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The Talmud is very complicated, not every statement is a law, sometimes it is a commentary or the opinion of a certain Rabbi, sometimes a stipulation or refutation, however the quotes below should give you a good idea about Talmudic reasoning on certain issues.
It is interesting to note that according to the Talmud, Lot’s oldest daughter was rewarded because she was the first to sleep with her own father before her younger sister, thus it was her bloodline (and not her slower sister’s) that became part of the royal house of Israel. The Talmud considers uncle-niece incest to be “meritorious”. Besides this, when it comes to incest, the Talmud indicates the the problem is not the incest itself, but becoming pregnant by incest. Thus the Talmud may make exception for incest when pregnancy is not likely to happen. The two specific examples given when incest is may not prohibited is when a mother has sex with her own son who is below 8 years old (he cannot cause conception) or if the penis is flacid during the incest, so fertilization cannot take place.
TALMUD CONSIDERS UNCLE/NIECE MARRIAGE “MERITORIOUS”
“Concerning him who loves his neighbours, who befriends his relatives, marries his sister’s  daughter… FOOTNOTE 50: This is a meritorious act, because the affection a man has for his sister will be extended to her daughter, his wife”. (1961 Soncino Babylonian Talmud, Yebamoth 62b)
LOT’S OLDER DAUGHTER IS “REWARDED” FOR SLEEPING WITH HER OWN FATHER FIRST (BEFORE HER YOUNGER SISTER) BY HAVING HER BLOODLINE APPEAR IN ROYAL HOUSE OF ISRAEL
R. Hiyya b. Abin said: R. Joshua b. Korha said: A man should always be as alert as possible to perform a precept, for as reward for anticipating the younger by one night, the elder daughter [of Lot] was privileged to appear in the genealogical record of the royal house of Israel, four generations earlier. (Babylonian Talmud, Nazir 23b – 24a)
INCEST WHERE THE PENIS IS FLACID IS NOT PUNISHABLE SINCE FERTILISATION COULD NOT HAVE TAKEN PLACE
That in connection with a married woman excludes intercourse with a relaxed membrum. This is a satisfactory interpretation in accordance with the view of him who maintains thatif one cohabited with forbidden relatives with relaxed membrum he is exonerated; (Babylonian Talmud, Yebamoth 55b)
FOOTNOTE 19: Since no fertilisation can possibly result.
THE RABBIS OF THE TALMUD AGREE THAT SEX BETWEEN MOTHERS AND SONS IS PERMISSIBLE AS LONG AS THE SON IS BELOW 8 YEARS OLD BECAUSE HE CANNOT CAUSE CONCEPTION
Our Rabbis taught: If a woman sported lewdly with her young son [a minor], and he committed the first stage of cohabitation with her, — Beth Shammai say, he thereby renders her unfit to the priesthood. Beth Hillel declare her fit. R. Hiyya the son of Rabbah b. Nahmani said in R. Hisda’s name; others state, R. Hisda said in Ze’iri’s name: All agree that the connection of a boy aged nine years and a day is a real connection; whilst that of one less than eight years is not: their dispute refers only to one who is eight years old, Beth Shammai maintaining, We must base our ruling on the earlier generations, but Beth Hillel hold that we do not. (Babylonian Talmud, Sanhedrin 69b)
FOOTNOE 5: So that if he was nine years and a day or more, Beth Hillel agree that she is invalidated from the priesthood; whilst if he was less that eight, Beth Shammai agree that she is not.
FOOTNOTE 6: When a boy of that age could cause conception.