### Question
Can you define what ordinary gross income” means the gross income determined by excluding—


(A) all gains from the sale or other disposition of capital assets,


(B) all gains (other than those referred to in subparagraph (A)) from the sale or other disposition of property described in section 1231(b), and


(C) in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof: [1](#543_1_target)


#### (2) Adjusted ordinary gross income


The term “adjusted ordinary gross income means?


### Answer
**Ordinary gross income” means the gross income determined by excluding—


(A) all gains from the sale or other disposition of capital assets,


(B) all gains (other than those referred to in subparagraph (A)) from the sale or other disposition of property described in section 1231(b), and


(C) in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof: [1](#543_1_target)


#### (2) Adjusted ordinary gross income


The term “adjusted ordinary gross income** is defined as the following in *26 U.S.C. § 543*:

> the ordinary gross income adjusted as follows:


#### (A) Rents


From the gross income from rents (as defined in the second sentence of paragraph (3) of this subsection) subtract the amount allowable as deductions for—


(i) exhaustion, wear and tear, obsolescence, and amortization of property other than tangible personal property which is not customarily retained by any one lessee for more than three years,


(ii) property taxes,


(iii) interest, and


(iv) rent,


  

to the extent allocable, under regulations prescribed by the Secretary, to such gross income from rents

#### Citation:
  - *26 U.S.C. § 543*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter G-Corporations Used to Avoid Income Tax on Shareholders > PART II-PERSONAL HOLDING COMPANIES**

