Categories for which various sources of income are allocated based on United States tax regulations. Each basket has a net gain or loss, which may not be applied to any other basket as a means to reduce taxable gains. For example, let's look at a situation where you have a net loss in one income basket, with an equivalent net gain in another. Ignoring baskets, your net income is $0, as the loss offsets the gain, meaning you will not have to pay any taxes. However, because U.S. tax code specifies that baskets can't overlap, the net loss cannot be applied to the net gain. Unfortunately, you will have to pay any applicable income taxes on the basket with a net gain.