Example "eliminated income": (2 file(s) found) Fact "eliminated income" is only prescribed in two sections, 861-8, and 861-8T. So, thousands of sections (files) exist in the Code of Federal Regulations, but only one section, Sec. 861, can explain anything about income that is eliminated. And, it's explained just before the list of "income that is not ... exempt" (i.e. taxable). Here are results of some initial searches... "calculate taxable income": (0 file(s) found) "calculating tax": (1 file found) [Not Applicable] "computing income tax": (2 file(s) found) [N/A] "totaling tax": (0 file(s) found) "adding taxable income": (0 file(s) found) "adding income tax": (0 file(s) found) "adding tax": (1 file found) [N/A] "add tax": (0 file(s) found) "figure tax": (0 file(s) found) "figuring tax": (0 file(s) found) "figure the tax": (0 file(s) found) "finding taxable income": (0 file(s) found) "how to determine income tax": (0 file(s) found) "what is taxable income": (0 file(s) found) "what is taxed": (0 file(s) found)   As you can see, blindly guessing for "search terms" isn't the way to go. Instead, try making a diagram, or a visual of the objects you wish to follow. Simply drawing circles with lines between them will work. (If you want something better, learn about diagrams and try some free diagram tools.)

Don't believe everything you hear. Search the tax regulations and verify. "Eight decades of amendments... to [the] code have produced a virtually impenetrable maze... The rules are unintelligible to most citizens... The rules are equally mysterious to many government employees who are charged with administering and enforcing the law". -- Shirley Peterson, Former IRS Commissioner, April 14, 1993 at SMU

Eventually, you'll find our Income Tax really only has two classes, or objects:

1. excluded income
2. taxable income

If your income is not taxable income, then it is not taxed. It is excluded.

So, What is excluded?

 

Follow...
Source: http://ecfr.gpoaccess.gov

• "excluded income": (7 files/regs, 13 matches, among over 9,000 sections)
  The specifics are in Sec. 861.


• "eliminated income": (2 files/regs, 4matches) Both sec. 861


• "eliminated items": (1 file/reg, 1 matches) Sec. 861


• "income that is exempt": (7 files, 8 matches) Sec. 861


• "income that is exempt or excluded": (1 file, 1 match) Sec. 861


• "how to determine taxable income": (1 file) Sec. 861


• "specific sources": (1 file) Sec. 861


• "specific guidance": (1file) Sec. 861


• "income that is not considered tax exempt": (1 file) Sec. 861

 

Section 861-8T is the only regulation in 26 CFR, which prescribes both "income that is exempt" and "income that is not ... exempt".

These are just a few results, but dozens of code-terms and rules are found only ONCE, or occur in just one section, in Title 26 CFR ...

 

	Results from Regulations

These terms are written exclusively in Sec. 861

* Note: Totals (for files/regs found) will change slightly every year because the occurrences of some terms may increase every year as the lawmakers do their thing. These results come from year 2004 regs.

Search options:

1. Use your local computer to search a copy of the GPOs Code of Federal Regulations, Title 26. Download and compile your copy from the Government Printing Office website, see How to Search.
2. Use the eCFR online to search tax regulations. These results vary slightly. For example, the eCFR search engine may ignore terms, or combinations, that contain italic words.

eCFR results are called 'matches.' So, one 'file' (a regulation) may have several 'matches', which are the written occurrences of a code-term.

1. "how to determine taxable income": (1 file/regulation, 2 matches) Sec. 861
   
2. "specific guidance" AND "rules" AND "taxable income": (1 file/reg) Sec. 861
   
3. "the rules" AND "for determining taxable income": (1 file, reg) Sec. 863 referring to 861
   
4. "rules contained in this section apply in determining taxable income": (1 file, reg) Sec. 861
   
5. "income for purposes of the income tax": (1 file, reg) Sec. 861
   
6. "eliminated income": (2 file(s) found) Secs. 861-8 and 861-8T
   
7. "eliminated items": (1 file found) Secs. 861-8T
   
8. "specific sources": (1 file found) Sec. 861
   
9. "[gross] income from a specific source": (1 file found) Sec. 861
   
10. "income from specific sources": (1 file found) Sec. 861
    
11. "deductions to excluded income": (1 file found) Sec. 861
    
12. "gross income enumerated": (1 file found) Sec. 861
    
13. "excluded from gross income entirely": (1 file found) Sec. 61
    
14. "how to determine tax": (1 file found) Sec. 861
    
15. "how to determine taxable income of a taxpayer": (1 file found) Sec. 861
    
16. "determining taxable income of the taxpayer": (1 file found) Sec. 861
    
17. "determining taxable income from specific sources": (1 file found) Sec. 861
    
18. "sections of the Code which require the determination of taxable income": (1 file found) Sec. 861
    
19. "determine the sources of income for purposes of the income tax": (1 file found) Sec. 861
    
20. "taxable income from sources within the United States shall consist of": (1 file found) Sec. 861
    
21. "gross income means only": (1 file found) Sec. 931-1
    
22. "rules" AND "income that is exempt": (1 file found) Sec. 861
    
23. "income that is not considered tax exempt": [i.e. Income That Is Taxable (items)] (1 file found) Sec. 861
    
24. "the rules" AND "for determining taxable income from sources within the United States": (1 file found) Sec. 863
    
25. "the rules" AND "determining taxable income of the taxpayer from specific sources": (1 file found) Sec. 861
    
26. "determining taxable income" AND "excluded income": [containing both terms] (1 file found) Sec. 861
    
27. "determine tax" AND "excluded income": [containing both terms] (1 file found) Sec. 861
    
28. "specific","guidance","rules","taxable","income","apply","how to" AND "taxable income": [ containing all terms ] (1 file found) Sec. 861 [Long boolean searches require using the WinMerge tool, or similar. See How to Search]
    
29. "specific","guidance","applying", "rules" AND "prescribing": [ containing all five terms ] (1 file found) Sec. 861
    
30. "rules" AND "prescribing" AND "taxable income": [ containing all three terms ] (2 file(s) found) Sec. 861
    
31. "prescribing" AND "excluded" AND "taxable income": [ containing all three terms ] (1 file found) Sec. 861
    
32. "prescribing" AND "exempt" AND "taxable income": [ containing all three terms ] (1 file found) Sec. 861
    
33. "determine the sources of income": (1 file found) Sec. 861
    
34. "determine the source of income": (1 file found) Sec. 863
    
35. "determination of sources of income": (1 file found in 2003) Sec. 860G-3 - Now 2 files found in 2004.
36. etc.

* These results don't even include the fact that the rules for the allocation and apportionment of deductions, expenses, and losses, are also located in Sec. 861. These results are from 2004 regulations. The 'files found' may increase slightly each year as new rules are created or amended by the Treasury. This is more likely to happen with boolean results.

Boolean and Proximity Search Results

Most boolean and proximity results were moved here.

 

Additional Results

Additional supporting search terms were moved here.

Results from the statutes (26USC) can be found in Who is taxed and According to Law.

---

For information on Text Data Mining, search the internet. An introductory discussion can be found at:
http://www.sims.berkeley.edu/~hearst/papers/acl99/acl99-tdm.html

---

 

Results: 1 through ... N - Use the links above

 

- "the tax imposed is upon taxable income": (1 file found)

26CFR1.1-1
(a)(1)...The tax imposed is upon taxable income (determined by subtracting the allowable deductions from gross income)...

[ This is rule #1 in the Code of Federal Regulations (CFR, the rules), which is based on a similar statement in the United States Code (USC, the law). ]

- "income for purposes of the income tax": (1 file found)

26CFR1.861-1
(a) Categories of income. Part I (section 861 and following), subchapter N, chapter 1 of the Code, and the regulations thereunder determine the sources of income for purposes of the income tax.

[ This is the only section that tells us what sources are taxable, read what it says. ]

- "eliminated income": (2 file(s) found)

26CFR1.861-8
(d) (2) Allocation and apportionment to exempt, excluded, or eliminated
income. [Reserved] For guidance, see Sec. 1.861-8T(d)(2).

[ This term only occurs in 861-8 and 861-8T. ]

- "eliminated items": (1 file found)

26CFR1.861-8T
(d) Excess of deductions and excluded and eliminated items of income.
(1) [Reserved]
(2) Allocation and apportionment to exempt, excluded or eliminated income--
  (i) the following rules shall apply to take account of income that is exempt or excluded, ...with respect to allocation and apportionment of deductions.
    (A) Allocation of deductions. In allocating deductions ... to ... gross income, exempt income (as defined in paragraph (d)(2)(ii) of this section) shall be taken into account.
  (ii) Exempt income and exempt asset defined
  (iii) Income that is not considered tax exempt. The following items are [taxable]

- "sections of the Code which require the determination of taxable income": (1 file found)

- - Note : this term only occurs only once in the entire 26 CFR - -

26cfr1.861-8
(f) Miscellaneous matters--(1) Operative sections. The operative sections of the Code which require the determination of taxable income of the taxpayer from specific sources or activities and which give rise to statutory groupings to which this section is applicable include the sections described below.
(i) ( all foreign sources )
(ii)
(iii)...

[Why is the only rule to make such a statement titled "Miscellaneous matters?" Shouldn't this be rule #2 instead of #861-8(f)(1)? And shouldn't this rule be titled "Primary Matters", instead? This rule says, the "sections of the Code which require the determination of taxable income... include the sections described below." No other variations of this statement can be found after reading all 817 files containing the term "taxable income." Other than Sec. 861-864 (which are part of the rules for determining taxable income) this list has only 22 "sections described below." It actually makes hundreds of other sections, and rules irrelevant for determining our taxable income. According to Principles of Statutory Construction, if a list does not include something it is excluded on purpose. Principles are such things as beginning a regulation with letters, and not numbers, like with (a) instead of (1). Principles create a foundation for additional rules. Like driving on the right side of the road instead of the left is established first before we can worry about a speed limit. Take a moment to look up this "miscellaneous" rule. This is just one of several, which all lead to the same result; that most Americans don't have any taxable income.]

[ For those who believe Sec. 861-8(f)(1) is not a list of sources of income... ]

CFR Sec. 861-8(a)(1)
The rules contained in this section apply in determining taxable income of the taxpayer from specific sources... See paragraph (f)(1) of this section for a list...

(f)(1)
(i)...the statutory grouping is foreign source income ...
(ii) reserved
(iii) international sales and foreign sales
[...and many more foreign concerns listed]

- "excluded from gross income entirely": (1 file found)

26cfr1.61-1
Sec. 1.61-1 Gross income.

(b) ...more common items which are included in or excluded from gross income entirely, or treated in some special manner. To the extent that another section of the Code or of the regulations thereunder, provides specific treatment for any item of income, such other provision shall apply notwithstanding section 61 and the regulations thereunder.

- "deductions to excluded income": (1 file found)

26cfr1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States ...

(a) In general--
  (4) Statutory grouping of gross income ... See paragraph (d)(2) of this section with respect to the allocation and apportionment of deductions to excluded income.

- "gross income enumerated": (1 file found)

26cfr1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States ...

(a) In general--
  (3) Class of gross income. ... 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 enumerated in section 61".

- "how to determine tax": (1 file found)

[ - - This string of text only occurs in 1 regulation. Use *, "how to determine tax*" to find when using GPO search engine]

26cfr1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

- "how to determine taxable income": (1 file found)

[ This term only occurs in 1 Regulation, on 1 page, in 1 paragraph in the entire 26 CFR (millions of words). ]

26cfr1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

[ Not only does Sec. 861-8 tell us "how to determine taxable income", it is titled "Computation of taxable income": (37 file(s) found), it lists the "specific sources" of income (1 file found), it "provides specific guidance", and says that "The rules contained in this section apply in determining taxable income ... under other sections of the Code." These rules tell us to see paragraph (f)(1) for a list of taxable sources, and to follow paragraph (d)(2) to see the list of taxable items. Neither list requires the income of most Americans. ]

- "how to determine taxable income of a taxpayer": (1 file found)

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States...
...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections...

- "determining taxable income of the taxpayer": (1 file found)

26CFR1.861-8
(a) In general--(1) Scope...
...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections...

- "determine tax" and "excluded income": (1 file found)

CFR Sec. 861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance... See paragraph (f)(1) of this section for a list...

(a)(4)
the [...income] may include, or consist entirely of, excluded income. See paragraph (d)(2) of this section with respect to... excluded income.

(b)(1)
See paragraph (d)(1)...that in a taxable year there may be no item of gross income in a class or less gross income than deductions allocated to the class, and paragraph (d)(2) of this section which provides that a class of gross income may include excluded income.

[ Just one section in the CFR has both text strings "determine tax" and "excluded income". This one section is also the only section that tells us "how to determine taxable income", and is found under the title "Computation of taxable income". ]

- "determining taxable income" and "excluded income": (1 file found)

26CFR1.861-8
(a) In general--(1) Scope...
...The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections...

(a)(4)
...where the operative section so requires, the statutory grouping or the residual grouping may include, or consist entirely of, excluded income . See paragraph (d)(2) of this section with respect to the allocation and apportionment of deductions to excluded income.

(b)(1)
See paragraph (d)(1)...that in a taxable year there may be no item of gross income in a class or less gross income than deductions allocated to the class, and paragraph (d)(2) of this section which provides that a class of gross income may include excluded income.

[Only one section has both of these terms.]

- "the rules... for determining taxable income": (1 file found)

The ONLY occurrence of this term in CFR Title 26. See How to Search.

26CFR1.863-1 (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 Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States.

[ The "rules" provide over a dozen unique terms (closer to two dozen now) that clearly show "taxable income" is very limited. ]

- "the rules... for determining taxable income from sources within the United States": (1 file found)

The ONLY occurrence of this term in CFR Title 26. Found within the search for "taxable income from sources within the United States": (8 file(s) found).

26CFR1.863-1 (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 Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States.

- "the rules... determining taxable income of the taxpayer from specific sources": (1 file found)

The ONLY occurrence of this term in CFR Title 26.

26CFR1.861-8
(a) In general--(1) Scope.

... The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

- "rules contained in this section apply in determining taxable income": (1 file found)

The ONLY occurrence of this term in CFR Title 26. WinMerge tool required.

26CFR1.861-8
(a) In general--(1)Scope.

... The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

[ How come there are no other sections claiming to have the rules which "apply in determining taxable income?" ]

- "determining taxable income from specific sources": (1 file found)

26CFR1.861-8(f)(3)(ii)
Relationship of sections 861, 862, 863(a), and 863(b). Sections 861, 862, 863(a), and 863(b) are the four provisions applicable in determining taxable income from specific sources. Each of these four provisions applies independently.

- "determine the sources of income for purposes of the income tax": (1 file found)

26cfr1.861-1
Sec. 1.861-1 Income from sources within the United States.

(a) Categories of income. Part I (section 861 and following), subchapter N, chapter 1 of the Code, and the regulations thereunder determine the sources of income for purposes of the income tax. These sections explicitly allocate certain important sources of income to the United States or to areas outside the United States, as the case may be; and, with respect to the remaining income (particularly that derived partly from sources within and partly from sources without the United States), authorize the Secretary or his delegate to determine the income derived from sources within the United States, either by rules of separate allocation or by processes or formulas of general apportionment. The statute provides for the following three categories of income:
(1) Within the United States...
(2) Without the United States...
(3) Partly within and partly without the United States...
...See Secs. 1.861-8 and 1.863-1.

[ The Secretary is authorized to prescribe, so at this point it matters not that the law is missing the action verbs found throughout the rules. (Amazingly, the term "prescribing rules" is only found once in 26 CFR and is located in Sec. 861-8.) If we search for "rules" and "allocation" we come upon Sec. 861-8(b), which tells us to see 861-8(d)(2). Paragraph (d)(2) tells us it has been "Reserved" and that we should go see Sec. 861-8T(d)(2). In 861-8T(d)(2) we are told "In allocating deductions...exempt income shall be taken into account." Shortly after, in 861-8T(d)(2)(iii), we are finally given the actual list of items of taxable income. ]

- "determine the sources of income": (1 file found)

26cfr1.861-1
Sec. 1.861-1 Income from sources within the United States.

(a) Categories of income. Part I (section 861 and following), subchapter N, chapter 1 of the Code, and the regulations thereunder determine the sources of income for purposes of the income tax.

- "determine the source of income": (1 file found)

26CFR1.863-3
(a) In general--(1) Scope. Paragraphs (a) through (e) of this section apply to determine the source of income derived from the sale of inventory property (inventory), which a taxpayer produces (in whole or in part) within the United States and sells outside the United States, or which a taxpayer produces (in whole or in part) outside the United States and sells within the United States (Section 863 Sales). A taxpayer must divide gross income from Section 863 Sales between production activity and sales activity using one of the methods described in paragraph (b) of this section. The source of gross income from production activity and from sales activity must then be determined under paragraph (c) of this section. Taxable income from Section 863 Sales is determined under paragraph (d) of this section.

(c) Determination of the source of gross income from production activity and sales activity--(1) Income attributable to production activity--(i) Production only within the United States or only within foreign countries--(A) Source of income. For purposes of this section, production activity means an activity that creates, fabricates, manufactures, extracts, processes, cures, or ages inventory...
...the only production activities that are taken into account for purposes of Secs. 1.863-1, 1.863-2, and this section are those conducted directly by the taxpayer. Where the taxpayer's production assets are located only within the United States or only outside the United States, the income attributable to production activity is sourced where the taxpayer's production assets are located...

(d) Determination of source of taxable income. Once the source of gross income has been determined under paragraph (c) of this section, the taxpayer must properly allocate and apportion separately under Secs. 1.861-8 through 1.861-14T the amounts of its expenses, losses, and other deductions to its respective amounts of gross income from Section 863 Sales determined separately under each method described in paragraph (b) of this section.

- "determination of sources of income": (1 file found in 2003)
*There are 2 files found in 2004.

26cfr1.860G-3
[[Page 122]]
(b) [Reserved]
[T.D. 8458, 57 FR 61313, Dec. 24, 1992]

TAX BASED ON INCOME FROM SOURCES WITHIN OR WITHOUT THE UNITED STATES

Determination of Sources of Income

[ Note: Sec. 860G-3(b) appeared to make no sense, or have any meaning. It is shown here complete. Further research shows "Determination of Sources of Income", used to be the title given to Sec. 861, which is the section immediately following this section. Also, this is still the title used for Sec. 861 in the USCS.
The following portion of ammendments comes from the USC: ]

AMENDMENTS
1988 - Pub. L. 100-647, title I, Sec. 1012(h)(2)(D), Nov. 10,
1988, 102 Stat. 3503, substituted ''Source rules and other general
rules relating to foreign income'' for ''Determination of sources
of income'' in item for part I.]

26cfr1.851-1
This is the new file found in 2004 online regulations. This section contains the Table of Contents for Secs 851-907. The titles for Sec. 861 begin with the following:

TAX BASED ON INCOME FROM SOURCES WITHIN OR WITHOUT THE UNITED STATES

Determination of Sources of Income

- "specific sources": (1 file found)

26CFR1.861-8
(a) In general--(1) Scope.

... The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(a)(4) ... gross income from a specific source or activity which must first be determined in order to arrive at ``taxable income'' from which specific source or activity under an operative section. (See paragraph (f)(1) of this section.) ...
...In some instances, where the operative section so requires, the statutory grouping or the residual grouping may include, or consist entirely of, excluded income. See paragraph (d)(2) of this section with respect to the allocation and apportionment of deductions to excluded income.

(d)(2) [leads to 861-8T(d)(2)(iii), which has the only list of items that are taxable in every case]

(f) Miscellaneous matters--(1) Operative sections. The operative sections of the Code which require the determination of taxable income of the taxpayer from specific sources or activities and which give rise to statutory groupings to which this section is applicable include the sections described below.
(i) (foreign or foreigner related income)
(ii) (more foreign...)
(iii) ...

(f)(3)(ii)
Relationship of sections 861, 862, 863(a), and 863(b). Sections 861, 862, 863(a), and 863(b) are the four provisions applicable in determining taxable income from specific sources. Each of these four provisions applies independently.

[ We can see that "specific sources" only occurrs twice in 26 CFR. First, it is written in subsection (a) and we are told where to find the list. Then, "specific sources" is written in subsec. (f), which is the list. The regulations show that in general, all income from whatever source is taxable for somebody, somewhere, but for who, where and what? Paragraph (f)(1) provides the only list of "specific sources" that are taxable in every case. The conclusion is supported by the search result of "specific sources" (1 file found), and by the "Scope" of the rules contained in this section, which show to who, where, and what the rules do apply. The conclusion is further supported by another list, the list of taxable items. To read which "items" are taxable in every case, see paragraph (d)(2). It provides the list of items that are not excluded (therefore taxable), or just search for "income" and "that is taxable", and "income that is not".]

- "income from a specific source": (1 file found)

[resulting from the search for "gross income from a specific source"]

26CFR1.861-8
(a) (4) Statutory grouping of gross income and residual grouping of gross income. For purposes of this section, the term ``statutory grouping of gross income'' or ``statutory grouping'' means the gross income from a specific source or activity which must first be determined in order to arrive at ``taxable income'' from which specific source or activity under an operative section. (See paragraph (f)(1) of this section.) Gross income from other sources or activities is referred to as the ``residual grouping of gross income'' or ``residual grouping.''
... In some instances, where the operative section so requires, the statutory grouping or the residual grouping may include, or consist entirely of, excluded income. See paragraph (d)(2) of this section with respect to the allocation and apportionment of deductions to excluded income.

- "income from specific sources": (1 file found)

26CFR1.861-8(f)(3)(ii)
Relationship of sections 861, 862, 863(a), and 863(b). Sections 861, 862, 863(a), and 863(b) are the four provisions applicable in determining taxable income from specific sources. Each of these four provisions applies independently.

- "taxable income from sources within the United States shall consist of": (1 file found)

26CFR1.861-1(b)
Taxable income from sources within the United States. The taxable income from sources within the United States shall consist of the taxable income described in paragraph (a)(1) of this section plus the taxable income allocated or apportioned to such sources, as indicated in paragraph (a)(3) of this section.

[ Following this rule points us to two lists. One list providing sources of taxable income, and the other list providing items of income that are taxable. These lists show that only our foreign sources and items are taxable for a US citizen. First, we see paragraph(a)(1) as we are instructed. ]

861-1 paragraph (a)(1)
...taxable income from sources within the United States... See Secs. 1.861-8 and 1.863-1.

861-1 paragraph (a)(3)
Partly within and partly without the United States. The taxable income allocated or apportioned to sources within the United States... shall be determined in accordance with section 863 (a) or (b). See Secs. 1.863-2 to 1.863-5, inclusive.

26CFR1.863-1
(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 Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States.

[ If we follow any of the previous references, they all lead to CFR Sec. 861-8. The regulations are based on the USC "in accordance with section 863 (a) or (b)." So, we examine 861-8 next. ]

26CFR1.861-8
"Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope.
...how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined...
... This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections."

[ CFR Sec. 861-8 paragraph (f)(1) is the first list we are pointed to, and it lists the sources and "sections of the Code which require the determination of taxable income." This list excludes the income of most Americans. CFR Sec. 861-8(b) begins the steps required to determine exempt income by telling us about "allocation" and that we should see 861-8(d)(2). And (d)(2) points us to the second list, which is eventually found in CFR Sec. 861-8T(d)(2)(iii). ]

CFR Sec. 861-8T(d)(2)(iii)
Income that is not considered tax exempt. The following items are not considered to be exempt, eliminated, or excluded income and, thus, [are taxable and] may have expenses, losses, or other deductions allocated and apportioned to them:
(A) In the case of a foreign taxpayer...
(B) the gross income of [international and foreign sales]
(C) the gross income of a possessions corporation... and
(D) Foreign earned income...

[ This second list in Sec. 861-8T(d)(2)(iii) also excludes the income of most Americans. This list is the conclusion to the process given that the rules use to prescribe what income is exempt income. Obviously, the rules do not provide a complete list of items that are excluded. The lawmakers (and Treasury Secretaries) prescribed only What is Taxed. Except for examples, the rules do not provide a complete list of excluded income like they do for included income (i.e. "Income that is not... exempt"). This condition is similar to the fact that we can only be told the amount of tax we do owe. We cannot be told the amount of tax we Do Not owe. The exclusion of income of most Americans is shown by Principles of Statutory Construction, which tell us that if a list does not contain a particular item, it has been excluded intentionally. ]

- "rules" AND "income that is exempt": (1 file found)

26CFR1.861-8T(d)(2)
Allocation and apportionment to exempt, excluded or eliminated income--(i) In general. In the case of taxable years beginning after December 31, 1986, except to the extent otherwise permitted by Sec. 1.861-13T, the following rules shall apply to take account of income that is exempt or excluded, or assets generating such income, with respect to allocation and apportionment of deductions.
(A) Allocation of deductions. In allocating deductions that are definitely related to one or more classes of gross income, exempt income (as defined in paragraph (d)(2)(ii) of this section) shall be taken into account.

[ Following "as defined in paragraph(d)(2)(ii)" ]

CFR Sec. 861-8T(d)(2)(ii)
Exempt income and exempt asset defined--(A) In general. For purposes of this section, the term exempt income means any income that is, in whole or in part, exempt, excluded, or eliminated for federal income tax purposes. The term exempt asset means any asset the income from which is, in whole or in part, exempt, excluded, or eliminated for federal tax purposes.

[ And the very next paragraph provides...]

CFR Sec. 861-8T(d)(2)(iii)
Income that is not considered tax exempt. The following items are not considered to be exempt, eliminated, or excluded income and, thus, [are taxable and] may have expenses, losses, or other deductions allocated and apportioned to them:
(A) In the case of a foreign taxpayer...
(B) the gross income of [international and foreign sales]
(C) the gross income of a possessions corporation... and
(D) Foreign earned income...

[ It says that "the following rules shall apply to... income that is exempt", and then tells us...

Income that is not... exempt
= Income that is not not taxable
= Income that is Taxable

This is the only list of items of income that are not considered exempt, eliminated, or excluded, or in other words, are taxable. The items of most Americans are not on the list. This coincides with the fact that the current federal income tax is incorrectly applied to more than the "sections of the Code which require the determination of taxable income". According to The Principles of Statutory Construction, all the items not on a list have been excluded for a reason. The result is that any items of income not on the list are "exempt, or eliminated for federal tax purposes".]

- "income that is not considered tax exempt": (1 file found)

[ also known as "Income That Is Taxable" or... What Is Taxed. In their own words, "The following items are not... excluded". This statement is also only written once in 26 CFR. Both, the title and it's first words say the same thing. It is not stated anywhere more clearer. They both occur only once, and together. ]

26CFR1.861-8T(d)(2)(iii)
Income that is not considered tax exempt. The following items are not considered to be exempt, eliminated, or excluded income and, thus, [are taxable and] may have expenses, losses, or other deductions allocated and apportioned to them:
(A) In the case of a foreign taxpayer (including a foreign sales corporation (FSC)) computing its effectively connected income, gross income (whether domestic or foreign source) which is not effectively connected to the conduct of a United States trade or business;
(B) In computing the combined taxable income of a DISC or FSC and its related supplier, the gross income of a DISC or a FSC;
(C) For all purposes under subchapter N of the Code, including the computation of combined taxable income of a possessions corporation and its affiliates under section 936(h), the gross income of a possessions corporation for which a credit is allowed under section 936(a); and
(D) Foreign earned income as defined in section 911 and the regulations thereunder (however, the rules of Sec. 1.911-6 do not require the allocation and apportionment of certain deductions, including home mortgage interest, to foreign earned income for purposes of determining the deductions disallowed under section 911(d)(6)).

[ "Income that is not considered tax exempt" is a double negative, which really means "Income That Is Taxable." Why are the items of gross income of most Americans not included in this list as taxable? See Principles of Statutory Construction, which say if a list does not include an item, it is excluded from that list on purpose. Except for examples, the rules do not provide a complete list of excluded income like they do for included income (i.e. "Income that is not... exempt"). But consider this: a tax rulebook doesn't tell us What isn't Taxed, it tells us What Is Taxed (i.e. It won't tell you what you don't owe, only what you do owe). Here we have the most specific treatment of items of gross income in the CFR as prescribed by both "Except as otherwise provided" (USC Sec. 61) and CFR Sec. 61-1(b), "To the extent that another section of the Code or of the regulations... provides specific treatment for any item of income, such other provision shall apply notwithstanding section 61". So, no matter what Sec. 61-1(a) said about "all income from whatever source", if there is "another section" of Code, or regulations that "provides specific treatment", it shall apply, in spite of 61(a). Specifically, this other section (which is a part of 861) shows us the income of most Americans is not a taxable item of income. A citizen's income from sources within the US has been excluded from the list on purpose. This is the only list of "Income That Is Taxable" within the entire CFR. You can easily confirm this on your own computer. If needed, see How to Search, and see the 15 Min. Reading, or 5 Min. Reading. ]

 

- "gross income means only": (1 file found)

* The Treasury Dept. changed this section in Jan. 31, 2006. You can see the earlier version at http://www.access.gpo.gov/nara/cfr/cfr-table-search.html#page1

[What "gross income means" is only found in 6 regulations in the 2004 CFR, and this is one of the regs. This search result is missing from the eCFR (as of June, 2005), but it can be found in the CFR prior to 2005.]

26CFR1.931-1
(b) General rule--(1) Qualifications. In the case of a citizen of the United States or a domestic corporation satisfying the following conditions, gross income means only gross income from sources within the United States--
(i) If 80 percent or more of the gross income of such citizen or domestic corporation (computed without the benefit of section 931) for the 3-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession of the United States, and
(ii) If 50 percent or more of the gross income of such citizen or domestic corporation (computed without the benefit of section 931) for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States. ... For a determination of income from sources within the United States, see part I (section 861 and following), subchapter N, chapter 1 of the Code, and section 931(i), and the regulations thereunder.

[ So, "Gross income means all income from whatever source, unless excluded by law", BUT "In the case of a citizen of the United States... gross income means only gross income... within the United States -- If 80 percent or more" of it comes from possessions. The term ``possession of the United States'' includes American Samoa, Guam, Johnston Island, Midway Islands, the Panama Canal Zone, Puerto Rico, and Wake Island. Apparently if you work enough in a possession you can claim all the income was gained from within the United States. According to the rules, this is the most desirable condition for a taxpayer needing to reduce taxable income. But, notice this rule points us to Sec. 861, "the rules... for determining taxable income" to determine the sources of income. Don't be confused by individual Section titles. USC 7806(b) shows that the individual titles of sections, i.e. descriptive matter relating to the contents, or table of contents, and cross references, outlines, etc. are only tools for the location of a subject. The laws (and rules) are only found on the inside of these labeled sections. ]

- "rules" AND "prescribing" AND "taxable income": (2 file(s) found)

[ Only two files contains all three terms. ]

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(d)(2) Allocation and apportionment to exempt, excluded, or eliminated income. ...see Sec. 1.861-8T(d)(2).

[ If we see paragraph (f)(1), and Sec. 861-8T(d)(2) as directed, they show the income of most Americans is exempt; completely excluding our income from the list of "sections... which require the determination of taxable income", and the list of "Income that is not considered tax exempt" ( i.e. "Income That Is Taxable"). Use your computer to verify search results. (Amazingly, the term "prescribing rules" is only found once in 26 CFR and is located in Sec. 861-8.) ]

- "prescribing" AND "excluded" AND "taxable income": (1 file found)

[ Only one file contains all three terms. ]

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(d)(2) Allocation and apportionment to exempt, excluded, or eliminated income. ...see Sec. 1.861-8T(d)(2).

[ If we see paragraph (f)(1), and Sec. 861-8T(d)(2) as directed, they show the income of most Americans is exempt; completely excluding our income from the list of "sections... which require the determination of taxable income", and the list of "Income that is not considered tax exempt" ( i.e. "Income That Is Taxable"). Use your computer to verify search results. (Amazingly, the term "prescribing rules" is only found once in 26 CFR and is located in Sec. 861-8.) ]

- "prescribing" AND "exempt" AND "taxable income": (1 file found)

[ Only one file contains all three terms. ]

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(d)(2) Allocation and apportionment to exempt, excluded, or eliminated income. ...see Sec. 1.861-8T(d)(2).

[ If we see paragraph (f)(1), and Sec. 861-8T(d)(2) as directed, they show the income of most Americans is exempt; completely excluding our income from the list of "sections... which require the determination of taxable income", and the list of "Income that is not considered tax exempt" ( i.e. "Income That Is Taxable"). Use your computer to verify search results. (Amazingly, the term "prescribing rules" is only found once in 26 CFR and is located in Sec. 861-8.) ]

- "specific" , "guidance" , "rules" , "taxable" , "income" , "apply" , "how to" AND "taxable income": (1 file found)

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(d)(2) Allocation and apportionment to exempt, excluded, or eliminated income. ...see Sec. 1.861-8T(d)(2).

[ We can see this parargraph also tells us how to make a "Computation of" and that it is for "determining taxable income." If we see paragraph (f)(1), and Sec. 861-8T(d)(2) as directed, they show the income of most Americans is exempt; completely excluding our income from the list of "sections... which require the determination of taxable income", and the list of "Income that is not considered tax exempt" ( i.e. "Income That Is Taxable"). Use your computer to verify search results. Keep in mind that the rules only prescribe What is Taxed. Except for examples, the rules do not provide a complete list of excluded income like they do for included income (i.e. "Income that is not... exempt"). This is similar to the fact that rules can only tell us what we do owe; not what we do not owe. If this "argument" sounds weak, then have a look at the Principles of Statutory Construction, which tell us if an item is missing from any particular list, it has been excluded on purpose. If you want more facts, have a look at all the Search Results that only occur once, or in one regulation, and the Additional Results. They are written clearly and their intent is unmistakable. Since your denial will be great, see if you can find another set of "rules" for determination, computation, or anything else of taxable income. You may want to begin with "taxable income": (817 file(s) found) or simply "how to determine tax." See How to Search, and the Search Examples.]

- "specific" , "guidance" , "applying" , "rules" AND "prescribing": (1 file found)

26CFR1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.

(d)(2) Allocation and apportionment to exempt, excluded, or eliminated income. ...see Sec. 1.861-8T(d)(2).

[ If we see paragraph (f)(1), and Sec. 861-8T(d)(2) as directed, they show the income of most Americans is exempt; completely excluding our income from the list of "sections... which require the determination of taxable income", and the list of "Income that is not considered tax exempt" ( i.e. "Income That Is Taxable"). Use your computer to verify search results. ]

- "specific guidance" AND "rules" AND "taxable income": (1 file found)

26cfr1.861-8
Sec. 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general--(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ``deductions'') of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections.