However, the LDS leadership has long since resolved the issue; they ruled years ago that it is 10 percent of income. From Elder Dallin H. Oaks of the Quorum of the Twelve in April 1994:
In the Lord’s commandment to the people of this day, tithing is ‘one-tenth of all their interest annually’, which is understood to mean income. The First Presidency has said, “No one is justified in making any other statement than this” (First Presidency letter, 19 Mar. 1970, quoted in the General Handbook of Instructions, 1989, p. 9-1; see also D&C 119).
In November 2006, Elder Daniel L. Johnston of the Seventy echoed this counsel:
President Howard W. Hunter stated it this way: “The law is simply stated as ‘one-tenth of all their interest.’ Interest means profit, compensation, increase. It is the wage of one employed, the profit from the operation of a business, the increase of one who grows or produces, or the income to a person from any other source".
This takes all the guesswork out of it. While the LDS leadership leaves open the question as to whether to calculate on the basis of gross income or net income, the defining standard is "income", and "income" is considered interchangeable with "increase". No other interpretation seems appropriate.
Part of the confusion results from the fact that in earlier times, tithing was paid in kind -- a tenth of the herdsman’s increase, a tenth of the farmer’s produce. However, neither the herdsman nor the farmer received an income from the flocks or the land until after it had produced. Likewise today, one does not receive income from a job until one actually gets paid. So one is only expected to tithe on income -- not upon assets.
For business owners, income is defined as what is received AFTER expenses are paid. If a bookstore owner receives $200,000 in gross income during a given year, and takes only $50,000 in personal income, tithing is calculated only upon the income. However, this can become a murky area, which is why the LDS leadership has decided not to rule on whether tithing should be based upon gross income or net income. The decision is left to the individual Church member. And this is wise, considering the complexities of modern financial compensation; while an employee's contribution to a 401k might be considered "income", what about the employer's contribution to the employee's 401k? What about the value of other employment perks, such as health insurance and gym memberships? It's best to leave these questions to the individual Church member rather than for the leadership to micromanage the membership. As the Prophet Joseph Smith once said, "I teach them correct principles, and they govern themselves".
Most bishops will not ask if one is tithing on gross income or net income. So during the annual tithing settlement, or during a worthiness interview for any other purpose, if one is tithing on net income, one can truthfully claim to be paying a full tithing.