Believe it or not, there are a number of items that you might think of as business income, but that the IRS does not require you to report as income or pay tax on:
- contributions to capital; for example, if you deposit personal funds in your business checking account to cover a temporary cash-flow problem
- proceeds from loans
- gifts (provided they are bona fide gifts)
- cash discounts for prompt payment of bills (just report the net price after the discount as the amount of the expense; as an alternative, you can credit the amounts to a separate discount account, and include the credit balance in your business income at the end of the year)
- trade discounts you receive from suppliers
- consignments that are not recognized as sales until the merchandise is actually sold by the person to whom you consigned the goods.
- insurance reimbursements, up to the amount of your loss (but if you receive continuation-of-income benefits under a business insurance policy, these amounts must be treated as business income)
- improvements made by tenants to property they rent from you
- like-kind exchanges.