|FORMS: 9.9 EXEMPT INCOME|
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This form is useful during an IRS examination for the purposes of establishing exempt income.
A "class of gross income" "may consist of one or more items... of gross income enumerated in section 61." [26 C.F.R. § 1.861-8(a)(3)]
"[P]aragraph (d)(2) of this section... provides that a class of gross income may include excluded income." [26 C.F.R. § 1.861-8(b)(1)]
(26 C.F.R. § 1.861-8(d)(2) redirects the reader to 26 C.F.R. § 1.861-8T(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." [26 C.F.R. § 1.861-8T(d)(2)(ii)]
"(iii) Income that is not considered tax exempt. The following
items are not considered to be exempt, eliminated, or excluded
income and, thus, may have expenses, losses, or other deductions allocated and apportioned
This derived from older regulations, showing that the Constitution exempts some income not exempted by statute.
"Sec. 29.21-1. Meaning of net income.
"Sec. 29.22(b)-1. Exemption--Exclusions from gross income.
Similar to the current 26 C.F.R. § 1.861-8T(d)(2) (cited above), the older regulations defining "gross income" specifically listed what is not exempt by statute or the Constitution.
"Sec. 29.22(a)-1. What included in gross income.
(These activities match the activities listed in the older regulations under Section 119 of the 1939 Code, which is the predecessor of the current Part I of Subchapter N.)