Prompt Title: Defining Income in 1918

In Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918), the U.S. Supreme Court tackled the issue of what constitutes income under the Sixteenth Amendment, which grants Congress the power to levy income taxes. The case has been referenced in numerous tax law discussions because it provided one of the early interpretations of "income" following the ratification of the Sixteenth Amendment in 1913.

In its decision, the Court said:

"What is called gain, profit, or income is the realization of an excess over cost in a transaction completed during the year for which income is reckoned."

The Court further elaborated on the concept:

"Income may be defined as the gain derived from capital, from labor, or from both combined."

Thus, the Court distinguished between the return of capital and the gain derived from that capital. Simply put, not every receipt of money is considered income. Instead, income arises from some profit or gain above the return of one's initial investment (capital). This definition by the Supreme Court remains foundational in U.S. tax law discussions about the nature of taxable income.