I. Introduction

II. Taxation and Illegal Income

III. Effect of Illegality on Deductions

IV. Illegal Expenses of Legal Business

V. “Legitimate” Expenses of an Illegitimate Business

VI. Deductions vs. Cost of Goods Sold

VII. Is There a Constitutional Prohibition against Denying the Subtraction of Cost of Goods Sold from Gross Receipts?

VIII. Effect of Illegality on the Cost of Goods Sold

IX. Effect of Legal Stock Purchases to Acquire Goods

X. Conclusion