Taxable Income from Sources Within the U.S.

Internal Revenue Code
861(b) Taxable income from sources within United States

From the items of gross income specified in subsection (a) as being income from sources within the United States there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto....
The remainder, if any, shall be included in full as taxable income from sources within the United States.

I remind the reader that "general" is the antonym and antithesis of "specific"

IRC section 63 gave us an "in general" definition of taxable income. 'Section 861(b) states in general terms.' "This section [1.861-8] provides the specific guidance for applying the cited Code sections [861(b)]"

IRC 63 gives a general definition;
IRC 861(b) gives general guidance;
Treasury Reg 1.861-8 gives specific guidance.

Code of Federal Regulations
From the U.S. Government Printing Office via GPO Access

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.

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.

        IRC section 861(b) states in "general terms" what Treasury Regulation 1.861-8 gives "specific guidance" about. In other words, IRC section 861(b) is the skeleton, and Treasury Reg. 1.861-8 is the muscle attached to the skeleton.

        Treasury Regulation 1.861-8's specific guidance is about how to 'properly apportion or allocate' "deductions". This is in opposition to the "in general" definition of taxable income found in IRC section 63.

        The rules of Treasury Regulation 1.861-8 are the rules for determining taxable income.

Code of Federal Regulations
From the U.S. Government Printing Office via GPO Access

Sec. 1.862-1(b) Taxable income.
The taxable income from sources without the United States, in the case of the items of gross income specified in paragraph (a) of this section, shall be determined on the same basis as that used in Sec. 1.861-8 for determining the taxable income from sources within the United States.

Code of Federal Regulations
From the U.S. Government Printing Office via GPO Access

Sec. 1.863-1(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.

On the next page, Bill the burger flipper is going to help us examine the rules for determining taxable income.

U.S. Federal Income Tax

Subjugation by taxation

Taxable Income from Sources Within the U.S.