You know the story of Sodom and Gomorrah, right? About how the Lord destroyed the two cities because the men were all having sex with men? Well, not all the men were so depraved.
It so happened that Lot was playing host to some men one night, only these men weren't really men--they were angels (actually it seems they were a sort of tripartite manifestation of God, but that's really confusing and beside the point). Well, when word got out to the men of Sodom that Lot had taken these angel-men in as guests, they surrounded Lot's house and demanded he give them up, so that they might "know" them. Lot, desperate to be a gracious host, went as far as to offer his two daughters instead: "do to them as you please; only do nothing to these two men." But being rank homosexuals, the men of Sodom refused.
God ordered Lot, his wife and daughters to get the fuck out of Dodge, and so they did. Fire and brimstone rained down shortly thereafter and, boy, did those gay dudes get theirs.
So...here's the part you don't hear so much about. Lot and his daughters (his wife, of course, got turned into a pillar of salt during the evacuation when she looked back on the city) found themselves seeking refuge in a cave. The firstborn daughter, knowing full well they were living in a world full of homosexual men (dead homosexual men, actually), hatched a plan: "Come, let us make our father drink wine, and we will lie with him, so that we may preserve offspring through our father." And so the daughters in turn get the old man liquored up and have their way with him. Both get knocked up and both give birth to sons, Moab and Bennami, who give rise to great nations.
So, clearly gay sex is out. But sex with Dad? That, by God, is pretty much a-okay. Count incest (along with slavery and offering your daughters to appease a mob of angry men) as something that the Old Testament doesn't really have a problem with.