Section 3402-303 - Gross incomeA. The term "gross income" includes gains, profits and income derived from salaries, wages or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership, or use of, or interest in, such property, also from interest, rent, dividends, securities, or the transaction of any business, carried on for gain or profit, and all other income derived from any source whatever, including income derived through estates or trusts by the beneficiaries thereof, whether as distributed or as distributable shares. The amount of all such items shall be included in the gross income for the tax year in which received by the taxpayer.B. The term "gross income" does not include the following items: (1) Amounts received under a life insurance contract paid by reason of the death of the insured, whether in a single sum or in installments, but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income;(2) The amount received by the insured as a return of premium or premiums paid by him under life insurance, endowment or annuity contract, either during the term, or at the maturity of the term, mentioned in the contract, or upon surrender of the contract;(3) The value of property acquired by gift, bequest, devise or descent, but the income from such property shall be included in gross income;(4) Interest upon the obligations of the United States, or its possessions, or the obligations of the Commonwealth of Pennsylvania, or of any municipal corporation, or political subdivision thereof;(5) Any amount received through accident or health insurance, or under workmen's compensation acts as compensation for personal injuries or sickness, plus the amount of any damages received, whether by suit or agreement, on account of such injuries or sickness, or through the war risk insurance act, or any law for the benefit or relief of injured or disabled members of the military or naval forces of the United States;(6) Salaries, wages and other compensation received from the United States by officials or employes thereof, including persons in the military or naval forces of the United States;(7) Income received by any officer of a religious denomination, or by any institution or trust for moral or mental improvement, religious, bible, tract, charitable, benevolent, fraternal, missionary, hospital, infirmary, educational, scientific, literary, library, patriotic, historical or cemetery purposes or for the enforcement of laws relating to children or animals, or for two or more of such purposes, if such income be used exclusively for carrying out one, or more, of such purposes, but nothing herein shall be construed to exempt the fees, stipends, personal earnings or other private income of such officer or trustees;(8) Stock dividends when received by a shareholder, but if before or after the distribution of any such dividend, the corporation proceeds to cancel or redeem its stock, at such time and in such manner as to make the distribution and cancellation or redemption in whole or in part essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock shall be treated as a taxable dividend, and included in gross income: Provided, That any stock dividend shall be considered in computing gain, profit or income upon the sale, exchange or other disposition of the stock upon which a stock dividend has been declared, or of the stock included in such stock dividend;(9) The principal and income paid by a building and loan association to a member thereof upon the maturity of his or her shares or upon the withdrawal of such member from the association;(10) Any amount received by any person whatever under any law of this Commonwealth, the United States, or any other state providing for any pension, bonus or compensation whatsoever for, or in respect to, services in the military or naval forces of the United States in any war in which the United States has been engaged.C. In the case of taxpayers, other than residents, gross income includes only the gross income from sources within the State, but shall not include annuities, interest on bank deposits, interest on bonds, notes or other interest-bearing obligations or dividends from corporations, except to the extent to which the same shall be a part of income from any business, trade, profession or occupation carried on in this State subject to taxation under this act.D. In the case of taxpayers who regularly sell, or otherwise dispose of, personal property on the installment plan, gross income includes, in any tax year, only such portion of the total profit realized, or to be realized when the payment is completed, as the installment payments received in that year bears to the total of all installment payments.E. In the case of a casual sale or other casual disposition of personal property, or of a sale or other disposition of real property, if in either case the payment in cash or property are not completed during the tax year when the sale or disposition was made, the income may be returned on the basis and in the manner above described in subsection D of this section for installment sales. Evidences of indebtedness of the purchaser, or amounts secured by the property sold or disposed of, shall not be construed to be payments, but in such cases the income shall be returned on the above basis in the tax year when such indebtedness, or the amounts secured or any part thereof, is paid to the vendor.1935, July 12, P.L. 970, No. 314, art. III, § 303.