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Net Worth Method

net worth method n

: a method used by the Internal Revenue Service to detect and calculate tax evasion in which the change in a taxpayer's net worth is compared to reported taxable income taking into account living expenses, allowable deductions and exemptions, and nontaxable income


Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.