The government considers income to be any and all increase to your wealth. Any deductions that you receive from that income is solely and strictly at the leisure of legislative grace. There are two reasons that Congress will issue these reliefs to you: 1) to avoid double taxation and 2) to create a social action.
Under the concept of social action Congress has legislated (made law) that people who are involved in illegal activities are allowed to recapture their costs before they figure their net profit. Unless you are a drug dealer then you are not allowed to deduct these expenses from your business... ... ... I guess I am dumbfounded that congressional leaders actually think that this would actually be a deterrent to potential drug dealers. Maybe white collar drug dealers but really, Congress needs to visit the Cass Corridor of Detroit, or Woodward Avenue before they waste time coming up with this stuff.
I've also been thinking about how Congress does not tax Municipal Bonds (The investments of government municipalities). Is there a bit of admission that the activities of government need to have an added bonus to make them competitive in the market place? I find it thought provoking that none of my investment friends have suggested that I could make good money in muni-bonds. In fact, the only time they suggest such a vantage point is as I am to reach retirement for a safer investment... ... ... I'm just thinking.
So, these thoughts were not meant to help you as much as they were to share with you some of the ideas that are flitting through my head as I consider the tax code. I hope you didn't get scared off.
John
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