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Data-Mining the Tax Code -



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The US Tax Code and the Code of Federal Regulations show that income for most Americans is "excluded, or eliminated for federal income tax purposes." You can easily see this with a computer because the Income Tax has been codified.

Download 26-CFR:
* orig. source: GPO

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GPO eCFR Don't download anything. Instead, search the eCFR (the most user-friendly, online search tool available from US Government source).
Or Compile your own copy of 26-CFR (we'll tell you how to make a complete copy of all sections from the GPO, something even they didn't bother to do until late 2004 [2005]... Not fun, but possible).

See How to Search


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Diagram of income tax.


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Poor Albert, he didn't have a computer, and didn't know  "how to determine taxable income". Unfortunately for us, he left such critical thinking to his accountants.

"The hardest thing in the world to understand is income tax."

Wrong! Tax is easy.
See: PDF - Tax law


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Aaron Russo, who made the movies "The Rose" with Bette Midler, and "Trading Places" with Eddie Murphy, made a movie that exposes the politicians and their income tax fraud.

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What is Taxed?

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Comparing Construction

"The hardest thing in the world to understand is income tax"
-- Albert Einstein

Florida state doesn't have an income tax, but you might not know it by reading their law. This is a side-by-side comparison of the laws & regulations for US Federal income tax with Florida state income tax law.

Even Einstein had trouble understanding income tax.
Poor Albert didn't have a computer.


Comparing US Federal Tax Law & Florida State Tax Law


Pay up.1.

The Federal government and Florida both have power or authority to collect taxes.



US Constitution Amendment XVI

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived"

Florida Title XIV Taxation

220.701 "Collection authority.--The department shall collect the taxes imposed by this chapter"



Federal law imposes a tax upon taxable income, in Florida it's net income [Federal law also used to refer to it as net income]. If you wish, you can use these image links to follow along (open each in a new window or tab by right-clicking).

USC at

Florida Statutes:

FEDERAL LAW - United States Code, Title 26 FLORIDA STATE TAX LAW - Title 14

Tax imposed

26 USC Sec. 1
"There is hereby imposed on the taxable income of - [(a) every married individual, (b) every head of household, (c) every... unmarried individual, (d)... (i.e. citizen)] a tax"



Tax imposed

220.11 (1)
"A tax measured by net income is hereby imposed on every taxpayer ... for the privilege of conducting business, earning or receiving income in this state, or being a resident or citizen of this state."

[How can it be "on every taxpayer... for... being a citizen"? Florida has no State income tax. Yet, a tax on every citizen is actually written into Florida law, like the imposing Federal law, opposite.]



  1. Taxable income means gross income minus deductions.
  2. Gross income means all income.





26 USC Sec. 63
(a) "the term 'taxable income' means gross income minus the deductions allowed"

26 USC Sec. 61
(a) "General definition ... Except as otherwise provided ... gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;... "



[ 220.12 Net income is "taxable income" (220.13(2)) as defined in Federal law - USC Sec. 63, then becoming gross income minus the deductions allowed.]

196.012 Definitions.
(10) "Gross income means all income from whatever source derived, including, but not limited to, the following items... : earned income, income from investments, gains derived from dealings in property, interest, rents, royalties, dividends, annuities, income from retirement plans, pensions, trusts, estates and inheritances, and direct and indirect gifts."


[So, it's "all income" in both cases, but "minus the deductions allowed"]



There are many "deductions" to examine (916 files in 2004). Federal law says "Except as otherwise provided", so we continue searching for 1) deductions, and 2) the list of taxable income.




[' otherwise provided'? ]

26 USC Sec. 863.
"Special rules for determining source

(a) Allocation under regulations
Items of gross income... and deductions, other than those specified in sections 861(a) and 862(a), shall be allocated or apportioned to sources within or without the United States, under regulations prescribed by the Secretary."


[But, USC 861 and 862 only have one deduction. So where are the plural - 'deductions'?]

[Net income is "adjusted federal income", 220.12]

<---- moving to federal side, focusing on deductions



USC 863 tells us that more "deductions" exist, and "shall be allocated... under regulations prescribed by the Secretary". USC 863's corresponding regulation is CFR 863.




26 CFR Sec. 863-1
"Allocation of gross income ...
(c) Determination of taxable income. The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Sec. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States."

["the rules... for determining taxable income" (1 file found). Only one regulation in the CFR contains this term - among millions of words. It clearly commands "taxable income... will be determined under the rules of Sec. 1.861-8"]

[Net income is "adjusted federal income", 220.12]

<---- continuing with federal side,
how to determine taxable income



Next, examining 861-8, we see the "specific guidance" (1 file) for the rules for deductions. The term, specific guidance, is written only once in the entire Income Tax, in sec. 861.




26 CFR 861-8
"Computation of taxable income..."

(a)(1) "Scope. This section provides specific guidance ... prescribing rules for the allocation... of... deductions of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer... See... (f)(1) of this section for a list..."

(2) "A taxpayer... is required to allocate deductions to a class of gross income"

(3) "a 'class of gross income' ...may consist of one or more items... of gross income enumerated in section 61, namely:
 (i) Compensation for services, including fees, commissions, and similar items;
 (ii) Gross income derived from business;
 (iii) Gains derived from dealings in property;
 (iv) Interest;..."

(4) "... Gross income ... may include, or consist entirely of, excluded income. See paragraph (d)(2) of this section"

(b) "Allocation--(1) ...gross income to which a specific deduction is definitely related is referred to as a "class of gross income'' and may consist of one or more items of gross income. See... paragraph (d)(2) of this section which provides that a class of gross income may include excluded income."

(d)(2) "For guidance, see Sec. 1.861-8T(d)(2)".

Florida State Income Tax

[Net income is "adjusted federal income", 220.12]

<---- continued with federal,
how to determine taxable income



Saying the above once again - "This section provides specific guidance... [and ] Gross income [including income enumerated in the given list] ... may include, or consist entirely of, excluded income... For guidance, see Sec. 1.861-8T(d)(2)"

And finally, Federal law compared to its Florida equivalent.




[What is taxed: Federal - the exact list, determined by measurable and repeatable results, see How to Search]

26 CFR Sec. 861-8T(d)(2)
(i) the following rules shall apply to take account of income that is exempt or excluded...with respect to allocation and apportionment of deductions.

(ii) ...the term exempt income means any income that is, in whole or in part, exempt, excluded, or eliminated for federal income tax purposes.

(iii) Income that is not considered tax exempt. The following items are not ... exempt, eliminated, or excluded...and, thus [...thus are taxable]:
(A) foreign taxpayer
(B) DISC or a FSC
(C) possessions corporation...
(D) Foreign earned income as defined in section 911 and the regulations thereunder


[What is taxed: in Florida - the exact list, also determined by measurable and repeatable results, see How to Search]



[Federal regulations use many pages to show what Florida law can show in a fraction of pages.]



220.02 Legislative intent.-- (1) It is the intent of the Legislature in enacting this code to impose a tax upon all
, and other
artificial entities
... Subject ... for the privilege of conducting business, deriving income, or existing



Result: An individual citizen is not taxed on domestic income.


Result: An individual citizen is not taxed on domestic income.



What happened... to "A tax... imposed on every taxpayer... being... a citizen", on "all income" in Florida?

In each case, we are eventually shown the exact list of what is taxed. Both Florida and the Feds make it clear, but in the federal tax, "the following items are not ... excluded" [i.e. taxable].

Ultimately, we find that only GROSS INCOME is "all income from whatever source." TAXABLE INCOME is a completely different subject and must be specifically listed, because EXEMPT INCOME is not specified. What is taxed is listed in the Florida code, and also listed in the Code of Federal Regulations.

According to the Principles of Statutory Construction, if a list in a statute does not include a particular item, it has been excluded from the list, and is "excluded from the statute's coverage or application."

The courts, the laws, and regs, tell us that we are "subject to" and "liable to" the income tax, and accurately so, but if we see what we are subject for, and liable for, we see what is really taxed. It may apply to you, or it may not. Only by finding who, what, when, where, and how can we accurately determine any tax. Such instructions and information are required, and thus, are provide in the regulations.

Every troll wants a toll.
Sams wants whatever, but find out what the tax rules say - - Data-Mining Tax Code
Fat Sam wants 'whatever source'.
Download the regulations

US citizens do owe a tax, but only upon "Foreign earned income". This is why the code says "the remainder, if any, shall be included in full as taxable income". Most US citizens don't have foreign earned income, which is why CFR 61(b) can say "more common items... are... excluded... entirely."


Attention Researchers

If any link has disappeared, try to copy and paste the link address at


The intended purpose of this website,, is to data mine with a computer the Internal Revenue Code, and the Code of Federal Regulations, Title 26, for the "codes" (e.g. taxable income, gross income, excluded income, eliminated income, exempt income, deductions, allocation, apportionment, etc), for rules, and instructions, for determining income tax. The results have been published throughout this website. It should be evident these search methods may be applied to any Title of Law, or large volume of text, and in any country that has codified laws and rules. See How to Search.

Nothing is for sale at Information posted at should not be considered legal advice and is solely for educational purposes. The reader should not rely on information provided herein to determine tax.

Do not accept this website as tax advice.
is only tax research from data mining tax law.

To contribute - See How to Search, and Contact Us.

We do not sell, promote, or advise anything, but data-mining, searching, and reading tax code with the only appropriate code tool ... your computer.

We do find every occurrence of a particular code-term to establish precisely what is written, and what is not written in tax law. When we say, no other rule or statute exists - for example, regarding excluded income, we show you how many files contain this important code term, and how we searched for it with a computer. You can easily verify any of the laws, rules, or code-terms in question, and you should verify every result because it is your duty to know and follow the law. Ignorance is no excuse.

You are responsible for doing your taxes.

Questions: If you have questions, try asking your Congressperson or Senator.

Question Ask your lawmaker to explain these Sec. 861 search results ...

  1. "eliminated income" - Sec. 1.861-8(d), 1.861-8(d)(2), 1.861-8T(d)(2)
  2. "excluded and eliminated items of income" - Sec. 1.861-8T(d)
  3. "eliminated items" - Sec. 1.861-8T(d)
  4. "excluded income" - Sec. 1.861-8 and 1.861-8T
  5. "income that is exempt or excluded" - Sec. 1.861-8T(d)(2)
  6. "specific sources" - Sec. 1.861-8(a)(1)
  7. "specific guidance" - Sec. 1.861-8(a)(1)
  8. "how to determine taxable income" - Sec. 1.861-8(a)(1)
  9. "the rules [of Sec. 1.861-8 ...] for determining taxable income" - Sec. 1.863-1(c)
  10. "Exempt income ... defined" - Sec. 1.861-8T(d)(2)(ii)
  11. "income that is not considered tax exempt" [i.e. taxable income] - Sec. 1.861-8T(d)(2)(iii)


Ask your Congressman and Senator ...

Question If "Exempt income" is "defined" in Sec. 861, why is Sec. 861 frivolous?

Find your Congressperson:
Find your Senator:

Answers: If you want answers, you can try asking the press - the American media and foreign media.


The Code of Federal Regulations

When searching tax law, we pay close attention to 26 CFR...

"the Official Interpretation"

"Federal Income Tax Regulations (Regs) are the official Treasury Department interpretation of the Internal Revenue Code"
- Internal Revenue Manual,
"Federal Tax Regulations pick up where the Internal Revunue Code (IRC) leaves off by providing the official interpretation of the IRC"

The Code of Federal Regulations are the rules, written in plain English, which both the public and the IRS must follow:

"The Service is bound by the regulations."
- Internal Revenue Manual,

Since "the Service is bound," we can be sure that we are playing by the same rules. It does not require a law degree to understand them. See How to Search and Search Examples.



All data mining research contained herein is Copyright © 2001-2011 Zolt [at] Permission is hereby granted for all use, Copyleft © 2001-2011 Zolt [at] Many logos and images are owned by others and protected by copyright and/or trademark. We believe their use qualifies as fair use under United States copyright law.