HRS § 237-3 — "Gross income", "gross proceeds of sale", defined


§237-3 "Gross income", "gross
proceeds of sale", defined. (a) "Gross income" means the
gross receipts, cash or accrued, of the taxpayer received as compensation for
personal services and the gross receipts of the taxpayer derived from trade,
business, commerce, or sales and the value proceeding or accruing from the sale
of tangible personal property, or service, or both, and all receipts, actual or
accrued as hereinafter provided, by reason of the investment of the capital of
the business engaged in, including interest, discount, rentals, royalties,
fees, or other emoluments however designated and without any deductions on
account of the cost of property sold, the cost of materials used, labor cost,
taxes, royalties, interest, or discount paid or any other expenses whatsoever.
Every taxpayer shall be presumed to be dealing on a cash basis unless the
taxpayer proves to the satisfaction of the department of taxation that the
taxpayer is dealing on an accrual basis and the taxpayer's books are so kept,
or unless the taxpayer employs or is required to employ the accrual basis for
the purposes of the tax imposed by chapter 235 for any taxable year in which
event the taxpayer shall report the taxpayer's gross income for the purposes of
this chapter on the accrual basis for the same period.
"Gross proceeds of sale" means the
value actually proceeding from the sale of tangible personal property without
any deduction on account of the cost of property sold or expenses of any kind.
(b) The words "gross income" and "gross
proceeds of sales" shall not be construed to include: gross receipts from
the sale of securities as defined in 15 United States Code section 78c or
similar laws of jurisdictions outside the United States, contracts for the sale
of a commodity for future delivery and other agreements, options, and rights as
defined in 7 United States Code section 2 that are permitted to be traded on a
board of trade designated by the Commodities Futures Trading Commission under
the Commodity Exchange Act, or evidence of indebtedness or, except as otherwise
provided, from the sale of land in fee simple, improved or unimproved,
dividends as defined by chapter 235; cash discounts allowed and taken on sales;
the proceeds of sale of goods, wares, or merchandise returned by customers when
the sale price is refunded either in cash or by credit; or the sale price of
any article accepted as part payment on any new article sold, if the full sale
price of the new article is included in the "gross income" or "gross
proceeds of sales"; gross receipts from the sale or transfer of materials
or supplies, interest on loans, or the provision of engineering, construction,
maintenance, or managerial services by one "member" of an "affiliated
public service company group" to another "member" of the same
group as such terms are defined in section 239-2. Accounts found to be
worthless and actually charged off for income tax purposes may be deducted, at
corresponding periods, from gross proceeds of sale, or gross income, within
this chapter, so far as they reflect taxable sales made, or gross income
earned, after July 1, 1935, but shall be added to gross proceeds of sale or
gross income when and if afterwards collected.
(c) For purposes of the tax imposed by this
chapter, a taxpayer under section 237-13(3) may report on a cash basis;
provided the taxpayer notifies the department of taxation of the basis upon
which the tax imposed by this chapter is to be reported.