The parent's reference to taxation has no basis in reality; your understanding of taxation is correct. You are only taxed on income. If you have money in the

The parent's reference to taxation has no basis in reality; your understanding of taxation is correct. You are only taxed on income. If you have money in the bank, and you receive more money, that new money gets taxed. If you own a company, and it increases in value from $1M to $2M over a year (but you don't sell it), you are not taxed, because you haven't received any actual income.