I find that interesting. If I trade you an apple for a pear, did either of us have income? If the taxable event is our trade, how can the trade be quantified, since we didn't use FRN's?
In the same manner, if someone is receiving lawful money, he isn't receiving income, at least to the way I'm understanding it today. He is merely being paid.
I think people dealing in FRN's are in reality factoring agents for their principal, the Fed. Everything they do is meant to generate a profit to the Fed in the overall scheme of things. The money they generate from their dealings is income, and the Fed wants a percentage returned.