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do you really EVER have a gross profit or gain?
You make log cabins, and you sell the titles. What is the basis cost for your sale of capital? Everything you put into these, including the efforts you lent to the endeavour, was basis cost- all inputs one way or the other. You may volunteer your time, or exchange it for a share of interest in the value, without redemption; or you can just invest your participation. It’s all characterization- who has the first-hand knowledge to claim otherwise?
When you sell your interest, the value is exactly what you paid for it. If you had somehow lost your entire investment, any law is going to recognize this loss as a deduction. Until you recoup your loss, including whatever you have invested, you are at negative. When you cover the loss by selling the title and interest in the product you bring your loss back up to zero. It’s always an even exchange.
Or maybe you just borrow against your collateral, left in the hands of your creditors. Loan proceeds are immune from levy.
Or maybe you just collected what YOU had lent, a pre-paid credit, also immune.
Or you have been damaged by the loss of your property, and received an exempt compensation from insurance.
Even if you have a prior agreement with the government to count forward from gross, and allow only certain deductions, the above examples are contemplated by law as immune from levy, or exempt. You could be franchised to do all the business in the world and still borrow money, lend titles/interests, receive pre-paid credits, be covered for damage to your property (as in- “what’s the damage”) and so on.
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