Gross Income / allocation to sources / allocation and apportionment of
deductions / Taxable Income / Tax
There is no basis in LAW for any other assumption.
26 USC SEC 61. GROSS INCOME DEFINED
(a) GENERAL DEFINITION
Except as otherwise provided in this subtitle, gross income means all income
from whatever source derived, including (but not limited to) the following
items:
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26 USC SEC 861. INCOME FROM SOURCES WITHIN THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHIN UNITED STATES
The following items of gross income shall be treated as income from sources
within the United States:
Here Gross Income is allocated to sources.
26 USC SEC 862. INCOME FROM SOURCES WITHOUT THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHOUT UNITED STATES
The following items of gross income shall be treated as income from sources
without the United States:
Here again Gross Income is allocated to sources.
26 USC SEC 863. SPECIAL RULES FOR DETERMINING SOURCE
(a) ALLOCATION UNDER REGULATIONS
Items of gross income, expenses, losses, 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. Where items of gross income are separately
allocated to sources within the United States, there shall be deducted (for
the purpose of computing the taxable income therefrom) the expenses,
losses, and other deductions properly apportioned or allocated thereto and
a ratable part of other expenses, losses, or other deductions which cannot
definitely be allocated to some item or class of gross income. The
remainder, if any, shall be included in full as taxable income from sources
within the United States.
Here again Gross Income is allocated to sources.
(b) INCOME PARTLY FROM WITHIN AND PARTLY FROM
WITHOUT THE UNITED STATES
In the case of gross income derived from sources partly within and partly
without the United States, the taxable income may first be computed by
deducting the expenses, losses, or other deductions apportioned or
allocated thereto and a ratable part of any expenses, losses, or other
deductions which cannot definitely be allocated to some item or class of
gross income; and the portion of such taxable income attributable to
sources within the United States may be determined by processes or formulas
of general apportionment prescribed by the Secretary. Gains, profits, and
income--
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Richard A. Macdonald, CPA/EA