CHAPTER 6

“Above the Line” Deductions

“Take it off. Take it all off. . . .”

GYPSY ROSE LEE

INCOME TAX RATES

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Our tax system is founded on a multistep computation. You begin with gross income. This is all income, all accession to wealth, clearly realized, over which you have dominion, less those items defined earlier as tax exclusions. From gross income you then subtract a certain category of expenses called by tax practitioners adjustments or above the line deductions. A deduction is a reduction of your taxable income—the income base on which your tax is imposed. Above the line deductions include trade and business deductions, alimony, moving ...

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