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The tax laws are codified in the Internal Revenue Code (IRC). Congress passes the tax laws, the President signs them into law, and the Internal Revenue Service enforces the laws. Gifts and inheritances are not taxable income to the recipient, generally. Says who? IRC 102(a) says so. See the structure of the IRC in the Supporting Materials. Also, look at IRC 61 in the Supporting Materials. What does it address? Basically, IRC 61 states that all income from whatever source is gross income, unless specifically excluded, gifts and inheritances for example. Chapter three is all about sources of taxable income and exclusions from income. Discuss what surprised you with regard to what's taxable and what isn't.
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