Um, YES gifted money is included. It is up to you on your tax form to declare and what not. FYI, gifted money (unless you use the one time exemption) is technically taxible: i.e. if Grandma gives you $100 for your birthday vs. Grandma gives you $10,000 one time gift to avoid taxes. Further more, how does one expect Paypal (and others) to differenciate what is a gift and what is not? If you don't pass the threshold, the point is mute. But if you do pass the threshold and you happen to have gift money and business money, then the IRS will expect you to clear it up when you file. Just saying...
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