rade or business), but doeB not include: (1) Stock 1n tr$de ot the tax• payer or other property of a kind which woul4 properly be lnel uded in the inv~ntocy or the taxpayet~ i f on hand at the close of the taxable y~ar, or property held by the taxpayer pr1tna- r1ly tor sale to customers in the ordi- nary cours·e of his trade or busineos; (2) Personal property used in h1a t r ade or buei~eas, or a character whi ch 1s subject to the regular al- l owance for depreciation; (3) A copyright, a literary, musical or artisti c composition or similar property, held by a taxpayer 1n whose han4s the basis of such prop- erty is determined, for the purpose or determining gain from a sale or exchange, in wholo or in part by refer- ence to the basis of auoh property 1n Honorable M. B. Morris the hands of the person whose person- al etto"s created suoh property; (4) Gain or loss on the sale of property as det1n~4 1n the forego1!18 deeer1pt1ona1 subd1v1a1on (l) to (4), shall be olaas1f1ed aa ordinary gain or loss transactions taxable one hundred per centJ (5) In the caae (a) ot a casual eele or other casual c11apoaition of personal property (other than property ot a kind whi.ch would be pJttOperly in• cluded in the inventory of the taxpayer it on hand at the close of the taxable year). tor a price exceeding one thousand dollara, or (b) of a a&le or other d1s- poa1tion ot real. property, it in either e-aae the initial payments do not exceed thirty per cent of the selling price# the tax on the net prot1t on such tr•ns- act1on, computed as aforesaid, shall be impoaeo only on that portion o£ such net profit which the amount actually received in payment ot the purchase price bears to the total purchase price. As used in this section, the term 'initial fY- menta' means the payments received n caa'fi or propeJ>tY other than evidences ot indebtedness ot the purcbasexo duri.ng the taxable p•r1od 1n which the sale or other diapoa1t1on is made. "2• IncoMe enall also include interest, rent, div~denda, securities and gains, profits and earnings front any other trans- actions of any business carried on tor aain or pro tit; and t .rom any sou1!Ces Whatever; income shall also include the share or each person in the undistributed profits and earnings of partnerships, and the ehare ot each stockholder 1n the un- distributed profits and earn1nse of cor- porations, Jo1nt stock companies, or Joint stock aaaoc1at1ona who•e income 1s not ex- empted and against ~se income there is no provision to~ a tax. -3- Honorable M11 B. Morris "3.. Amounts received aa an annuity under an annuity contract shall be in- cluded in gross income; except that there shall be excluded from gross in• come the excess of the amount received in the taxable year over an amount equal to three per cent of the asgregate premi- ums or considerations paid tor such an- nuity, whether or not paid during such year, until the aggregate amount ex- cluded from gross income equals the aggregate premium.a or oona1derationa paid tor such annuity. "4. Income ahall &lao inolude all peri- odic payments, whether or not made at regular interval a, reoei ved by a Wife who ia divorced or leg&117 separated trom her hUsband under a decree of di- vorce or separate maintenance, but shall not include that portion ot such peri- odic payments which are tixed by the de- cree or written instrument tor the sup- port ot minor children or such husband. It any periodic p.,.ment is leas than the amount specified in the decree or written 1netrument tor the support of minor children, such parment, to the extent of such sum payable for such aup• port, shall be considered a payment tor suoh support. Such paJments aa are imposed upon or incurred by such huaband under such decree or under a written instrument incident to such divorce or separation tor al1Diony shall be deductible f"rom the adJusted gross income as determined 1n accordance with this section. No part ot any court decree which represents p~ent tor child support 1a deducti- ble on the income tax return. "5.. Interest on bonds, notes or other interest-bearing obligations of residents, corporate or otherwise, to the extent de- ductible by such residents, interest on aQJ obligation secured b7 lien on any property having a situs in th1a state, to the extent deductible by the lienor, and wagea, salaries and compenaat1on paid -4- • • Honorable. M. E. Norris to a nonresi dent for aervi oea rendered in this state., and undistributed profits and earni ngs of partnership accruing on a¢count of busineee and transaction 1n this state, and. divi dends on capital stock., and undistributed profits and earnings of corporations., Jo1nt stock companies or joint stock associations whose income 1a not exempted and against whose income there is no provisi on ~or a tax, accru1og on aceount of business transaction& in th1e st ate, and geina., profits and earnings from any use or sale ot real or personal property in this state, or any interest therein shall be eons1deve4 as from sources within thi s state. ••6. D1v1dends on the atoek or any sub· B1d1ar;y corporati on incorporated under the laws ot this state shall not be re .. garded ae taxable income to the parent corporetion where such parent corpor- ation makes a consolidated return for inconle t ax purpoees to the United Statea and i ncludes the income ot such &ubs1.d1- ary tharei,a. D1 v1den4s on corpora.te stock awned by ~other corporation shall not be income o£ the corporation receiving auoh divi dends wb~re the corporati on de- clar1ng the 01v1dencS has paid its tax t o this state on the portion or ita i n• come subJect to tax by this state. "7. Net 1~ome .&ball be determined bi de~uct!ifrom lne~Dte the dedu¢£.1ons now or here t 1•£ prgv1dea bz law. " Section 143.160 provides (fIn ascertaining net income there m&J be dedUcted from 1roaa 1nc{l d•rtved dUring the same period the following: • • ". phe,a1e supplied). The statute then proceeds to set out allowable deductions to the taxpa¥er. -s- Honorable M. B. Morris Section 143.170 generally s&ts out the standard de- duotions for d-epentlente and states n* * • No person can be cla.imed a& a depe.ndent who has a gro:u~ income o£ tour hundred dollars or more during t he t axable ye~ tor which the return 1& filed • * *u. The statute then prooeeda to define "'ho may qualify a3 dependen·ts. The question pre~ented by you hinges solely on the mean1ng of nsroas incomeH ao referred t o in S$ct1on 1~3.170. Is this term limit ed by t he def1n1t1o,n or "income•• referred to 1n section 143.100 or 1a some other atandal'd applied? There 1s a general rule of statutory construction for revenue laws t hat they are oonstrued in favor of the taxpaye,r and agai nst tbe taxing authority. In re Kansas City star Company, 142 Sw2d 1029, 346 i4o. 658; State ex rel. Ford Motor Co~pany va. Gahner, 24 SW24 13, 325 No. 24. The tact that a particular subJect of taxation is within the purview and intendment of the tax1ag statute . must clearly appear. Artophone Corp. vs. Coale, 133 SW2d 342, 347, 345 Mo. 344. Another applicable rule or atatutocy construction 1a that tile d&t1nit1on of a t erm 1n a statute must be given great weight in con~truing the statute. In the caae ot Producer& Produce Company vs. Induetrial Commission, 281 SW2d 619j the Spr1ng~1eld Court of Appeals noted. 1. c. 629 (6-9 ' "We think the tx•1al court disregarded the Nle of construction that the statute ae a wbole ah.ould be consi dered in de- termining the intention of the Legis- l ature in its passage. The lawmaking body• s own construction ot its language by me•ns of definition ot the tenus em- ployed, should be followed 1n th~ in- terpret~t1on of the Act or section to Which it relates and 1a i ntended to epply. Indeed a statutory de£in1t1on supersedee the commonly accepted~ dict ionary or Ju41c1al 4er1n1t1on. Where the Aot passed by the LeB1alature embod1es a der1nit1on 1t is binding on t he courts• 11 -6- Honorable M. B. MOrris The Court 1n the above decision cited with approval the cue of Lennox Realt1 Company va. Haekett. 187 Atl . 895. 898, ¥bioh he14s To oonatrue rr 1ncome 11 aa other than that aa defined in Chapter 1,3, RaMo 1959~ would make effective adminis- tration 1mpoaalble. There 1a no other workable standard avaUable other than that spelled out in this atatutoey definition. CONCLUSION In 1nten>ret1ng the uanina ot "gross income" as uaed 1n Section 143.170, the term ahould be limited to 11income" as defined in Section 143.100. The foregoing opinion. which I hereby approve, waa prepared by my assistant, Robert D. IC.1ngsland. JUKamwzJb Very truly yours, TliOMIS 1. llOLBtON Attorne1 General