§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. [L 1935, c 141, pt of
§1; am L 1941, c 265, §1(a); RL 1945, §5444; RL 1955, §117-3; am L Sp 1957, c
1, §3(a); am L Sp 1959 2d, c 1, §16; HRS §237-3; am L 1977, c 26, §2; gen ch
1985; am L 1988, c 295, §2; am L 1989, c 118, §1; am L 1997, c 178, §3; am L
2000, c 262, §2]



 



Attorney General Opinions



 



  With the exception of pre-bid costs, all items entering into
the total contract price of a Capehart project contractor constitute gross
income subject to general excise taxation.  Att. Gen. Op. 61-85.



  Interest income from agreement of sale not exempt as income
from "sale of land".  Att. Gen. Op. 62-1.



  Taxability of out-of-state travel agency conducting local
tours and of local travel agent conducting out-of-state tours.  Att. Gen. Op.
65-6.



 



Case Notes



 



  "Gross income", defined.  34 H. 269.



  Exemption from gross income, "sale of real
property".  44 H. 584, 358 P.2d 539.  Sale defined. Id.



  Payments by manufacturers and other sellers to retailers
under cooperative merchandising or advertising agreements are payments for
services and constitute gross income.  51 H. 281, 458 P.2d 664.



  Interest received on agreement of sale of land does not come
within "gross receipts from the sale of land in fee simple".  52 H.
279, 474 P.2d 538.



  Interest income received by a nondomiciliary vendor from
sales of Hawaiian land found not within exemptions.  57 H. 436, 559 P.2d 264.



  Taxability of transactions between joint venture and its
member.  59 H. 307, 582 P.2d 703.



  Cited:  40 H. 722, 728, 56 H. 321, 536 P.2d 91.