Wednesday, April 23, 2014


Have you searched Income tax law for "exempt, eliminated, or excluded income"? 
Most people can work their whole lives ... and tax professionals can muddle through entire careers, without once bothering to search for "deductions", "excluded income", or even basics, such as the codified definition of "Exempt income", or "Income that is not."

So, now its time ...
Go to US Government Printing Office Code of Federal Regulations
Click on Simple Search
Enter Title 26, and search for...

Search term & Result
excluded income - Sec. 861 (also first written occurrence is in 861)
how to determine taxable income - Sec. 861
the sources of income for purposes of the income tax - Sec. 861
the term exempt income means - Sec. 861
exempt, excluded, or eliminated - Sec. 861 (Exempt income)
Income that is not considered tax exempt - Sec. 861 (Taxable income)
exempt, eliminated, or excluded income - Sec. 861
income that is exempt or excluded - Sec. 861
eliminated income - Sec. 861
eliminated items - Sec. 861
eliminated for federal income tax - Sec. 861
gross income may include excluded income - Sec. 861
specific sources - Sec. 861
specific guidance - Sec. 861
deductions to excluded income - Sec. 861
allocation and apportionment of taxable income - Sec. 863-2, refers to 861
allocation and apportionment of deductions - Sec. 861
allocation and apportionment of expenses - Sec. 861
allocation and apportionment to exempt, excluded or eliminated income - Sec. 861
“deductions” - Sec. 861 - in "quotes", now buried by GPO, see 1.861-8(a)

Tax Professionals?
1. "income that is exempt"
2. "Income that is not"
A real pro would already know where "Exempt income" is legally defined.
Is it ignorance of the law?

Exempt income -
26 CFR 1.861-8T(d)(2)(ii)

Income that is not -
26 CFR 1.861-8T(d)(2)(iii)

Nothing is for sale at
No products. No advice.
Just pure data mining.

According to the Government Printing Office, all of these subjects are located in Section 861. Coincidence? Frivolous? No. "Exempt income" is also legally defined (codified exclusively) in Sec. 861. So, 861 can never be frivolous.