Actually, there is a list as long as your arm of situations where it's not true.  Taxidermy, for example.  And patents and personal papers.  Professionals know when to spot these exceptions to the general rule.  

Let's say I have a desk that I bought at a yard sale for $25 but had appraised for $500.  I trade it to you for tax return preparation services.  Why do you have to report more than $25 income? Usually, the IRS makes me recognize the gain, which then gives me basis, so that is what I should deduct and you report. I can think of no other instance where there is this exception, except in this one instance. I just want to know what grants this exception.