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net worth method

noun
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net worth meth·​od

Legal Definition of net worth method

: 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

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“Net worth method.” Merriam-Webster.com Legal Dictionary, Merriam-Webster, https://www.merriam-webster.com/legal/net%20worth%20method. Accessed 23 Oct. 2021.

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