On what basis are contractors' income taxes derived?

The correct basis for deriving contractors' income taxes is net profit. Net profit is calculated by deducting all operational expenses, costs of goods sold, and other expenses from gross revenue. This figure represents the actual earnings of a contractor after accounting for the necessary expenses incurred in running the business. Tax liabilities are assessed on this net income, as it reflects the true profit available for taxation.

When considering the other options, gross revenue refers to the total income from all sources before any deductions and does not give an accurate picture of profitability. Total assets represent the overall value of what the contractor owns, which is not directly related to taxable income. Commission earnings represent a type of income that may be part of a contractor's revenue stream but does not encompass the broader financial picture necessary for calculating income taxes. Therefore, focusing on net profit allows for a clearer, more accurate measure upon which income taxes are based.