### Question
How is the term net income derived from prohibited transactions defined?


### Answer
The term **net income derived from prohibited transactions** is defined in *26 U.S.C. § 860F* as the following:

> the excess of the gross income from prohibited transactions over the deductions allowed by this chapter which are directly connected with such transactions

#### Citation:
  - *26 U.S.C. § 860F*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter M-Regulated Investment Companies and Real Estate Investment Trusts > PART IV-REAL ESTATE MORTGAGE INVESTMENT CONDUITS**

