Taxable Income


D

Dan Evans

After too many years of reading tax denial gibberish, I have concluded
that the ONLY income that would be subject to the federal income tax
is the gold or silver received by foreign corporations from
counterfeiting U.S. currency using patents obtained by piracy in
interstate commerce by U.S. mail while the foreign corporation was
employed by the federal government and residing in the District of
Columbia, a military base, or other "federal zone."

I say "would be" because there is no law making the foreign
corporation liable, or requiring the foreign corporation to file any
return or pay any tax.


**Dan Evans
**I post information, not advice.
 
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H

Horace Greeley

Dan Evans said:
After too many years of reading tax denial gibberish, I have concluded
that the ONLY income that would be subject to the federal income tax
is the gold or silver received by foreign corporations from
counterfeiting U.S. currency using patents obtained by piracy in
interstate commerce by U.S. mail while the foreign corporation was
employed by the federal government and residing in the District of
Columbia, a military base, or other "federal zone."

I say "would be" because there is no law making the foreign
corporation liable, or requiring the foreign corporation to file any
return or pay any tax.
If I incorporate as a foreign corporation and use gold on a file sharing
network and sell to jarheads at Camp Pendleton I can no pay taxes ?
 
A

Arthur Kamlet

After too many years of reading tax denial gibberish, I have concluded
that the ONLY income that would be subject to the federal income tax
is the gold or silver received by foreign corporations from
counterfeiting U.S. currency using patents obtained by piracy in
interstate commerce by U.S. mail while the foreign corporation was
employed by the federal government and residing in the District of
Columbia, a military base, or other "federal zone."

But only after the 16th Amendment is legally ratified, and the
Director of the IRS replaces the gold fringed flag in his office.
 
W

Wesley Serra

After too many years of reading tax denial gibberish, I have concluded
And no one can find a case that holds that what you say isn't true.
(My personal favorite TP standard.)
 
W

Wesley Serra

What is the difference between . . .

a) "Give us your money, or we won't protect you from us," and

b) "Give us your money, or we won't protect you from us"

. . .where 'a' is the Mafia and 'b' is the IRS?
I won't answer it the way you phrase it, because "or we won't protect
you from us" is just your personal spin.

I'll be glad to answer it an equivalent way: What is the difference
between the Mafia saying "give us your money or else" and the
government saying the same thing. I thought, as a sort of social
experiment, I would put the question to my sixth-grade daughter -
somewhat unfair, admittedly, as she is much smarter than you. Her
answer: "The law." When I followed up by asking why that should
matter, she looked at me as though I were crazy, and said "the consent
of the governed".

I don't expect you to understand.
 
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T

Tarapia Tapioco

Dan (The Liar) Evans spews:
I say "would be" because there is no law making the foreign
corporation liable, or requiring the foreign corporation to file any
return or pay any tax.
http://www.taxableincome.net/


It is an excise tax! Only "privileged" foreign corporations are allowed
to do business WITHIN the US. That is the taxing jurisdiction of the
central federal government.



-HEAD-
Subpart B - Foreign Corporations

-MISC1-
Sec.
881. Tax on income of foreign corporations not connected with
United States business.
882. Tax on income of foreign corporations connected with United
States business.
883. Exclusions from gross income.
884. Branch profits tax.
885. Cross references.


-CITE-
26 USC Sec. 884 01/02/01

-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter N - Tax Based on Income From Sources Within or Without
the United States
PART II - NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
Subpart B - Foreign Corporations

-HEAD-
Sec. 884. Branch profits tax
(f) Treatment of interest allocable to effectively connected income
(1) In general
In the case of a foreign corporation engaged in a trade or
business in the United States (or having gross income treated as
effectively connected with the conduct of a trade or business in
the United States), for purposes of this subtitle -
(B) such foreign corporation SHALL BE LIABLE for tax under
section 881(a)

Sec. 881. Tax on income of foreign corporations not connected with
United States business
(a) Imposition of tax
Except as provided in subsection (c), there is hereby imposed for
each taxable year a tax of 30 percent of the amount received from
sources WITHIN the United States by a foreign corporation as -

Sec. 882. Tax on income of foreign corporations connected with
United States business
(a) Imposition of tax
(1) In general
A foreign corporation engaged in trade or business WITHIN the
United States during the taxable year shall be taxable as
provided in section 11, 55, 59A, or 1201(a) on its taxable income
which is effectively connected with the conduct of a trade or
business within the United States.
(2) Determination of taxable income
In determining taxable income for purposes of paragraph (1),
gross income includes only gross income which is effectively
connected with the conduct of a trade or business WITHIN the
United States.

.. etc, etc ..

-CITE-
26 USC Sec. 6001 01/02/01

-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 61 - INFORMATION AND RETURNS
Subchapter A - Returns and Records
PART I - RECORDS, STATEMENTS, AND SPECIAL RETURNS

-HEAD-
Sec. 6001. Notice or regulations requiring records, statements, and
special returns

-STATUTE-
Every PERSON LIABLE for any tax imposed by this title, or for the
collection thereof, shall keep such records, render such
statements, MAKE SUCH RETURNS, and comply with such rules and
regulations as the Secretary may from time to time prescribe...


-CITE-
26 USC Sec. 7701 01/02/01

-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 79 - DEFINITIONS

-HEAD-
Sec. 7701. Definitions

-STATUTE-
(a) When used in this TITLE, where not otherwise distinctly
expressed or manifestly incompatible with the intent thereof -
(1) Person
The term ''person'' shall be construed to mean and include an
individual, a trust, estate, partnership, association, company or
CORPORATION.

-CITE-
26 USC Sec. 6151 01/02/01

-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 62 - TIME AND PLACE FOR PAYING TAX
Subchapter A - Place and Due Date for Payment of Tax

-HEAD-
Sec. 6151. Time and place for paying tax shown on returns

-STATUTE-
(a) General rule
Except as otherwise provided in this subchapter, when a return of
tax is required under this title or regulations, the PERSON
required to MAKE such RETURN SHALL, without assessment or notice
and demand from the Secretary, PAY SUCH TAX to the internal revenue
officer with whom the return is filed, and SHALL PAY SUCH TAX at
the time and place fixed for filing the return (determined without
regard to any extension of time for filing the return).
 
D

Dave Johnson

sorry pal, -- your definition of taxable income for foreign
corporations is, at best,
"warped" !!!
 
D

Dan Evans

It is an excise tax! Only "privileged" foreign corporations are allowed
to do business WITHIN the US. That is the taxing jurisdiction of the
central federal government.
"An excise is not limited to vocations or activities that may be
prohibited altogether. It is not limited to those that are the outcome
of a franchise. It extends to vocations or activities pursued as of
common right." Charles C. Steward Machine Co. v. Davis, 301 U.S. 548
(1937).

"It is true that the power of Congress to tax is a very extensive
power. It is given in the Constitution with only one exception and
only two qualifications. Congress cannot tax exports, and it must
impose direct taxes by the rule of apportionment and indirect taxes by
the rule of uniformity. Thus, limited, and thus only, it reaches EVERY
SUBJECT, and may be exercised at discretion." License Tax Cases, 72
U.S. 462, 471 (1866), (emphasis added).

"All individuals, freeborn and nonfreeborn, natural and unnatural
alike, must pay federal income tax on their wages, regardless of
whether they have requested, obtained or exercised any privilege from
the federal government. United States v. Sloan, 939 F.2d 499, 501 (7th
Cir. 1991), cert. den. 112 S.Ct. 940 (1992).

"Plaintiff appears to argue that according to the Sixteenth Amendment,
federal income tax is not a direct tax on wages or salaries of
individuals, but that it is an excise tax on the privilege of engaging
in some privileged or regulated activity. Therefore, according to
plaintiff, this 'indirect excise tax' can only be imposed on the
income of corporations and the dividend income of stockholders.
Despite plaintiff's many case citations allegedly supporting his
argument, the Sixteenth Amendment, valid as described above, clearly
authorizes Congress to levy a direct income tax upon individuals who
are United States citizens." Betz v. United States, 40 Fed.Cl. 286,
294-296 (1998)

"The IRS is not required to show that the Debtor's income is derived
from a 'revenue taxable activity.'" In re: Michael Fleming, 86 AFTR2d
¶2000-5138; No. 97-6342-8G3 (U.S.Bank.Ct. M.D.Fl. 8/9/2000).

"[P]etitioner argues that the income tax is an excise tax and that
petitioner did not engage in any taxable excise activities during
1996, 1997, and 1998. The contentions made by petitioner in his
petition and on brief are appropriately termed 'tax protester rhetoric
and legalistic gibberish', and we shall not dignify such arguments
with any further discussion." Heisey v. Commissioner, T.C. Memo.
2001-41 (tax deficiencies affirmed, along with penalties for failure
to file and failure to pay estimated taxes, and an additional penalty
of $2,000 was imposed for filing a frivolous petition), aff'd 2003 TNT
66-47, No. 02-72675 (9th Cir. 3/20/2003), ($1,500 penalty imposed for
filing a frivolous appeal).


**Dan Evans
**I post information, not advice.
 
R

Richard A. Macdonald

Tarapia Tapioco said:
Dan (The Liar) Evans spews:
to do business WITHIN the US. That is the taxing jurisdiction of the
central federal government.
BUYER BEWARE:

From T.C. Memo. 2002-18, MARK CHRISTOPHER AND NANCY LOUISE CORCORAN,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No.
2947-01.

Section 1 imposes an income tax on the income of every individual who is a
citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs.
Section 61(a) provides that except as otherwise provided in subtitle A
(income taxes) gross [5] income includes "all income from whatever source
derived," including compensation for services and interest. Secs. 61(a)(1),
(4). Section 85(a) provides that an individual's gross income includes
unemployment compensation.


Ignoring these statutory provisions, petitioners argue that their
compensation for services, unemployment compensation, and interest do not
constitute gross income because these items of income are not listed in
section 1.861-8(f), Income Tax Regs. Their argument is misplaced and takes
section 1.861-8(f), Income Tax Regs., out of context. The rules of sections
861-865 have significance in determining whether income is considered from
sources within or without the United States. The source rules do not exclude
from U.S. taxation income earned by U.S. citizens from sources within the
United States.
 
D

Dan Evans

BUYER BEWARE:

From T.C. Memo. 2002-18, MARK CHRISTOPHER AND NANCY LOUISE CORCORAN,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No.
2947-01.
And for the "Tax Court is not a real court" crowd, Richard should
start reporting that Corcoran was affirmed by the Ninth Circuit (i.e.,
a "real court"), 2002 TNT 235-6, No. 02-71577 (9th Cir. 11/12/2002),
(unpublished opinion), an appeal was denied by the Supreme Court (the
most "real" court there is), cert. den. TNT 2003 TNT 97-4, No. 02-1481
(5/19/2003).


**Dan Evans
**I post information, not advice.
 
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T

Tarapia Tapioco

It is an excise tax! Only "privileged" foreign corporations are allowed
[ snipped Tax "Court", 1800s, and other tyrant BS ]

Why don't you provide a link to the full text of these "opinions"?

You're a deceiver! You're a liar!
 
D

Dave Johnson

Tarapia Tapioco said:
[ snipped Tax "Court", 1800s, and other tyrant BS ]

Why don't you provide a link to the full text of these "opinions"?

You're a deceiver! You're a liar!
no lye !!


A U.S. citizen is subject to tax on his or her worldwide income. The
computation of taxable income begins with gross income. Section 61 of the
Code provides that "gross income means all income from whatever source
derived ...." The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress’ intent to exert the full
measure of its taxing power and to bring within the definition of income
"any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327
(1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any
receipt of funds by a taxpayer is presumed to be gross income unless the
taxpayer can demonstrate that the accession fits into one of the exclusions
created by other sections of the Code. See Commissioner v. Glenshaw Glass
Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived"
thus includes income earned or received from any geographic source.

In the case of an individual, section 62 of the Code defines "adjusted gross
income" as gross income minus certain listed deduction. Pursuant to section
63, "taxable income" generally means gross income minus those deductions
allowed by the Code. For individuals who do not itemize their deductions,
section 63(b) defines "taxable income" as adjusted gross income minus the
standard deduction and the deduction for personal exemptions.

Sections 861 through 865 of the Code address the source of items of gross
income and deductions. Under these provisions, taxable income is "sourced"
as either from within the United States or from without (i.e., outside of)
the United States. These source rules are utilized under several parts of
the Code. In the case of a U.S. citizen, the most notable of these parts
concerns the foreign tax credit. While the determination of a U.S. citizen’s
foreign source and U.S. source taxable income may affect the amount of his
or her tax liability by way of the foreign tax credit, it does not affect
which items are considered for purposes of the taxpayer’s overall taxable
income. This determination is made under the rules of sections 61 through
63.

Thus, in summary, the source rules of sections 861 through 865 of the Code
do not limit or exclude items from consideration for purposes of determining
a U.S. citizen’s taxable income under sections 61 through 63. We hope that
this general information will prove helpful to you. If you have any further
questions or comments, please call David Bergkuist (employee ID 50-00518) at
[redacted].
 
D

Dale Eastman

Because this is a signed statement by a "senior technical reviewer" at
the Office of the Chief Counsel at IRS headquarters in Washington,
rather than some unsigned form-letter spit out by some low-level IRS
paper-pusher, it deserves a more complete consideration and careful
analysis.

First, there are some general aspects of the response which are
interesting. For example, not even one of the eight yes-or-no questions
was actually answered. In addition, the response did not even quote one
word from 26 USC § 861 or the related regulations, while explaining the
scope and purpose of that section. In fact, the majority of the response
explained an entirely irrelevant issue: what constitutes "income" and
which "items" of income are taxable.

Below is a step-by-step examination of the substance of the response
(the text shown in blue is from the IRS’ letter).

See the following to see the text in color.
http://taxableincome.net/debate/attempts/irschief2.html
=======================================================



A U.S. citizen is subject to tax on his or her worldwide income.



=======================================================
This is a popular assertion, though it never seems to be backed by much.
(Notice that no citations were given.) The Tax Court has made this
assertion.

"As a citizen of the United States during the years at issue, petitioner
is subject to United States Federal income tax on his worldwide income.
Sec. 1; Cook v. Tait, 265 U.S. 47 (1924); sec 1.1-1(a)(1) and (c),
Income Tax Regs."
[Norman F. Dacey, T.C. Memo 1992-187]

To support their assertion (which is more than the Chief Counsel’s
office did), the Tax Court cites a Supreme Court case, and a regulation.
Unfortunately for the Tax Court, neither gives any support to the
implication that most U.S. citizens are taxed on their domestic income.

The Supreme Court ruling (Cook v. Tait, 265 U.S. 47 (1924)) which the
Tax Court cited dealt with the question of "whether Congress has power
to impose a tax upon income received by a native citizen of the United
States who, at the time the income was received, was permanently
resident and domiciled in the city of Mexico." The Supreme Court ruled
that Congress does have such power, and we agree. Such income is
specifically shown to be subject to the tax (after a large exemption) by
26 USC § 911. The Supreme Court ruling was not at all about the domestic
income of citizens, and never used the word "worldwide." The Tax Court
citing that case to support a claim that citizens are taxed on their
"worldwide" income is bad logic (or something worse).

The second thing cited to back the claim that citizens are taxed on
their "worldwide" income was 26 CFR § 1.1-1. What is odd is that the Tax
Court cited the wrong parts of that regulation (1.1-1(a)(1) and
1.1-1(c)). While the former states that the "tax imposed is upon taxable
income (determined by subtracting the allowable deductions from gross
income)," neither of the parts cited says anything about the
geographical origin of the income (for U.S. citizens). The part the Tax
Court should have cited, to at least give an initial appearance of
supporting their claim, is 26 CFR § 1.1-1(b), which includes the following:

"In general, all citizens of the United States, wherever resident... are
liable to the income taxes imposed by the Code whether the income is
received from sources within or without the United States." [26 CFR §
1.1-1(b)]

However, the broad implication of that statement is cut down to size by
another section of the regulations:

"Determination of taxable income. The taxpayer's taxable income from
sources within or without the United States will be determined under the
rules of Secs. 1.861-8 through 1.861-14T." [26 CFR § 1.863-1(c)]

So in short, the statement in the IRS’ letter that citizens are taxed on
their "worldwide income" (which would seem to imply that all domestic
income is included) is an unsupported assertion. But when we dug up the
attempts of others to support this assertion, we still find that it is
baseless.
=======================================================




The computation of taxable income begins with gross income. Section 61
of the Code provides that "gross income means all income from whatever
source derived ...." The Supreme Court has long recognized that the
definition of gross income sweeps broadly and reflects Congress’ intent
to exert the full measure of its taxing power and to bring within the
definition of income "any accession of wealth." Commissioner v.
Schleier, 515 U.S. 323, 327 (1995); United States v. Burke, 504 U.S.
229, 233 (1992). Accordingly, any receipt of funds by a taxpayer is
presumed to be gross income unless the taxpayer can demonstrate that the
accession fits into one of the exclusions created by other sections of
the Code. See Commissioner v. Glenshaw Glass Co., [348] U.S. 426, 431
(1955).




=======================================================
The paragraph above is mostly accurate, but irrelevant. Yes, the tax was
designed to exert the full measure of Congress’ taxing power (which of
course says nothing about what the extent of that power actually is).
And yes, the section was intended to broadly cover all types of
"income." Both the above statements, and the cases cited, deal with what
constitutes "income," an issue completely independent of the "sources"
(i.e. activities) such income must derive from in order to be subject to
the tax.

But there is another issue about what is "exempt." The letter implies
that only "exclusions created by other sections of the Code" can exempt
income from taxation. However, as the older regulations defining "gross
income" demonstrate, there is some income which is not exempted by
statute, but which is, "under the Constitution, not taxable by the
Federal Government" (26 CFR § 39.22(b)-1 (1945)). However, the letter
had been discussing the "items" of income, and the "items" of income
(using the lingo of the current regulations) are only exempted by
statute, while the Constitution affects which sources or activities are
and are not exempt (see below).
=======================================================




"[A]ll income from whatever source derived" thus includes income earned
or received from any geographic source.




=======================================================
This statement is a total non sequitur; a flying leap of bad logic.
After saying that "income" includes any "accession of wealth," the
letter states that "thus" all geographical sources are included. The two
have nothing to do with each other.

But there is also an implication (though not a clear statement) that the
word "source" refers only to the geographical origin of the income. Such
a claim would clearly be false, since the "specific sources" to which 26
USC § 861 and following apply (see 26 CFR § 1.861-8(f)(1)) are
activities, not just geographical locations. (We cannot say that the IRS
letter was actually wrong on this point; since, while it may have
implied that "source" refers only to the geographical origin of income,
it did not actually state that.)
=======================================================




In the case of an individual, section 62 of the Code defines "adjusted
gross income" as gross income minus certain listed deduction. Pursuant
to section 63, "taxable income" generally means gross income minus those
deductions allowed by the Code. For individuals who do not itemize their
deductions, section 63(b) defines "taxable income" as adjusted gross
income minus the standard deduction and the deduction for personal
exemptions.




=======================================================
This is all true, but unrelated to the questions asked.
=======================================================




Sections 861 through 865 of the Code address the source of items of
gross income and deductions.




=======================================================
This is very true, and an interesting (albeit somewhat vague) admission.
=======================================================




Under these provisions, taxable income is "sourced" as either from
within the United States or from without (i.e., outside of) the United
States.




=======================================================
It is true that the sections (with their regulations) give the general
rules about the geographic origin of income, but they also deal with the
activities (i.e. the "specific sources" in 1.861-8(f)(1)) from which the
income derives. But the IRS’ letter does not actually contradict that fact.

(Was this careful lawyer "spin," or something more benign? Perhaps this
answer is akin to a defendant being asked where he was on such-and-such
a date, with him answering that he was mowing his lawn on that day...
but failing to mention he also committed murder that day. The
straight-forward questions about whether 861 is to be used to determine
gross income and taxable income from sources within the United States
were not answered. The IRS stated one or two functions of 861 and
following, but never denied that 861 is to be used to determine gross
income and taxable income from within the United States. For nearly a
century the Great Deception has survived on carefully-worded statutes
and regulations which literally state one thing (the truth) while
implying another (a lie). Is it unreasonable to suspect that this
response from the IRS may be more of the same?)
=======================================================




These source rules are utilized under several parts of the Code. In the
case of a U.S. citizen, the most notable of these parts concerns the
foreign tax credit.




=======================================================
This reference to "several parts" seems to mean the "operative
sections," one of which 26 USC § 904 (dealing with the foreign tax
credit). There is a hint of the common assumption and backwards logic
there. In one way, it would be correct to say that 26 USC § 861 "only
applies to income related to other sections of the code" (such as 904).
The false implication would be that no one else should be looking at
861. On the contrary, if the sections which determine "taxable income
from sources within the United States" only apply to income from certain
activities, then the logical conclusion is that income from within the
states is only taxable if it comes from one of those activities (the
logical conclusion is not to ignore the section because it does not show
most peoples’ income to be taxable).
=======================================================




While the determination of a U.S. citizen’s foreign source and U.S.
source taxable income...




=======================================================
We stop this sentence halfway through, because this was a serious
blunder by the IRS. (The entire sentence is addressed below.) If a
United States citizen attempts to use Sections 862 and 861
(respectively) to determine his "foreign source and U.S. source taxable
income," he will find that his domestic income is not shown to be
taxable. If a citizen with both domestic and foreign income sets out to
use 861 and 862 to determine how much of a foreign tax credit he is
entitled to (under 26 USC § 904), as the IRS letter suggests, he will
not find his domestic income to be taxable under 26 USC § 861.

(Note: Prior to 1986, he could have found his domestic income to be
taxable, if he had received most of income from within federal
possessions, pursuant to the older 26 USC § 931.)
=======================================================
Next page:
http://taxableincome.net/debate/attempts/irschief2b.html
=======================================================



While the determination of a U.S. citizen’s foreign source and U.S.
source taxable income may affect the amount of his or her tax liability
by way of the foreign tax credit, it does not affect which items are
considered for purposes of the taxpayer’s overall taxable income. This
determination is made under the rules of sections 61 through 63.

Thus, in summary, the source rules of sections 861 through 865 of the
Code do not limit or exclude items from consideration for purposes of
determining a U.S. citizen’s taxable income under sections 61 through 63.



=======================================================
This is pretty much the "punchline," but what does it actually say?
Section 61 and following address the taxable "items" of income. Section
861 and following address the "sources" of income. And the author of the
IRS’ letter seems completely aware of this. But then in the conclusion,
the terms are shuffled.

"Sections 861 through 865 of the Code address the source of items of
gross income and deductions... [T]he determination of a U.S. citizen’s
foreign source and U.S. source taxable income... does not affect which
items are considered for purposes of the taxpayer’s overall taxable
income... [T]he source rules of sections 861 through 865 of the Code do
not limit or exclude items from consideration for purposes of
determining a U.S. citizen’s taxable income."

Is it coincidence that twice the letter states that Section 861 does not
determine which "items" are taxable? Was this just a case (or two) of
poor choice of wording, or was this a lawyer-style way of stating an
irrelevancy while implying something that isn’t true? The questions
asked were not about which "items" are taxable, and were not about
whether section 861 affects which "items" are taxable. As the statutes
and regulations demonstrate all over the place (and as the IRS letter
confirms), the taxable "items" are kinds of income, and those are
determined by 26 USC § 61 and following.

"Sec. 61. Gross income defined
(a) General definition
Except as otherwise provided in this subtitle, gross income means all
income from whatever source derived, including (but not limited to) the
following items:
(1) Compensation for services...;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;... [more items listed]
(b) Cross references
For items specifically included in gross income, see part II (sec. 71
and following). For items specifically excluded from gross income, see
part III (sec. 101 and following)." [26 USC § 61]

But whether something is a taxable "item" is not the only criteria for
whether income is taxable, and is not at all the issue that was asked
about. The regulations specifically say that a "class of gross income"
"may consist of one or more items... of gross income enumerated in
section 61" (26 CFR § 1.861-8(a)(3)), and go on to say that 26 CFR
1.861-8(d)(2) "provides that a class of gross income may include
excluded income" (26 CFR § 1.861-8(b)(1)), meaning it may include income
which is "exempt, excluded, or eliminated for federal income tax
purposes" (26 CFR § 1.861-8T(d)(2)(ii)). Those regulations go on to
specify what is not exempt.

"(iii) Income that is not considered tax exempt. The following items are
not considered to be exempt, eliminated, or excluded income and, thus,
may have expenses, losses, or other deductions allocated and apportioned
to them:
(A) In the case of a foreign taxpayer…
(B) In computing the combined taxable income of a DISC or FSC…
(C) …the gross income of a possessions corporation…
(D) Foreign earned income…" [26 CFR § 1.861-8T(d)(2)(iii)]

Whether something is a taxable "item" is not the only criteria, and is
not the same as whether the income comes from a taxable "source" (which
was the issue asked about). While the "items" of income are dealt with
by 26 USC § 61, the "sources" of income are dealt with by 26 USC § 861
and following (and related regulations). And the letter from the IRS
shows that they are well aware of this, when it states that "Sections
861 through 865 of the Code address the source of items of gross income
and deductions." The "source" basically means "the origin of the item of
income," which involves both the geographical origin, as well as the
specific activities (a.k.a. "specific sources"). But the items of
income, and the origin (or "source") of those "items," are obviously not
the same thing.

As the Treasury regulations say, "Section 861 and following... and the
related regulations, determine the sources of income for purposes of the
income tax" (26 CFR § 1.861-1). To assert that those sections do not
determine which "items" are taxable is entirely true, but entirely
irrelevant, and is not at all what was asked.

(In the United States Code Service (USCS) printing of the Code, the
notes under 26 USC § 861 show that the courts have considered the
question of whether the list of "items" in Section 861 is an exclusive
list, and properly concluded that it is not. Whereas Section 861
enumerates some of the more common "items" of income, Section 61 and
following more completely address which items are taxable. So the
"experts" at IRS headquarters answered a valid question... they just
didn't answer a question which was actually asked. They certainly
understand the differences between "items" and "sources" (as their
letter demonstrates). And they certainly understand the difference
between what was asked, and the irrelevant, un-asked question they chose
to answer. They chose to make a statement irrelevant to the issue, but
a statement which could easily be misconstrued by the average reader to
mean something that is not true. Coincidence?)

Finally, we will review the eight questions asked, and see if we can
find actual answers to any of them.

1) "Gross income" is generally defined in 26 USC § 61 as "all income
from whatever source derived." Is the legal scope of the term "source"
(as used in 26 USC § 61) determined by Part I of Subchapter N (26 USC §
861 and following) and the related regulations?

This question was not directly answered. But the statement that
"Sections 861 through 865 of the Code address the source of items of
gross income and deductions" seems a lot closer to a "yes" than a "no."

2) In order for income to constitute "gross income" (within the meaning
of 26 USC § 61) or taxable income, would it first have to constitute
either "income from sources within the United States" or "income from
sources without the United States"?

This question was not addressed at all.

3) Do 26 USC § 861 and the related regulations (and in some cases 26 USC
§ 863 and related regulations) determine what constitutes "income from
sources within the United States" for purposes of the income tax?

This question was not directly answered, although again there were
pieces which seemed to lean more towards a "yes" than a "no."

4) When no income from outside of the United States is involved in an
individual’s situation, do 26 USC 861(a) and related regulations
determine what constitutes "gross income from sources within the United
States"?

This question was not addressed.

5) When no income from outside of the United States is involved in an
individual’s situation, do 26 USC 861(b) and related regulations
determine what constitutes "taxable income from sources within the
United States"?

This question was not addressed. (This is a key and fundamental
question. It may be quite difficult to come up with an honest reason for
why the IRS did not answer it.)

6) Is there any provision of law or regulation stating that most people
should not use 26 USC § 861(b) and 26 CFR § 1.861-8 to determine their
taxable income from sources within the United States?

This question was not addressed. (There was perhaps a vague implication
that one should look to 26 USC § 63, and ignore 26 USC § 861, but this
was never actually stated.)

7) If 26 USC § 861(b) and 26 CFR § 1.861-8 do not show certain domestic
income to be taxable, is that income then considered to be exempt from
the federal "income tax" imposed by 26 USC § 1?

This question was not directly addressed. Certain statements in the
response seemed to imply a "no," but in two cases what was actually said
is that 861 does not determine which "items" of income are taxable
(which is entirely true).

8) If a United States citizen lives exclusively within the 50 states,
and receives all of his income from within the 50 states, do 26 USC §
861(b) and 26 CFR § 1.861-8 show such income to be taxable?

This question was not addressed.

In conclusion, the response was a little more than a page of
"tap-dances" and irrelevancies, which did not give a direct answer to
any of the questions asked. After more than a month, this is what the
lawyers at IRS headquarters came up with. While a few citations were
given regarding general definitions, and the meaning of "income," (with
which we agree), not a single citation of statute, regulation, or court
ruling was given concerning the "source" issue.

Keep in mind, these are the "experts" on 26 USC § 861 and following.
Presumably they understand the section, and the clear questions asked.
Why then did they not actually answer any of the questions? Whatever
explanation they wanted to add afterwards, why could not they not say
"yes" or "no" to a single question? Surely they must know what their
position is on the specific points. So why didn’t they clearly state
their position? You decide.
=======================================================

Hey Dave, you forgot the beginning:

The following is the response from the IRS. As an aside, click here to
see that the IRS' own web page admits that this letter (letter 2001-0027
on the list on that page) is "advisory only" has no binding effect on
the Service.

December 21, 2000

Index Number: 861.00-00

CC:INTL:Br.3:Dbergkuist
COR-127333-00

xxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxx

Re: Your request for general information

Dear Mr. xxxxxxxx:

This letter responds to your letter dated November 8, 2000, in which you
raise several points concerning the interaction between the definition
of "gross income" in section 61 of the Internal Revenue Code and the
"source of income" rules in sections 861 through 865.

A U.S. citizen is subject to tax on his or her worldwide income. The
computation of taxable income begins with gross income. Section 61 of the
Code provides that "gross income means all income from whatever source
derived ...." The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress’ intent to exert the full
measure of its taxing power and to bring within the definition of income
"any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327
(1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any
receipt of funds by a taxpayer is presumed to be gross income unless the
taxpayer can demonstrate that the accession fits into one of the exclusions
created by other sections of the Code. See Commissioner v. Glenshaw Glass
Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived"
thus includes income earned or received from any geographic source.

In the case of an individual, section 62 of the Code defines "adjusted gross
income" as gross income minus certain listed deduction. Pursuant to section
63, "taxable income" generally means gross income minus those deductions
allowed by the Code. For individuals who do not itemize their deductions,
section 63(b) defines "taxable income" as adjusted gross income minus the
standard deduction and the deduction for personal exemptions.

Sections 861 through 865 of the Code address the source of items of gross
income and deductions. Under these provisions, taxable income is "sourced"
as either from within the United States or from without (i.e., outside of)
the United States. These source rules are utilized under several parts of
the Code. In the case of a U.S. citizen, the most notable of these parts
concerns the foreign tax credit. While the determination of a U.S. citizen’s
foreign source and U.S. source taxable income may affect the amount of his
or her tax liability by way of the foreign tax credit, it does not affect
which items are considered for purposes of the taxpayer’s overall taxable
income. This determination is made under the rules of sections 61 through
63.

Thus, in summary, the source rules of sections 861 through 865 of the Code
do not limit or exclude items from consideration for purposes of determining
a U.S. citizen’s taxable income under sections 61 through 63. We hope that
this general information will prove helpful to you. If you have any further
questions or comments, please call David Bergkuist (employee ID 50-00518) at
[redacted].

--
On May 6, 2003, The IRS pushed their way into the home of Larken Rose
and seized $3,000 worth of the video Theft-By-Deception.
According to Mr. Rose, the IRS has vowed to never give the tapes back.

This is a First Amendment violation.

As of October 24, 2003, the IRS has still not indicted
or charged Larken Rose for the commission of any crime.

If you are within the Chicago, Milwaukee, Rockford triangle
and are interested in viewing this video for free, buy yourself
some popcorn & soda, then Contact me by clicking this link:
mailto:[email protected]?subject=screenT-B-D

6 questions the IRS won't answer:
http://home.sprintmail.com/~dalereastman/tax/6Questions.html

All income is taxable right?
http://home.sprintmail.com/~dalereastman/tax/right.html

Why is the word "hormel" here?
http://home.sprintmail.com/~dalereastman/misc/spamnot.htm to find out.
 
D

Dale Eastman

You forgot the beginning.
http://taxableincome.net/debate/attempts/irschief.html

The following is the response from the IRS. As an aside, click here to
see that the IRS' own web page admits that this letter (letter 2001-0027
on the list on that page) is "advisory only" has no binding effect on
the Service.

December 21, 2000

Index Number: 861.00-00

CC:INTL:Br.3:Dbergkuist
COR-127333-00

xxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxx

Re: Your request for general information

Dear Mr. xxxxxxxx:

This letter responds to your letter dated November 8, 2000, in which you
raise several points concerning the interaction between the definition
of "gross income" in section 61 of the Internal Revenue Code and the
"source of income" rules in sections 861 through 865.
A U.S. citizen is subject to tax on his or her worldwide income. The
computation of taxable income begins with gross income. Section 61 of the
Code provides that "gross income means all income from whatever source
derived ...." The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress’ intent to exert the full
measure of its taxing power and to bring within the definition of income
"any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327
(1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any
receipt of funds by a taxpayer is presumed to be gross income unless the
taxpayer can demonstrate that the accession fits into one of the exclusions
created by other sections of the Code. See Commissioner v. Glenshaw Glass
Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived"
thus includes income earned or received from any geographic source.

In the case of an individual, section 62 of the Code defines "adjusted gross
income" as gross income minus certain listed deduction. Pursuant to section
63, "taxable income" generally means gross income minus those deductions
allowed by the Code. For individuals who do not itemize their deductions,
section 63(b) defines "taxable income" as adjusted gross income minus the
standard deduction and the deduction for personal exemptions.

Sections 861 through 865 of the Code address the source of items of gross
income and deductions. Under these provisions, taxable income is "sourced"
as either from within the United States or from without (i.e., outside of)
the United States. These source rules are utilized under several parts of
the Code. In the case of a U.S. citizen, the most notable of these parts
concerns the foreign tax credit. While the determination of a U.S. citizen’s
foreign source and U.S. source taxable income may affect the amount of his
or her tax liability by way of the foreign tax credit, it does not affect
which items are considered for purposes of the taxpayer’s overall taxable
income. This determination is made under the rules of sections 61 through
63.

Thus, in summary, the source rules of sections 861 through 865 of the Code
do not limit or exclude items from consideration for purposes of determining
a U.S. citizen’s taxable income under sections 61 through 63. We hope that
this general information will prove helpful to you. If you have any further
questions or comments, please call David Bergkuist (employee ID 50-00518) at
[redacted].

--
On May 6, 2003, The IRS pushed their way into the home of Larken Rose
and seized $3,000 worth of the video Theft-By-Deception.
According to Mr. Rose, the IRS has vowed to never give the tapes back.

This is a First Amendment violation.

As of October 24, 2003, the IRS has still not indicted
or charged Larken Rose for the commission of any crime.

If you are within the Chicago, Milwaukee, Rockford triangle
and are interested in viewing this video for free, buy yourself
some popcorn & soda, then Contact me by clicking this link:
mailto:[email protected]?subject=screenT-B-D

6 questions the IRS won't answer:
http://home.sprintmail.com/~dalereastman/tax/6Questions.html

All income is taxable right?
http://home.sprintmail.com/~dalereastman/tax/right.html

Why is the word "hormel" here?
http://home.sprintmail.com/~dalereastman/misc/spamnot.htm to find out.
 
D

Dale Eastman

Richard said:
BUYER BEWARE:

From T.C. Memo. 2002-18, MARK CHRISTOPHER AND NANCY LOUISE CORCORAN,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No.
2947-01.

Section 1 imposes an income tax on the income of every individual who is a
citizen or resident of the United States. Sec. 1.1-1(a)(1), Income Tax Regs.
Sec. 1.1-1 Income tax on individuals.

(a) General rule. (1) Section 1 of the Code imposes an income tax on
the income of every individual who is a citizen or resident of the
United States and, to the extent provided by section 871(b) or 877(b),
on the income of a nonresident alien individual. For optional tax in the
case of taxpayers with adjusted gross income of less than $10,000 (less
than $5,000 for taxable years beginning before January 1, 1970) see
section 3. The tax imposed is upon TAXABLE INCOME....

(3) The income tax imposed by section 1 upon any amount of TAXABLE
INCOME is computed by adding to the income tax for the bracket in which
that amount falls in the appropriate table in section 1 the income tax
upon the excess of that amount over the bottom of the bracket at the
rate indicated in such table.

TAXABLE INCOME not income.
There are FOUR LIGHTS.
J.L.Picard, StarTrek TNG.

Now why would the secretary of the treasury put a useless statement such
as "Section 1 of the Code imposes an income tax on the income of every
individual who is a citizen or resident of the United States.." When the
actual computational rules make that statement incorrect?
Section 61(a) provides that except as otherwise provided in subtitle A
(income taxes) gross [5] income includes "all income from whatever source
derived," including compensation for services and interest. Secs. 61(a)(1),
(4). Section 85(a) provides that an individual's gross income includes
unemployment compensation.
Sec. 1.861-1 Income from sources within the United States.

(a) Categories of income. Part I (section 861 and following),
subchapter N, chapter 1 of the Code, and the regulations thereunder
determine the sources of income for purposes of the income tax.

http://home.sprintmail.com/~dalereastman/images/tm1.GIF
http://home.sprintmail.com/~dalereastman/images/taxmachine.GIF
http://home.sprintmail.com/~dalereastman/misc/rubin4.html


--
On May 6, 2003, The IRS pushed their way into the home of Larken Rose
and seized $3,000 worth of the video Theft-By-Deception.
According to Mr. Rose, the IRS has vowed to never give the tapes back.

This is a First Amendment violation.

As of October 24, 2003, the IRS has still not indicted
or charged Larken Rose for the commission of any crime.

If you are within the Chicago, Milwaukee, Rockford triangle
and are interested in viewing this video for free, buy yourself
some popcorn & soda, then Contact me by clicking this link:
mailto:[email protected]?subject=screenT-B-D

6 questions the IRS won't answer:
http://home.sprintmail.com/~dalereastman/tax/6Questions.html

All income is taxable right?
http://home.sprintmail.com/~dalereastman/tax/right.html

Why is the word "hormel" here?
http://home.sprintmail.com/~dalereastman/misc/spamnot.htm to find out.
 
Ad

Advertisements

G

Geoffrey F. Green

Dale Eastman said:
Sec. 1.861-1 Income from sources within the United States.

(a) Categories of income. Part I (section 861 and following),
subchapter N, chapter 1 of the Code, and the regulations thereunder
determine the sources of income for purposes of the income tax.
Well, since section 61 says gross income includes all income "from
whatever source derived," this doesn't show anything.

- geoff
 
J

John

Dale Eastman said:
A U.S. citizen is subject to tax on his or her worldwide income. The
computation of taxable income begins with gross income. Section 61 of the
Code provides that "gross income means all income from whatever source
derived ...." The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress’ intent to exert the full
measure of its taxing power and to bring within the definition of income
"any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327
(1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any
receipt of funds by a taxpayer is presumed to be gross income unless the
taxpayer can demonstrate that the accession fits into one of the exclusions
created by other sections of the Code. See Commissioner v. Glenshaw Glass
Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived"
thus includes income earned or received from any geographic source.

In the case of an individual, section 62 of the Code defines "adjusted gross
income" as gross income minus certain listed deduction. Pursuant to section
63, "taxable income" generally means gross income minus those deductions
allowed by the Code. For individuals who do not itemize their deductions,
section 63(b) defines "taxable income" as adjusted gross income minus the
standard deduction and the deduction for personal exemptions.

Sections 861 through 865 of the Code address the source of items of gross
income and deductions. Under these provisions, taxable income is "sourced"
as either from within the United States or from without (i.e., outside of)
the United States. These source rules are utilized under several parts of
the Code. In the case of a U.S. citizen, the most notable of these parts
concerns the foreign tax credit. While the determination of a U.S. citizen’s
foreign source and U.S. source taxable income may affect the amount of his
or her tax liability by way of the foreign tax credit, it does not affect
which items are considered for purposes of the taxpayer’s overall taxable
income. This determination is made under the rules of sections 61 through
63.

Thus, in summary, the source rules of sections 861 through 865 of the Code
do not limit or exclude items from consideration for purposes of determining
a U.S. citizen’s taxable income under sections 61 through 63. We hope that
this general information will prove helpful to you. If you have any further
questions or comments, please call David Bergkuist (employee ID 50-00518) at
[redacted].
 
D

Dale Eastman

John wrote nothing:

Why not answer the question about the embossing filter?

Why not answer what is convoluted about this image?
http://home.sprintmail.com/~dalereastman/block/7.GIF


--
On May 6, 2003, The IRS pushed their way into the home of Larken Rose
and seized $3,000 worth of the video Theft-By-Deception.
According to Mr. Rose, the IRS has vowed to never give the tapes back.

This is a First Amendment violation.

As of October 24, 2003, the IRS has still not indicted
or charged Larken Rose for the commission of any crime.

If you are within the Chicago, Milwaukee, Rockford triangle
and are interested in viewing this video for free, buy yourself
some popcorn & soda, then Contact me by clicking this link:
mailto:[email protected]?subject=screenT-B-D

6 questions the IRS won't answer:
http://home.sprintmail.com/~dalereastman/tax/6Questions.html

All income is taxable right?
http://home.sprintmail.com/~dalereastman/tax/right.html

Why is the word "hormel" here?
http://home.sprintmail.com/~dalereastman/misc/spamnot.htm to find out.
 
Ad

Advertisements

D

Dave Johnson

still pushing larken rose "section 861" tax scams?

Dale Eastman said:
John wrote nothing:

Why not answer the question about the embossing filter?
A U.S. citizen is subject to tax on his or her worldwide income. The
computation of taxable income begins with gross income. Section 61 of the
Code provides that "gross income means all income from whatever source
derived ...." The Supreme Court has long recognized that the definition of
gross income sweeps broadly and reflects Congress' intent to exert the full
measure of its taxing power and to bring within the definition of income
"any accession of wealth." Commissioner v. Schleier, 515 U.S. 323, 327
(1995); United States v. Burke, 504 U.S. 229, 233 (1992). Accordingly, any
receipt of funds by a taxpayer is presumed to be gross income unless the
taxpayer can demonstrate that the accession fits into one of the exclusions
created by other sections of the Code. See Commissioner v. Glenshaw Glass
Co., [348] U.S. 426, 431 (1955). "[A]ll income from whatever source derived"
thus includes income earned or received from any geographic source.

In the case of an individual, section 62 of the Code defines "adjusted gross
income" as gross income minus certain listed deduction. Pursuant to section
63, "taxable income" generally means gross income minus those deductions
allowed by the Code. For individuals who do not itemize their deductions,
section 63(b) defines "taxable income" as adjusted gross income minus the
standard deduction and the deduction for personal exemptions.

Sections 861 through 865 of the Code address the source of items of gross
income and deductions. Under these provisions, taxable income is "sourced"
as either from within the United States or from without (i.e., outside of)
the United States. These source rules are utilized under several parts of
the Code. In the case of a U.S. citizen, the most notable of these parts
concerns the foreign tax credit. While the determination of a U.S. citizen's
foreign source and U.S. source taxable income may affect the amount of his
or her tax liability by way of the foreign tax credit, it does not affect
which items are considered for purposes of the taxpayer's overall taxable
income. This determination is made under the rules of sections 61 through
63.

Thus, in summary, the source rules of sections 861 through 865 of the Code
do not limit or exclude items from consideration for purposes of determining
a U.S. citizen's taxable income under sections 61 through 63. We hope that
this general information will prove helpful to you. If you have any further
questions or comments, please call David Bergkuist (employee ID 50-00518) at
[redacted].
 

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