The IRS has released Business Income and the Tax Gap (FS-2006-20):

The IRS recently completed a National Research Program (NRP) reporting compliance study of individual taxpayers for tax year 2001. The study involved random selection of about 46,000 returns for review. The examinations generally concluded in the fall of 2004….

In an effort to assist small businesses and self-employed taxpayers to better understand their reporting, filing and payment obligations, the IRS designed a series of fact sheets to identify issues discovered during the NRP process and provide detailed educational information. This first fact sheet addresses the issue of income and how to determine gross income for a small business or self-employed taxpayer. A later fact sheet will provide information about a factor contributing to underreported income –– overstated expenses.