2) throw out any levels you own. Or sell them.
3) use the money to buy a copy of "How to Run a Lathe" by south bend.
4) follow the explicit instrucions therein on doing the "two-collar" test.
Though I understand and appreciate the sentiment, I wouldn't actually throw out or sell my level. A precision level is useful for getting a machine (lathe, yes, but more especially a mill) level, both front-to-back and side-to-side. You might be surprised at how often this comes in handy when trying to align a workpiece on the machine when no other reference is available.
Leveling a lathe for accuracy is a bit of a misleading concept. What one is actually trying to do is align the front and rear ways such that there is no "twist" which will cause tapered bores and O.D.'s when using a chuck. (Lathe beds are prone to this phenomenon due to their length, and the usual configuration of being fixed only at the ends.) A precision level can be placed across the top of the ways, front-to-rear, to check if the tops of the bedways are
coplanar along their length (not necessarily "level"), and if not, adjusting the tailstock end of the bed to make them so. Whether this involves placing shims under the legs of a floor lathe, mounting feet of a bench lathe, or adjusting some kind of built-in mechanism, depends on the particular lathe in question.
But wait! Often, it's not actually a twist, but uneven wear to the bedways which is having the same effect. In this case, using a level may not resolve the problem, depending on the location/extent of the wear. In either case,
using a level to align the bedways should only be considered an initial step. Final adjustment should be performed based on the results of the Two-Collar Test:
By using a bit of common sense, you can determine which way the tailstock end of the bed needs to be rotated. If the collar closest to the tailstock end is smaller than the headstock collar, then the bed needs to be rotated toward the front (CCW, viewed from the tailstock end), and vice versa.
Once you've got the spindle aligned with the bed, then you can check the alignment of the centers, as the former affects the latter. Here's how HTRAL describes the procedure:
Paula