The Netting of Costs Against Income Receipts (Including Damage Recoveries) Produced by Such Costs, Without Barring Congress from Disallowing Such Costs‪.‬

I. INTRODUCTION This article principally argues that, under the federal income tax, costs of obtaining specific sums of money should be capitalized (as opposed to being treated as expenses), just as costs of obtaining property should be capitalized. (1) Insofar as a right or claim to money is itself "property," this thesis should be wholly noncontroversial. The result of capitalization is the creation of basis, (2) and basis is netted against the "amount realized" (3) (the proceeds of disposition), (4) to produce "gain" (includible in gross income) (5) or "loss" (potentially deductible in arriving at taxable income). (6) Since this article deals with costs of obtaining or receiving specific cash amounts, it propounds what can be referred to as a "netting" or "offset" rule, principle, or thesis. (7) The netting thesis is a straightforward application of the capitalization principle that would operate (notwithstanding perceived current tax accounting conventions) outside the arbitrary confines of the taxable year.