There is no federal or state income tax on working wages by law in this country.

[Weston White]

Mr. White, Subtitle B deals with gift, estate, and generation-skipping taxes, none of which has anything to do with what is included in gross income, which is an income tax concept. Similarly, nothing in Subtitles C through E has anything to do with what is included in gross income. While there are certain differences in treatment between self-employment income and compensation earned by working for someone else, nothing the IRS has published and nothing in the law suggests that one is included in gross income but the other isn't.

And so, the point of these distinctions actually flies over your head? Do you really fail to realize the various classes of taxes levied throughout the IRC? Those Subtitles represent various considerations and exceptions to the federal income tax as a whole, each calling for specified treatment as to whatever means of being taxed or not taxed; which is vastly important to realize because you keep making the asinine argument that any object (including anything at all of whatever form or shape or value) you receive is taxable unless specifically exempted. As to the various classifications, see below:

Class 0: EPMF; Class 1: Withholding, SSI & FICA; Class 2: Individual Income, Fiduciary, Partnership; Class 3: Corporation Income; Class 4: Excises; Class 5: IRP, Estates & Gifts; Class 6: NMF; Class 7: RRT; Class 8: FUTA; Class 9: Mixed; et al.

And that’s not correct; SSI and FICA (including FUTA) are determined by the sum already established within Subtitle A. SSI, FICA, and PPACA (including FUTA) are taxes coupled in monetary proportion to the individual income tax. See: 26 USC Sects. 1 and 3402(n)(1),(2).

Finally, neither does the law nor the IRS have to, for the IRC considers only constitutionally ‘taxable income’ as being within its legal jurisdiction. It is not for the Legislature to preordain the constitutionally of its public laws; that function is reserved for the courts once the matter reaches ripeness, while refraining mootness.

You are extremely confused. Yes, the estate tax is an excise, but since it can't be shifted (i.e., the executor must pay the tax out of the estate assets and can't shift it to someone else), it disproves the contention that excises are taxes that can be shifted.

My goodness, after all that work I put into my original reply, you are still so utterly lost on the issue. And more than that you outright avoid the fact that within your prior response you were stating that an ‘estate tax’ was not the same thing as an ‘inheritance tax’. At any rate your comparison is faulty and deserving of no further debate. Simply put, the notion that an ‘estate tax’ (or whatever other similar tax) is even remotely comparable to a ‘direct tax’ is entirely unjustified; and yes such taxes can be avoided simply by refusing to accept it, which then it passes onto the next in-line heir -ergo, if you don’t want the benefit of the gift simply refuse to accept it (either way it is of no direct loss to the would be receiver, they stand only to gain from the exchange). This matter cannot be made any clearer than it already has been made, period, end of discussion.

You really should read the case before displaying such ignorance.

Which is in regards to your prior response: “… The IRS is wrong in stating that a direct tax (in the constitutional sense) is one that can't be shifted to others. In fact, that was the precise holding in Knowlton v. Moore (or did you miss that part?). …”

Well, you seem to have missed the point, quoting from above: “… that duties, imposts and excises which are not the essential equivalent of a tax on property generally, real or personal, solely because of its ownership, must be converted into direct taxes, because it is conceived that it would be demonstrated by a close analysis that they could not be shifted from the person upon whom they first fall. …
…
“… a particular tax might possibly be regarded as a direct tax, when as a practical matter pertaining to the actual operation of the tax it might quite plainly appear to be indirect. Under such circumstances, and while varying and disputable theories might be indulged as to the real nature of the tax, a court would not be justified, for the purpose of invalidating the tax, in placing it in a class different from that to which its practical results would consign it. …”

Concluding, then, that the tax under consideration is not direct within the meaning of the Constitution, but, on the contrary, is a duty or excise, we are brought to consider the question of uniformity.”

And to quote from your own source Mr. Henry Black from within Pollock at 157 U.S. 429, 625 (1895):

“Black, writing on Constitutional Law, says: “But the chief difficulty has arisen in determining what is the difference between direct taxes and such as are indirect. In general usage, and according to the terminology of political economy, a direct tax is one which is levied upon the person who is to pay it, or upon his land or personalty, or his business or income, as the case may be. An indirect tax is one assessed upon the manufacturer or dealer in the particular commodity, and paid by him, but which really falls upon the consumer, since it is added to the market price of the commodity which he must pay. …””

Making the distinction between direct and indirect taxation, so as to the former being one that cannot be shifted away from its subject, serves only as a generality; otherwise that would be exactly the same as labeling the ‘sales tax’ a direct tax because it had been shifted onto the consumer -who is the one that ultimately pays the tax (that is, at least, in most all cases). This distinction is but merely one aspect that may be the case given the circumstances of the taxing method, there are in fact other factors to be considered. Matters involving taxation are not always so “black and white”; they involve many facets, many intricacies. That a more practical distinction for direction taxation is to be realized when the tax is imposed upon the source itself, i.e., capital, principal, stock, personalty, individual, etc.

Ergo, a tax that does not meet the historic context of an ‘indirect tax’ or that is otherwise clearly directed at the subject is a tax imposed directly upon the subject and is properly a DIRECT TAX; while a tax that does meet the historic context of an ‘indirect tax’ or that its directness is questionable (being otherwise externally affluent as to its subject) is an INDIRECT TAX. Direct taxes require an assessment, indirect taxes only a partaking. In other words, generally, if the method of taxation imposes an unavoidable loss to or upon the subject it is functioning as a method of direct taxation.

The individuals in the first cited paragraph never wrote on the federal income tax, and although Mr. Cooley (writing in 1886) referred to the Civil War income tax, he never really discussed it nor did he cite the Supreme Court case that upheld its constitutionality as an excise or duty. But let's see what Mr. Black had to say in Section 229:

No you are again completely incorrect the federal income tax was not crafted to destroy all other preexisting methods of direct and/or indirect taxation:


Both the writings of Locke and Paine greatly inspired the awesome fundaments for our United States of America.

Adams, Jefferson, Hamilton, and others had exerted great efforts to solidify those very ideals and fundaments into our Nation’s own history for both their posterity and all of ever advancing mankind.

Around that same timeframe, Turgot, Smith, Hamilton, and Gallatin had provided great philosophical insight into the subjects of economy and taxation.

And additionally to take into consideration are:

The Bible as to a few examples:

Genesis 47:24: “And it shall come to pass in the increase, that ye shall give the fifth part unto Pharaoh, and four parts shall be your own, for seed of the field, and for your food, and for them of your households, and for food for your little ones.”

Matthew 21:12: “And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,”

The Law - Bastiat: “The Fatal Idea of Legal Plunder”:

“But on the other hand, imagine that this fatal principle has been introduced: Under the pretense of organization, regulation, protection, or encouragement, the law takes property from one person and gives it to another; the law takes the wealth of all and gives it to a few — whether farmers, manufacturers, ship owners, artists, or comedians. Under these circumstances, then certainly every class will aspire to grasp the law, and logically so.

The excluded classes will furiously demand their right to vote — and will overthrow society rather than not to obtain it. Even beggars and vagabonds will then prove to you that they also have an incontestable title to vote. They will say to you:

"We cannot buy wine, tobacco, or salt without paying the tax. And a part of the tax that we pay is given by law — in privileges and subsidies — to men who are richer than we are. Others use the law to raise the prices of bread, meat, iron, or cloth. Thus, since everyone else uses the law for his own profit, we also would like to use the law for our own profit. We demand from the law the right to relief, which is the poor man's plunder. To obtain this right, we also should be voters and legislators in order that we may organize Beggary on a grand scale for our own class, as you have organized Protection on a grand scale for your class. Now don't tell us beggars that you will act for us, and then toss us, as Mr. Mimerel proposes, 600,000 francs to keep us quiet, like throwing us a bone to gnaw. We have other claims. And anyway, we wish to bargain for ourselves as other classes have bargained for themselves!"”

And finally:

1. Concerning Section 229 of your above quotation, the context of Section 229 is: “Salaries and Earnings from Professions and Trades”, see further quotations disproving your notion below.
2. Your excuses against Cooley on Taxation are not valid, for according to your own arguments the government always has had the power to tax an individual’s livelihood without apportionment and hence is withstanding the XVI Amendment; so the timeframe is not relevant.
3. While, interesting to realize is that a SCOTUS search on Black’s treatise returns only one result within Pollock and its rehearing -which was included above- (even though Mr. Black began publishing his legal dictionaries in 1891), while Pollock in 1895 did look to Cooley several times for consideration, (as well as others, i.e., Story, Blackstone, et al).
4. Additionally to be considered, for example is (Pollock v. Farmers' Loan & Trust Company, 158 U.S. 601, 708-709 (1895):

“6th. Attention was previously called to the fact that practically all the theoretical and philosophical writers on the Constitution since the carriage tax act was passed and the Hylton case was decided have declared that the word "direct" in the Constitution applies only to taxes on land and capitation taxes. The list of writers formerly referred to, with the addition of a few others not then mentioned, includes Kent, Story, Cooley, Miller, Bancroft, the historian of the Constitution, Pomeroy, Hare, Burroughs, Ordroneaux, Black, Farrar, Flanders, Bateman, Patterson, and Von Holst. How is this overwhelming consensus of publicists, of law writers, and historians answered? By saying that their opinions ought not to be regarded because they were all misled by the dicta in the Hylton case into teaching an erroneous doctrine. How, if the Hylton case did not decide this question of direct taxation, it could have misled all these writers -- among them some of the noblest and brightest intellects which have adorned our national life -- is not explained. In other words, in order to escape the effect of the act and of the decision upon it, it is argued that they did not, by necessary implication, establish that direct taxes were only land and capitation taxes, and, in the same breath, in order to avoid the force of the harmonious interpretation of the Constitution by all the great writers who have expounded it, we are told that their views are worthless because they were misled by the Hylton case.

7th. If, as is admitted, all these authors have interpreted the Hylton case as confining direct taxes to land and capitation taxes, I submit that their unanimity, instead of affording foundation for the argument that they were misled by that case, furnishes a much better and safer guide as to what its decision necessarily implied than does the contention now made, unless we are to hold that all these great minds were so feeble as to be led into concluding that the case decided what it did not decide, and unless we are to say that the true light in regard to the meaning of this word "direct" has come to no writer or thinker from that time until now.”

I guess you missed that part, Mr. White.

Not so much as you are taking that passage out of its context and reading far too much into it. More pointedly I suppose that you simply overlooked the few proceeding sections that are within the context you are insinuating:

Section 218 - “Statutes in Pari Materia.”: “…”


Section 219 - “Associated Words and Phrases.”: “It is another ancient and fundamental rule in the construction of statutes that the meaning of a doubtful word or phrase may be ascertained by reference to the meaning of other words or phrases with which it is associated, and that, where several things are referred to, they are presumed to be of the same class, when connected by a copulative conjunction, unless a contrary intent plainly appears. For example, all the acts of Congress on the subject of income taxation, from 1862 to the present time, have associated together the words “gains,” “profits,” and “income” as descriptive of the subject taxed, and the same is true of the income tax laws of some of the states. These words may be traced far back in the history of English taxation. The original income tax law of that country, enacted in 1799, imposed a tax on “income” by that name, but the acts of 1842 and 1853 introduced the associated terms “profits and gains,” whence they were apparently borrowed by Congress in framing the act of 1862, and have since persisted in use. Applying the rule above stated, we are justified in asserting the following principles as applicable to the interpretation of the phrase in question: If it is doubtful whether or not a particular fund or acquisition is taxable as “income,” under the statute, it is not taxable unless it is income in the nature of “gain” or “profit.” If any item is clearly included in the description of “gains” yet it is not taxable unless it is a gain in the nature of “income” or “profit.” And although the disputed item may be certainly a “profit,” in one sense of the word, yet it is not taxable unless it be a profit accruing by way of “gain” or “income.””


Section 221 - “General Definitions of “Income.””: “…Again, as this term is used in statutes relating to the nature and ownership of property, it includes the rents and profits of real estate, interest on money, dividends on stock, and other produce of personal property. Particularly, when applied to a sum of money, or to money invested in public or corporate securities, income means interest.
But an important distinction must be noted in the signification of this word, according as it is used in the ordinary business affairs of the community (or in statutes relating thereto) or in a tax statute. In the former case, it is understood to mean “net” income or profit; in the latter case, it is equivalent to “gross” income or “gross receipts,” unless otherwise specified in the statute. Thus, it is said that the word “income,” as used in commerce and trade, means the balance of gain over loss in the fiscal year or other period of computation, or it is the ultimate profit of a business or trade, ascertained by placing the sum total of gains over against the sum total of losses. So, “the income of an estate means nothing more than the profit it will yield after deducting the charges of management, or the rent which may be obtained for the use of it. The rents and profits of an estate, the income or the net income of it, are all equivalent expressions.” …
But on the other hand, in a statute imposing taxes, “income” means gross receipts, not net profits, unless it is so specified. Whenever the law means to tax the clear profits arising from the employment of capital or otherwise, the expression used is “net income” or “net annual income.” And especially the phrase “whole income” means the aggregate of all receipts without any deduction for expenses or losses, that is, it means gross receipts and not net profits. But, as stated in an earlier section, if this word is associated with the term “profits,” as in the phrase “gains, profits, and income,” it may take color from the more restricted term and be limited by it. That is to say, in the phrase quoted, the word “income” should not be taken in its most extensive signification, but as meaning income which is in the nature of a profit, in other words, net income. …
… When a bond which was purchased at a discount reaches par in the market, the owner cannot properly be said to have made a profit; he is in a position where he can realize a profit if he sells the bond, but not otherwise. If he sells, then the sum gained may constitute a part of his income, but it cannot be so described while he continues to hold the security. So, the farmer’s crop is not his income; it is the source from which his income will be derived when it is converted into cash. … but it is not properly described as income until it is received, that is, it is “income” when it comes in, but not while it remains outstanding. … But the principle is, as ruled in an English case, that nothing is to be considered as income except what represents value in money, that is, either money or something that is equivalent to money because it can be converted into money and the proceeds expended in any way the recipient may please. In this case, speaking of the income tax of that country, it was said: “It is a tax on income in the proper sense of the word. It is a tax on what comes in, on actual receipts, not on what saves his pocket, but on what goes into his pocket.” Of course it is entirely within the power of a legislature having jurisdiction to lay an income tax to make the word “income” include items which are not at all proper to be described under that name. But then those items are taxed, not because they constitute income, but because the legislature has said that they shall be taxed. And on the other hand, when the word “income” is clearly defined in the act imposing the tax, it cannot be taken to include anything which is not within that definition.
We conclude therefore that, for the purpose of an income tax, a proper definition of the word “income” would be all that a man receives in cash during the year, except such sums as are merely capital or principal in a changed form, that is, excluding sums which are merely the proceeds of some other form of capital converted into cash. This last point is emphasized in a recent decision of one of the federal courts, in which it was said: “What does the word ‘income’ mean? In ordinary speech, people recognize a difference between capital and income. I believe that the ordinary meaning attached to income, when it is not derived from personal exertion, is that it is something produced by capital without impairing that capital, and which leaves the property intact, and that nothing can be called income, for the purpose of this act, which takes away from the property itself. If it does, then it ceases to be income and amounts to a sale of capital assets.” … And where a traveling salesman is allowed a certain sum per month by his employers to cover his expenses, the money is properly included by the assessor as part of his taxable income.”


Section 224 - “”Profits” and “Gains” Compared and Distinguished.”: “… Or, according to a fuller description given by the Supreme Court of California, the word “profits” signifies an excess of the value of returns over the value of advances; the excess of receipts over expenditures, that is net earnings. In commerce it means the advance in the price of goods sold beyond the cost of purchase. In distinction from the wages of labor, it is well understood to imply the net return to the capital or stock employed after deducting all the expenses, including not only the wages of those employed by the capitalist, but the wages of the capitalist himself for superintending the employment of his capital stock. Profits are divided by writers on political economy into gross and net; the former being the entire difference between the value of advances and the value of returns, and the latter so much of this difference as arises exclusively from the capital employed. Profits cannot consist of earnings never yet received. …
It is said, and with truth, that this term is often used as synonymous with “income” and as meaning the same thing, and particularly where the two words are couple in the same phrase. And one court has remarked that, when they are thus joined together, there is no difference in the meaning of the words, and the use of them both is only due to a lawyer-like fondness for using several words where one would be sufficient. But this is scarcely correct. There is a substantial difference in the meaning of the two words. And it is more accurate to say that, when they are joined together in the same phrase, the word “profits” is used to particularize and point out one kind of income, or income derived from a particular source; and it would generally be found that their joinder is easily explained from their correlation with other descriptive words in the same sentence, as, for example, where “gains” may be correlated with “sales or dealing in property,” “income” with such words as “salaries” and earnings from “professions and vocations,” and “profits” with “business, trade, and commerce.” Besides, “income” is clearly a word of larger import than “profits.” The former may very properly include such items as the rent of houses, interest on investments, the earnings, of a professional man, or the salary of an officer of a corporation, but none of these could with any propriety be called “profits.” In effect, the latter term is more appropriately confined to gains resulting from the operations of trade or commerce, and especially from mercantile or manufacturing business or transportation. Moreover, it is important not to lose sight of the distinction that, while “income” means that which comes in or is received from any business or investment of capital, without reference to the outgoing expenditures, “profit” means the gain which is made upon any business or investment when both receipts and payments are taken into account. … But it may properly be said that when a tax law employees the phrase “gains, profits, and income,” to describe what is taxable, the term “gains” is inserted out of abundant caution, and intended to include an acquisition of the taxpayer which is not to be described as a “profit,” and which might not be included in the term “income” if that word were taken in a narrow sense. Properly speaking, “gain” means that which is acquired or comes as a benefit, and in a statute laying an income tax it may mean money received within the year which is not the fruit of a business transaction nor of the labor or exertion of the individual, but something arising from fortuitous circumstances or conditions which he does not control. In this signification, the term would include money received as a legacy or money won on a wager.”


Section 225 - “Income Derived from “Any Source Whatever.””: “… In defense to an action by the state against a certain attorney at law, to recover a tax on his income derived from the practice of his profession, it was contended that the clause quoted came within the doctrine of “ejusdem generis,” and therefore must be limited to incomes derived from sources of the same kind as those enumerated in the previous clauses of the schedule, and that it did not include incomes from licensed professions, trades, or businesses. But the Supreme Court of the state held … it … to apply to the professional incomes of lawyers as well as those specifically enumerated.”


Section 226 - “Change or Substitution of Capital Distinguished.”: “Both in popular and legal parlance, “income” is distinguished from “capital” or “principal.” Capital is the source of income. Income is the fruit of capital. … But it would be a misnomer to reckon the whole of each such return as “income” simply because it is so much money coming into the possession of the owner. Out of the fund so returning there must first be deducted, in case there has been no loss, a sum sufficient to replace the capital originally invested, and the balance, in any, will be income. …”


Section 228 - “Rental Value of Residence.”: “… But the Supreme Court of the state saw nothing in this provision to invalidate the statute. “It is said,” observed the court, “that this is not income, and that calling it income does not make it income. It may be conceded that things which are not in fact income cannot be made such by mere legislative fiat, yet it must also be conceded, we think, that income in its general sense need not necessarily be money. Clearly it must be money or that which is convertible into money.” … ”

Neither. Don't bother listing every university in the country in the hopes of finding out which I attended. I'm not playing that game anymore.

Then you’re most certainly a liar, as you have just ruled out the only three possibilities of the last few remaining henchmen of “Quatsville!” So why not come clean then, why are you hiding, is it because you are so utterly ashamed of yourself, of what you do, or of the disgraceful manner in which you earn a paycheck? So which is it then? You liar, who lies!

[Sonny Tufts]

Compensation received for working for someone else is not included in gross income. (hourly wages)

Compensation received for the result of the work done for someone else is included in gross income. This is what Section 61(a)(1) ["compensation for services"] refers to and includes Commissions, Fees, Tips, and Fringe Benefits. These are things that employees can receive besides hourly wages.

No, 61(a)(1) encompasses all compensation for work, including hourly wages.

No professor has written an article putting forth my interpretation because no professor has been presented with my interpretation.

Then why don't you write an article and submit it to a law review for publication? You'd become famous -- you would have discovered something that has eluded the best minds in the legal community for the last 100 years. And you didn't even have to go to law school to do it.

The big dollar athelete is not an employee of the team.

Of course he is. Whom in heaven's name do you think his contract is with?

[Sonny Tufts]

you keep making the asinine argument that any object (including anything at all of whatever form or shape or value) you receive is taxable unless specifically exempted.

Mr. White, I have never made such a claim, and you know it.

SSI and FICA (including FUTA) are determined by the sum already established within Subtitle A.

No, Mr. White, for the simple reason that there are some types of income includable in gross income under Subtitle A (e.g., directors' fees) that are not taxable as "wages" for FICA purposes.

Simply put, the notion that an ‘estate tax’ (or whatever other similar tax) is even remotely comparable to a ‘direct tax’ is entirely unjustified; and yes such taxes can be avoided simply by refusing to accept it, which then it passes onto the next in-line heir -ergo, if you don’t want the benefit of the gift simply refuse to accept it (either way it is of no direct loss to the would be receiver, they stand only to gain from the exchange). This matter cannot be made any clearer than it already has been made, period, end of discussion.

It can be made much clearer because you still haven't grasped the difference between an estate tax and an inheritance tax. Wioth the former type, the executor must pay the tax out of the estate's assets. He cannot refuse to accept the property of the estate, as it is his duty to administer it for the benefit of the beneficiaries. While a beneficiary may disclaim a testamentary bequest, this will not change the executor's duty to pay the estate tax.

Then you’re most certainly a liar, as you have just ruled out the only three possibilities of the last few remaining henchmen of “Quatsville!” So why not come clean then, why are you hiding, is it because you are so utterly ashamed of yourself, of what you do, or of the disgraceful manner in which you earn a paycheck? So which is it then? You liar, who lies!

Where is it written that there are only three possibilities? Who the heck do you think I am? And what difference does it make? That you have such an obsessive fixation on my identity is reason enough for me to remain anonymous. I don't suffer fools or crackpots gladly.

[Weston White]

Nor have they been asked to distinguish between compensation earned on odd numbered days and that earned on even numbered days, for the obvious reason that the statute doesn't make such a distinction. Similarly, both types of compensation are obviously included in gross income under Section 61(a).

Yes, though SCOTUS has been presented with many such cases pertaining to common day labors and to date the Court will hear no such case!

Neither is earning a livelihood any such “compensation” for which to be imposed a tax upon.

As a sprinkling of honestly was unleashed within 26 CFR § 1.61-2 – ‘Compensation for services, including fees, commissions, and similar items.’: “…compensation for services on the basis of a percentage of profits…”

Look at it this way: if compensation received for working for someone else really isn't includable in gross income, what in the world is the purpose of Subchapter 24, the income tax withholding provisions? I think you would agree that the tax to be withheld under Chapter 24 is upon compensation received for working for someone else, right? So why would Congress draft an entire chapter covering withholding if the withheld tax is simply going to be refunded because it's not part of the income tax base?

The IRS withholding provisions were marketed as a forced loan. Imagine just how much interest is borne annually out of $2.3-trillion… Which is ultimately a (an additional) lifelong expense incurred by every single taxpayer, see for example the loss incurred throughout an individual’s work career: http://www.iwarrior.defendindependen...p?p=1151#p1151

Nobody is claiming that compensation is not includable in the term ‘gross income’. However, as to your question, the IRC withholding provisions are very clearly mandated for certain classes of individuals or employees, such as military personnel; federal officers, officials, or instrumentalities; corporate officers; nonresident aliens and foreign corporations; salesmen, for example. Additionally, withholding is voluntary for others. See 26 USC Sects: 3401(c), 3121(d), 3402(p)(3)(B), 1441, 1442.

For common day laborers, “compensation” includes things such as (given to certain exemption either in-whole or in-part to certain items or circumstances): “fees and commissions; tips; bonuses and benefits; termination or severance pay; rewards; jury fees; marriage fees; child care pay; retired pay of employees; pensions; retirement allowances; trusts; meals; accommodations; stock; property; cash; gifts; prizes; awards; accident, injury, or sickness pay; scholarship and fellowship grants; employee time-bank payouts; holiday and vacation pay; etc.”

If Section 61(a)(1) ["compensation for services"] refers only to self-employment income, why do we also have Section 61(a)(2) ["gross income derived from business"]? Self-employment income is gross income derived from business, so why did Congress also include subsection (1)?

As to your point, there are two separate numerations for precisely the following reasons:

26 USC Sec. 61(a)(1) ‘Compensation for services, including fees, commissions, fringe benefits, and similar items’
26 USC Sec. 61(a)(2) ‘Gross income derived from business’


26 USC Sec. 61(a)(1) would address in addition to that referred to above (in your earlier question), partnerships, fiduciaries, etc. Hence, class-2 taxes.
26 USC Sec. 61(a)(2) would address namely manufacturing, merchandising, mining and business investments, contracts, etc. Hence, class-3 taxes.

If compensation earned for working for someone else isn't includable in gross income, why for the last 99 years has nobody in Congress jumped up and said, "Hold it! That type of compensation isn't covered by the statute!" Why has no professor written a law review article putting forth your interpretation of the statute? Why has no big-dollar athlete not hired a top tax attorney to make your argument so as to avoid tax on the $25 million in compensation he gets for working for his team?

Well, why doesn’t Congress come clean about the true nature and reason behind our nonconvertible paper currency and the Federal Reserve System; or about the myriad of farces they committed at Waco, the Alfred P. Murrah Building, on 9/11/2001, et al, and the subsequent the Patriot Acts and who the “terrorists” that they are after really are (i.e., American citizens); why is Congress now attempting to take total control of the Internet; why does Congress remain mum on the known falsehoods of “global warming” and continues to play stupid on the issue of “chem-trailing” all over our nation, or for that matter over other continents; why did they let the cigarette charade continue for so long; why are they not aware or of even concerned over the dangers of sodium fluoride in the public water supply (surely they know full well that both Stalin and Hitler implemented this tactic over those they ultimately murdered), and what about the over use of half-life pesticides, GMO, and genetically modified fish being released into the wild; what about the hidden conspiracy behind plastic syringes and the original “safety needle” or how about the unexplainable pull-out of America’s electric vehicles during the 1990’s; what about the Deepwater Oil Rig/BP/Corexit cover-up or for that matter the government’s virtual takeover of New Orleans ever since Katrina came and passed; how about the unexplainable increase in various human diseases, ailments, dysfunctions, etc., and reliance on big-pharma medications and vaccinations; what about the push for “Codex Alimentarious” and the banning of vitamins and minerals; and why doesn’t anybody in Congress stand up and challenge Barry Soetoro as to all of these simultaneous undeclared wars; etc., etc., etc.

There have been many individuals with such accolades that have come forward about the true nature of either taxation in general or the federal income tax (both in the past and the present); it is more correctly for you state that you and those similar to you, all simply refuse to acknowledge their work or efforts; similarly as to top scientists that have publicly rebuked the threat of “global warming”, thereafter they are shunned, their funding pulled, terminated from their positions, outright ignored by the major news media, etc.

Don’t movie stars, singers, athletes operate or contract as an LLC or similar? At any rate, I would think those classes of individuals are much more concerned about their next big party or shindig, or whatnot than about they are about political issues, e.g., Brittany Spears, Charlie Sheen and his buddy Lenny Dykstra comes to mind. However, such individuals are, aside from their general performance contracts, largely paid through endorsements, royalties, commissions, percentage of overall profits, etc.; moreover, such a means of earning a living -or more appropriately living a life of grand privilege- can hardly be comparable to that of a common day laborer, struggling from one week onto the next.

[Sonny Tufts]

Yes, though SCOTUS has been presented with many such cases pertaining to common day labors and to date the Court will hear no such case!

The Court has a limited amount of time that it doesn't need to waste on frivolous arguments. It has already made its feelings known on numerous occasions:

“The definition of gross income under the Internal Revenue Code sweeps broadly. Section 61(a), 26 U.S.C. 61(a), provides that ‘gross income means all income from whatever source derived,’ subject only to the exclusions specifically enumerated elsewhere in the Code. As this Court has recognized, Congress intended, through 61(a) and its statutory precursors, to exert ‘the full measure of its taxing power,’ [citation omitted] and to bring within the definition of income any ‘accessio[n] to wealth.’ [citation omitted] There is no dispute that the settlement awards in this case [for ‘back wages’ to compensate for sex discrimination] would constitute gross income within the reach of 61(a).” United States v. Burke, 504 U.S. 229, 233 (1992). Later in the same opinion, the Supreme Court referred to the compensation received by the taxpayers as “the wages properly due them - wages that, if paid in the ordinary course, would have been fully taxable.” 504 U.S. at 241.

“It [I.R.C. section 104, relating to compensation for personal injuries] also excludes from taxation those damages that substitute, say, for lost wages, which would have been taxed had the victim earned them.” O’Gilvie v. United States, 519 U.S. 79 (1996).

“It was therefore error to instruct the jury to disregard evidence of Cheek’ s understanding that, within the meaning of the tax laws, he was not a person required to file a return or to pay income taxes and that wages are not taxable income, as incredible as such misunderstandings of and beliefs about the law might be.” Cheek v. United States, 498 U.S. 192, 204 (1991), (emphasis added).

As a sprinkling of honestly was unleashed within 26 CFR § 1.61-2 – ‘Compensation for services, including fees, commissions, and similar items.’: “…compensation for services on the basis of a percentage of profits…”

And a veritable deluge of dishonesty was unleashed by your omission of the following from the regulation:

(a) In general.

(1) Wages, salaries, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses (including Christmas bonuses), termination or severance pay, rewards, jury fees, marriage fees and other contributions received by a clergyman for services, pay of persons in the military or naval forces of the United States, retired pay of employees, pensions, and retirement allowances are income to the recipients unless excluded by law.

26 USC Sec. 61(a)(2) would address namely manufacturing, merchandising, mining and business investments, contracts, etc.

Subsection 2 by its clear and unequivocal terms encompasses all income derived from business, which may obviously include a business conducted by a self-employed person.

Don’t movie stars, singers, athletes operate or contract as an LLC or similar?

They do not. They used to back in the 30's in an effort to escape taxes, so Congress closed the loophole by passing the Personal Holding Company provisions of Sections 541-547.

[Wheeljack]

No, 61(a)(1) encompasses all compensation for work, including hourly wages.

Believe what you want. My correspondence with the IRS, the State of New York and the Commonwealth of Pennsylvania tells me differently.

Then why don't you write an article and submit it to a law review for publication? You'd become famous -- you would have discovered something that has eluded the best minds in the legal community for the last 100 years. And you didn't even have to go to law school to do it.

Eluded!?! Ha!
Show me any article from these so-called legal geniuses in which they have even contemplated such an idea and then I shall accept your statement that it has eluded them. They certainly can't discover something they have never even looked for, even when the evidence is right under their nose.

Of course he is. Whom in heaven's name do you think his contract is with?

And what type of contract does he have?
Is it a contract of service? No.
Is it a contract for services? Yes.

He is an independent contractor.


.

[Weston White]

No, 61(a)(1) encompasses all compensation for work, including hourly wages.

That is incorrect, it, ‘gross income’, takes into account only the “gains, profits, and income” which have been derived from an individual’s salaries or wages, including whatever additional work related compensation received, save for sums that are below whatever deductions granted or have otherwise been made exempt from federal income taxation; and with certain exception given to certain types or classes of individuals or employments.

Then why don't you write an article and submit it to a law review for publication? You'd become famous -- you would have discovered something that has eluded the best minds in the legal community for the last 100 years. And you didn't even have to go to law school to do it.

Wow, real good, showing your true colors I see. Could you possibly be any more of a complete jackass? “Legist”, so called, I think you have officially topped yourself.

Of course he is. Whom in heaven's name do you think his contract is with?

That would largely be dependant on the team being owned by its own franchise within its league or by the league itself, which most all professional sports teams are the former; although, for example, the teams of the no longer existing XFL were owned by its league and their players paid much less than those in the “big four”.

Regardless, being an athlete or entertainer is hardly comparable to the mother saddled with two-three daily jobs for six days out of the seven, being necessary to provide for her and her family, as but just one common example (since holding a single fulltime job nowadays is a literal godsend -which is the end result of never-ending meddling and corruption by the federal government).

Mr. White, I have never made such a claim, and you know it.

Oh yes you have that is exactly what you are alleging all throughout each one of your posts addressing income taxes. As a few examples that come to mind:

• You claim the federal government has always held the power to uniformly tax income of whatever type, in whatever form, and of whatever source.
• You claim the national taxing powers are limited only by legislation.
• You claim that there is no legal distinction between the source and the income to be realized from its source.
• You claim that ‘gross income’ (including ‘taxable income’) really just means income.
• You claim that there is no legal significance between ‘income’ and ‘incomes’.
• You claim that taxes only qualify as being direct when they are made on reality or property.
• You claim that there is no constitutional distinction between one class of income and another.
• You claim that gains and profits are legally relatable to all arrangements, without exception, where one has received cash or bartered.

No, Mr. White, for the simple reason that there are some types of income includable in gross income under Subtitle A (e.g., directors' fees) that are not taxable as "wages" for FICA purposes.

You are referring to specified exceptions, and your point is what exactly? The point I had made is withstanding your response, the sums would only need to be adjusted accordingly so as to take into account whatever such applicable considerations -such as for those that do not pay into SSI, for example.

It can be made much clearer because you still haven't grasped the difference between an estate tax and an inheritance tax. Wioth the former type, the executor must pay the tax out of the estate's assets. He cannot refuse to accept the property of the estate, as it is his duty to administer it for the benefit of the beneficiaries. While a beneficiary may disclaim a testamentary bequest, this will not change the executor's duty to pay the estate tax.

Dingbat, those taxes are synonymous; ergo, potato, pa-tot-o. Nor can one be forced to be an executor and in some jurisdictions the person may need to qualify for the position with the county clerk, and as well an executor does not have to be a beneficiary to the will, for example, it can be a family friend or a paid professional in the probate or estate planning fields or provided by the court. The executor is a trust, a fiduciary, for the decedent’s estate (the testator), authorized to act through power of attorney. And to state that because the executor is also a recipient of the estate that they are effectively being forced to tax themselves (or their property) is the most damned foolish comparison to be made.

Where is it written that there are only three possibilities? Who the heck do you think I am? And what difference does it make? That you have such an obsessive fixation on my identity is reason enough for me to remain anonymous. I don't suffer fools or crackpots gladly.

Why, you’re “Legist” from over at the Freedom Watch show tips Website. And it makes a big difference because it is impossible to trust such an astute professional, as you so obviously are, when all you do is hide in anonymity. I am just trying to help you out Sonny Jim, that’s all.

The Court has a limited amount of time that it doesn't need to waste on frivolous arguments. It has already made its feelings known on numerous occasions:

The primary goal of SCOTUS is to address federal questions, and the content as provided for within this thread (including many others), meets every single objective of being just such a question. And no the Court has not rendered consideration to such matters as herein addressed.

Yet what the Court has continued to do, at least from time to time, is to hear other cases which are clearly without merit, such as whether punitive damages are taxable; or whether a spouse can avoid taxation for their partner by creating a contract stipulating to that; or whether a tax upon the gains realized from investments, or that estate taxes, etc., are actually a direct tax; etc.

And a veritable deluge of dishonesty was unleashed by your omission of the following from the regulation:

Do try to keep up with the conversation, will you? The context of the post you are referencing was addressing the sole aspect of what was considerable as “compensation” -that was all.

As to what is intended by wages and salaries within ‘gross income’, which is a global term used in many different contexts throughout the IRC; certainly, while the wages and salaries of some classes of individuals are legally taxable under ‘gross income’, the general masses are not. More aptly, the subject of ‘gross income’ has been timelessly embodied in the statute’s original form, which had been crafted in purposeful support for the XVI Amendment; stating not that salaries and wages are income but that capital (or corpus) derives income.

Ergo, an individual’s common livelihood and laboring are exempt from income taxation under our Nation’s fundamental laws. Such can only be taxed through apportionment and while circumstances are emergent and in no other instance.

Subsection 2 by its clear and unequivocal terms encompasses all income derived from business, which may obviously include a business conducted by a self-employed person.

Only if they are setup as a corporation, otherwise they would file a 1040 from along with a Schedule-SE form; while corporations would file a 1120/1120-S form and whatever other related forms.

[Sonny Tufts]

Believe what you want. My correspondence with the IRS, the State of New York and the Commonwealth of Pennsylvania tells me differently.

There is no way to verify your claim unless you post all such correspondence, which I don't expect you to do.

Eluded!?! Ha!
Show me any article from these so-called legal geniuses in which they have even contemplated such an idea and then I shall accept your statement that it has eluded them. They certainly can't discover something they have never even looked for, even when the evidence is right under their nose.

If they've never contemplated it, it means it's eluded them. The reason they've never contemplated it is because it's a ludicrous idea.

He is an independent contractor.

Guess again. He meets all of the criteria for a common-law employee.

[Sonny Tufts]

Oh yes you have that is exactly what you are alleging all throughout each one of your posts addressing income taxes. As a few examples that come to mind:

• You claim the federal government has always held the power to uniformly tax income of whatever type, in whatever form, and of whatever source.
  No, because after the Pollock case and before the 16th Amendment, a tax on investment income had to be apportioned.
• You claim the national taxing powers are limited only by legislation.
  No, I've stated that the Constitution prohibits federal taxes on exports, and Supreme Court decisions have indicated that Congress can't tax some operations of state and local governments.
• You claim that there is no legal distinction between the source and the income to be realized from its source.
  No, I've said that the things listed in Section 61(a) are items of income, not sources. There's an obvious distinction, for example, between dividend income and the source of dividend income (i.e., the stock).
• You claim that ‘gross income’ (including ‘taxable income’) really just means income.
  No, because (a) certain kinds of income in the generic sense are not part of gross income, and (b) taxable income is gross income less deductions.So neither gross income nor taxable income is equivalent to plain vanilla income.
• You claim that there is no legal significance between ‘income’ and ‘incomes’.
  One is singular and one is plural.
• You claim that taxes only qualify as being direct when they are made on reality or property.
  You mean "realty", not reality. But no, direct taxes also include capitations.
• You claim that there is no constitutional distinction between one class of income and another.
  Except for income earned by a state or local government, there is no such distinction.
• You claim that gains and profits are legally relatable to all arrangements, without exception, where one has received cash or bartered.

If by "legally relatable to all arrangements" you mean "includable in gross income in all types of transactions", no -- because there are many types of gain resulting from exchanges that the law excludes from gross income. But the law is clear that gross income needn't be in the form of cash.

In short, Mr. White, your claim that I have said that "any object (including anything at all of whatever form or shape or value) you receive is taxable unless specifically exempted" is a lie. I may receive a repayment of a loan, but it's not taxable.

to state that because the executor is also a recipient of the estate that they are effectively being forced to tax themselves (or their property) is the most damned foolish comparison to be made.

Which is beside the point, because I never said any such thing. Look, I'll make it so simple that even you might be able to understand: Assume a taxable estate of $10 million and a federal estate tax of $3.5 million. There is also a state inheritance tax of 10%. There is a single beneficiary, someone other than the executor (although that's quite irrelevant). The executor has to pay the U.S. the $3.5 million, and there's no way to shift this burden to someone else. After the estate tax is paid, the beneficiary's share is $6.5 million, but there's an inheritance tax of $650,000 to pay. So the beneficiary nets $5.85 million. The beneficiary may avoid the inheritance tax by disclaiming; the estate can't avoid the estate tax at all.

Only if they are setup as a corporation, otherwise they would file a 1040 from along with a Schedule-SE form; while corporations would file a 1120/1120-S form and whatever other related forms.

Mr. White, the form used to report the gross income is irrelevant. A corporation with business income uses an 1120. An estate or trust with business income uses a 1041. A partnership with business income uses a 1065. An individual with business income uses a 1040 and a Schedule C. But in all four cases, the filer is reporting gross income includable under 61(a)(2).

[Wheeljack]

If they've never contemplated it, it means it's eluded them. The reason they've never contemplated it is because it's a ludicrous idea.

You have as much trouble understanding eluded as you do with service.
If the police are not looking for me, then I am not eluding them. If they are looking for me and I escape their notice, then I have eluded them.

If an idea was judged as ludicrous, then it must have been contemplated.

Guess again. He meets all of the criteria for a common-law employee.

A common law employee can walk away from a job without liability. The employer can unilaterally change the remuneration for employment. The employee has placed himself in service to the employer, thus the employer directs and controls how the work is done.

Your athlete can not walk away from his contract without being sued for breach of contract. The Team can not unilaterally change the terms of the contract. The team signed the athlete based on his ability to achieve a desired result. How that result is achieved is in the hands of the athlete.

He is an independent contractor. He may be treated as an employee because of the exclusivity of his contract. This would be the perfect example for Form SS-8, if the team did not pay the employer share of Social Security and Medicare.

[Weston White]

If they've never contemplated it, it means it's eluded them. The reason they've never contemplated it is because it's a ludicrous idea.

It is by no means a ludicrous idea, it is a grand idea. It is an idea for which serves as the basis of our imbued American heritage, our very birthright. It’s as magnificent a concept as is governmental redress, due process, suffrage, equal protection, and as individual religion, thought, expression, privacy, and defense are.

It is an idea that ensures the government maintains accountability in its actions over the people for which it exists to serve. It provides that ownership in property and personalty is to be both protected and respected by all governing entities and that the individual’s right to pursue happiness through their own Creator granted rights (which are unalienable), is limited only by their own propensities; to the extent that their individual life and liberty are not otherwise degraded or desisted by governmental hegemony or by democratic pomp. The fundaments of life, liberty, and happiness are not malleable objects for which to be reshaped by the decrees of whichever ideology happening to hold a public office at whatever point in time.

Moreover, such ideals have in fact been contemplated, so being realized all throughout the worldly writings of great statesmen and economists alike, i.e., Turgot, Smith, Locke, Paine, Hamilton, Jefferson, Gallatin, et al. However, and quite sadly, in our present timeframe honesty no longer equates to recognition or profitability; for, you do of course realize that America -and most all other nation-states- has been taken over by elitist-eugenicist aristocrats, right?


Declaration of Independence:

“… We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed … He has refused his Assent to Laws, the most wholesome and necessary for the public good. … He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: … For imposing Taxes on us without our Consent: … We, therefore, ... appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People … solemnly publish and declare … That these united Colonies are, and of Right ought to be Free and Independent States … — And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”

Additionally to consider:

“America is a land of taxation that was founded to avoid taxation.” - Laurence J. Peter, D.Ed.

“What at first was plunder assumed the softer name of revenue.” - Thomas Paine

“If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute.” - Thomas Paine

“Collecting more taxes than is absolutely necessary is legalized robbery.” - Calvin Coolidge

“Unquestionably, there is progress. The average American now pays out twice as much in taxes as he formerly got in wages.” - H.L. Mencken

Guess again. He meets all of the criteria for a common-law employee.

Well, actually that is to some extent debatable; regardless, it proves nothing to the present discussion and is in all truth a moot point:

http://edd.ca.gov/UIBDG/Total_and_Pa...t_TPU_4154.htm

http://en.wikipedia.org/wiki/Independent_contractor

No, because after the Pollock case and before the 16th Amendment, a tax on investment income had to be apportioned.

Then I will rephrase my prior statement: You claim that up until the findings of Pollock the federal government had always held the power to uniformly tax income of whatever type, in whatever form, and of whatever source; after which it had only the above restriction placed on such methods of taxation, that is until the XVI Amendment was ratified.

No, I've stated that the Constitution prohibits federal taxes on exports, and Supreme Court decisions have indicated that Congress can't tax some operations of state and local governments.

Then I will rephrase my prior statement: You claim the national taxing powers, so far as they are applicable to the common livelihoods of the populace (or to the general populace), are limited only by legislation.

No, I've said that the things listed in Section 61(a) are items of income, not sources. There's an obvious distinction, for example, between dividend income and the source of dividend income (i.e., the stock).

If that be true then you have undoubtedly generated a fallacy by your own argument, being that (according to you at least) an individual’s remuneration is such an item of ‘gross income’, which is ultimately notwithstanding any source for the tax to be indirectly measured by. Ergo, your notion is founded in falsehoods that are wholly incompatible with the statutes restrictive prescriptions as set forth by Subsection (a) of 26 USC Sec. 61.

You cannot justly argue that by your example there is the stock as the source and its realized dividends as its income, but then to the question of remuneration (of the common day laborer), postulate that no such source is required that yet somehow it traverses itself into the realm of income, or even that the remuneration (of the common day laborer) is both simultaneously the source and its income.

Plainly, the reference to “salaries and wages” was removed from the amended version of the term ‘gross income’ because it would have otherwise continued exposing a truth that was at the time overt, though was intended to become covert.

No, because (a) certain kinds of income in the generic sense are not part of gross income, and (b) taxable income is gross income less deductions.So neither gross income nor taxable income is equivalent to plain vanilla income.

Great, so then you do acknowledge that: (1) there are in fact varied classifications of “income”, and (2) of those there are certain types that are -aside from having been statutorily exempted- naturally excludable (i.e., by organic or fundamental law) from the statutory term ‘gross income’ and hence the entirety of the IRC.

Oh and that “generic sense, plain vanilla income” in which you spoke of, is correctly called either ‘nontaxable income’ or ‘unconstitutionally taxable income’, or is otherwise the ‘source’ to later be taxed as ‘gross income’ upon “realization”.

One is singular and one is plural.

And, for which is distinctly relevant to the constitutional breadth of the XVI Amendment. Hence, the income tax is not merely a tax upon income as a generality, but is a tax upon one classification of income emanating another classification of income; or perhaps more clearly, it is a tax not upon the branches of a tree, but upon the fruit borne by the tree’s branches.

You mean "realty", not reality. But no, direct taxes also include capitations.

Wow, I must say that I am utterly impressed, being that typos usually trip you up so very easily -just like a wooden stake through a vampire’s heart. Your therapist prescribed Paxil and Abilify combo must be starting to finally take effect (just don’t go too crazy on that stuff though, being that a main compound in all psychotropics is fluorine, which is a toxic compound derived from fluoride), other than that great work buddy! You’re certainly progressing right along.

And yes, as well as “other direct” taxes, at any rate, you discount precisely what ‘capitations’ signify; otherwise we would not even be having this discussion.

Except for income earned by a state or local government, there is no such distinction.

Then I will rephrase my prior statement: Excluding all consideration to the incomes of whatever jurisdiction of governments, while lending consideration only to the livelihoods of the populace (or to the general populace), you claim that there is no constitutional distinction between one class of income and another.
* However, as provided above you do now realize such distinctions.

Also to note, governments do not “earn income”, they generate revenue. All forms of government are budgetary non-profits by their nature.

In short, Mr. White, your claim that I have said that "any object (including anything at all of whatever form or shape or value) you receive is taxable unless specifically exempted" is a lie. I may receive a repayment of a loan, but it's not taxable.

Not exactly, because the above statement that I made follows fairly well to the several responses you have made above, with obvious exception to your new admission that there are various classifications of income that may not be taxable (regardless if such items were intentionally exempted); with reference to your above “generic sense, plain vanilla income” example.

And no, of course a loan repayment would not be taxable it is respective to an outstanding debt (as to why neither is the borrower taxed upon their loan, that is unless it becomes CODI), and even if it were to be taxed the incurred loss from the original loan would cancel out the subsequent gain -that is with exception to whatever interest was realized by the lender.

Which is beside the point, because I never said any such thing. Look, I'll make it so simple that even you might be able to understand: Assume a taxable estate of $10 million and a federal estate tax of $3.5 million. There is also a state inheritance tax of 10%. There is a single beneficiary, someone other than the executor (although that's quite irrelevant). The executor has to pay the U.S. the $3.5 million, and there's no way to shift this burden to someone else. After the estate tax is paid, the beneficiary's share is $6.5 million, but there's an inheritance tax of $650,000 to pay. So the beneficiary nets $5.85 million. The beneficiary may avoid the inheritance tax by disclaiming; the estate can't avoid the estate tax at all.

No the executor does not have to pay the tax (as in out of their own funds); however, what the executor does have to do is to pay the tax on behalf of the estate that they are executing (such is but one of many duties to be performed by the executor). The will of the estate is merely to be executed (by the executor) on behalf of the deceased (the till then owner), ultimately passing each article onto a beneficiary, be it a heir, a charity, or is otherwise donated or ceded over to whatever government possessing jurisdiction.

Once an individual is deceased their last remaining rights is to receive a proper ceremony and burial, and to have their will lawfully executed. Such decedent’s “estate” cannot itself claim constitutional protections, nor may the executor claim to be acting as a proxy-personality of the decedent that is to be granted identical rights as the now departed.

Mr. White, the form used to report the gross income is irrelevant. A corporation with business income uses an 1120. An estate or trust with business income uses a 1041. A partnership with business income uses a 1065. An individual with business income uses a 1040 and a Schedule C. But in all four cases, the filer is reporting gross income includable under 61(a)(2).

False, each IRS form, schedule, table, or whatever is representative to a specific tax class, including the various numerations of ‘gross income’; to wit, such forms, schedules, and tables detail the relationally distinctive aspects and procedures of those tax classifications.

And yes, ‘gross income’ pertaining to business activities is addressed as you had cited above.

[Sonny Tufts]

It is by no means a ludicrous idea, it is a grand idea. It is an idea for which serves as the basis of our imbued American heritage, our very birthright. It’s as magnificent a concept as is governmental redress, due process, suffrage, equal protection, and as individual religion, thought, expression, privacy, and defense are.

Mr. White, it's ludicrous for the very simple reason that the types of income listed in subsections (1) through (15) of Section 61(a) are not exclusive -- they are not the only things that are included in gross income. So even if Wheeljack is correct in interpreting subsection (1) as encompassing only self-employment income, it wouldn't change the fact that compensation for working for someone else is included in gross income as well. Why? Because Section 61(a) says that ALL income is included in gross income unless specifically excluded, and such compensation is clearly income.

Then I will rephrase my prior statement: You claim that up until the findings of Pollock the federal government had always held the power to uniformly tax income of whatever type, in whatever form, and of whatever source; after which it had only the above restriction placed on such methods of taxation, that is until the XVI Amendment was ratified.

Not quite, because before Pollock the Supreme Court held that Congress couldn't constitutionally tax the income of a state employee, a rule which the Court abandoned in 1938. There might have been other isolated instances as well, but today it's quite clear that there's no type of income earned by an individual that's constitutionally exempt.

Then I will rephrase my prior statement: You claim the national taxing powers, so far as they are applicable to the common livelihoods of the populace (or to the general populace), are limited only by legislation.

No, because Congress is bound by due process and equal protection considerations. For example, Congress couldn't provide that dividends received by white people were excluded from gross income, but all others were not.

You cannot justly argue that by your example there is the stock as the source and its realized dividends as its income, but then to the question of remuneration (of the common day laborer), postulate that no such source is required that yet somehow it traverses itself into the realm of income, or even that the remuneration (of the common day laborer) is both simultaneously the source and its income.

Mr. White, the source of the laborer's compensation is his job and the labor he puts into it. The argument that before an item of income can be taxed its source must be determined is nonsense and has been rejected by the courts.

Great, so then you do acknowledge that: (1) there are in fact varied classifications of “income”, and (2) of those there are certain types that are -aside from having been statutorily exempted- naturally excludable (i.e., by organic or fundamental law) from the statutory term ‘gross income’ and hence the entirety of the IRC.

Oh and that “generic sense, plain vanilla income” in which you spoke of, is correctly called either ‘nontaxable income’ or ‘unconstitutionally taxable income’, or is otherwise the ‘source’ to later be taxed as ‘gross income’ upon “realization”.

Wrong again, Mr. White. There is no kind of income earned by an individual that's "naturally excludable (i.e., by organic or fundamental law)". And when I referred to plain vanilla income, I was referring to income as characterized by the Supreme Court: an undeniable accession to wealth, clearly realized, over which one has control. A particular instance of such income may or may not be included in gross income. For instance, a dividend is but a gift is not.

Then I will rephrase my prior statement: Excluding all consideration to the incomes of whatever jurisdiction of governments, while lending consideration only to the livelihoods of the populace (or to the general populace), you claim that there is no constitutional distinction between one class of income and another.

Wow, you finally said something that's correct.

[Weston White]

Mr. White, it's ludicrous for the very simple reason that the types of income listed in subsections (1) through (15) of Section 61(a) are not exclusive -- they are not the only things that are included in gross income. So even if Wheeljack is correct in interpreting subsection (1) as encompassing only self-employment income, it wouldn't change the fact that compensation for working for someone else is included in gross income as well. Why? Because Section 61(a) says that ALL income is included in gross income unless specifically excluded, and such compensation is clearly income.

1. No, it is rather that you are functioning in blatant ignorance to the true substance of the issue; while, it is that very substance which dominates the form, including sacking your entire argument.
2. No, Wheeljack is not saying that ONLY self-employment income is to be includable in ‘gross income’, be it Subsection (a)(1) or (a)(2), only that so far as remuneration has been received by a self-employed individual is it then within the context of being ‘gross income’; although, Subsection (a)(1) does factually include many other forms of “compensation” received, regardless of the context of being a self-employed individual or not.
3. Receiving compensation is not synonymous to earning a livelihood.
4. No, 26 USC Sec. 61(a) states no such thing; in its proper context, it states however, that all constitutionally taxable income, which has been derived from a source, then meets the requirement of being ‘gross income’ and is to be taxed as ‘taxable income’, unless otherwise stipulated. Ergo, ‘gross income’ is indicative of the realized ‘gain’ or ‘profit’ reciprocating from a fountainhead.
5. While it is true that 26 USC Sec. 61(a), et seq., is not expressio unius est exclusio alterius; it is however, ejusdem generis.
6. The fact remains that the context of ‘gross income’ was intentionally amended to be ambiguous, thereby its contextual application must remain in favor of the would be subject, respective of its originating form, i.e., clear statement rule, noscitur a sociism, generalia specialibus non derogant.

Not quite, because before Pollock the Supreme Court held that Congress couldn't constitutionally tax the income of a state employee, a rule which the Court abandoned in 1938. There might have been other isolated instances as well, but today it's quite clear that there's no type of income earned by an individual that's constitutionally exempt.

Wasn’t the year 1939, as in The Collector v. Day, 78 U.S. 113 (1870); Graves v. New York ex rel. O'Keefe, 306 U.S. 466 (1939)? Regardless you can debate all sorts of such exclusions spanning the decades, be they for “officials”, judges, government entities or instrumentalities, or whatever, but save for those exceptions, the above statement is clearly what you believe and are intent on believing; and as such you are entirely incorrect.

Although, in making such references, as above, what you are actually arguing over is the total cessation of all federal taxation over the individual versus a cessation of only specific considerations of federal taxation over the individual. While, the former discards all prudence and objectivity the latter maintains those vital essences and ethical considerations over the individual.

Moreover, you are further incorrect in that all income that is not constitutional income is wholly auto-exempted from federal income taxation, regardless if made statutorily exempt or not; that is entirely irrelevant to the matter.

No, because Congress is bound by due process and equal protection considerations. For example, Congress couldn't provide that dividends received by white people were excluded from gross income, but all others were not.

Your response is a poorly conceived red herring. Even still, yes Congress could in fact pass such legislation if they so desired; for there would be nothing to stop them, save for acquiring the necessary (bicameral) house votes to pass the law onto the President’s desk for signing into public law. Then, once ratified, under the ripeness doctrine, it would simply be a matter for the courts to recognize such constitutional considerations and issue whatever orders, injunctions, and whatnot after a complaint has been brought forth.

At any rate, your point serves only to further sack your argument for the fact that certain subjects of the federal income tax are permitted to record their actual ‘net income’, e.g., deducting expenses, losses, amortization, theft, etc.; while other subjects are allotted only a static amount that may be either for some too generous, while for others too punishing, and regardless is for the most part in both cases totally unrealistic.

Additionally, favored businesses are consistently allowed to reduce their taxes through off-shoring their profits into foreign subsidiaries within tax favorable nations, or by rebates, or are subsidized; certain class of occupations are taxed at a set rate regardless of how much they make, such as those living on investment income, having to surrender only a whopping 15% of their six or seven figured annual gains.

As a generic example, say your average Joe works for Mucky Irrigation Services in exchange for only $1,000 worth of Apple stock, which then quickly increases in value to $10,500 so your average Joe sells it for $10,000 and is happy. Meanwhile, over in Pleasantville you have the wealthy stock-player Pete, who during this same timeframe purchased $1,000 worth of Apple stock and who sold that stock right behind your average Joe, also for $10,000 -for this is how he maintains his now expected extravagance. Now according to you, and with consideration to both subjects, what was in essence the same exact arrangement qualifies your average Joe for $10,000 worth of ‘gross income’ at whatever tax rate he falls under (15% or more), yet for stock-player Pete he qualifies for the lesser sum of $9,000 worth of ‘gross income’ at a locked in tax rate of just 15%. I do not know about you, but to me that absolutely avoids all sense of equal protection.
* And that is not to mean that 15% isn’t an unethical tax rate, because it most certainly is.



See also:

http://blogs.suntimes.com/sweet/2011...s_avoidin.html

http://www.reuters.com/article/2011/...7A261C20111103

http://www.huffingtonpost.com/2012/0...n_1413263.html

http://www.thefiscaltimes.com/Articl...ons.aspx#page1

Mr. White, the source of the laborer's compensation is his job and the labor he puts into it. The argument that before an item of income can be taxed its source must be determined is nonsense and has been rejected by the courts.

1. False, as was previously noted, a source is to mean a constitutional source, having been summarized so well: “capital is the source of income; and income is the fruit of capital” [Black].
2. Either of ‘gains’ or ‘profits’ are “in distinction from the wages of labor” [Black].
3. Quoting Black’s Constitutional Law Treatise within Pollock at 157 U.S. 429, 625 (1895): “… a direct tax is one which is levied upon the person who is to pay it, or upon his land or personalty, or his business or income, as the case may be. …”
4. Quoting Alexander Hamilton [7 Hamilton’s Works, 848] within Pollock 158 U.S. 601, 625 (1895): “A tax upon one's whole income is a tax upon the annual receipts from his whole property, and as such falls within the same class as a tax upon that property, and is a direct tax in the meaning of the Constitution.” See also: 247 U.S. 179, 185 (1918); 247 U.S. 330, 335 (1918).
5. Quoting Black’s Income Tax Treatise: “… nothing is to be considered as income except what represents value in money, that is, either money or something that is equivalent to money because it can be converted into money and the proceeds expended in any way the recipient may please.”
6. A tax levied on an individuals “job” would still require apportionment being a capitation tax assessed on general occupations or otherwise a poll tax assessed on a specific caste of society, save for occupations that are deem privileged under excise taxes. Regardless, common law has well established that an individual’s labor is their personal property as is their ability to privately contract the same.
7. Furthermore, you sack your own argument for the obviousness that even if the individual’s job or their labor is considerable as the capital severing the remuneration in that exchange, there is still not any gain or profit for which to be realized, for there was only a conversion of human capital evenly expended into monetary capital, (e.g., “…and that nothing can be called income, for the purpose of this act, which takes away from the property itself. If it does, then it ceases to be income and amounts to a sale of capital assets.” [Turgot; Black]).
8. Any tax imposed upon an individual, that including their personalty or livelihood requires apportionment as a ‘personal tax’ [Black; viz., Wharton].
9. Income in its constitutional sense requires a conversion of capital, resulting in a severed positive sum or value, and in that way there must first exist a corpus; when one labors for their livelihood there is only an equal exchange respective to the accepted value set forth by the labor’s own personal capabilities, confidence, and ability to negotiate -also given to various external influences that are largely beyond their control.
10. False, aside from the IRC requiring that a certified assessment of taxes due be made (and made available upon request -and no the statute does not make any mention therein about this only being a requirement when the power is out at whatever IRS Office conducting such assessments, as the IRS so claims), the answer as to what does or does not constitute ‘gross income’ is not nonsense, it is requisite, see: Eisner v. Macomber, 252 U.S. 189, 206 (1920); Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 698 (1895).

Wrong again, Mr. White. There is no kind of income earned by an individual that's "naturally excludable (i.e., by organic or fundamental law)". And when I referred to plain vanilla income, I was referring to income as characterized by the Supreme Court: an undeniable accession to wealth, clearly realized, over which one has control. A particular instance of such income may or may not be included in gross income. For instance, a dividend is but a gift is not.

And here I had thought you were finally making a bit of process, then you just had to go and back-peddle -heh. Oh well, such is your loss, not mine.

1. False, source-income is the corpus for which to obtain that “undeniable accession to wealth” that you speak of and it may only be taxed through apportionment.
2. Earning a livelihood is not any such “undeniable accession to wealth”; it realizes only the continuation of subsistence.
3. Legislation cannot be used to creatively devise avoidances to constitutional stipulations on taxation (nor anything else for that matter).
4. Quoting Coppage v. Kansas, 236 U.S. 1, 14 (1915): “The principle is fundamental and vital. … Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich, for the vast majority of persons have no other honest way to begin to acquire property save by working for money.” See also: Olmstead v. United States, 277 U.S. 438, 478-479 (1928).

Wow, you finally said something that's correct.

What you mean to state is that you are finally in agreement with that statement (as provided above); however, which is wholly incorrect and that you -nor any other “Quatloser!”- are capable of even remotely substantiating.

[Sonny Tufts]

As a generic example, say your average Joe works for Mucky Irrigation Services in exchange for only $1,000 worth of Apple stock, which then quickly increases in value to $10,500 [I think you meant $10,000] so your average Joe sells it for $10,000 and is happy. Meanwhile, over in Pleasantville you have the wealthy stock-player Pete, who during this same timeframe purchased $1,000 worth of Apple stock and who sold that stock right behind your average Joe, also for $10,000 -for this is how he maintains his now expected extravagance. Now according to you, and with consideration to both subjects, what was in essence the same exact arrangement qualifies your average Joe for $10,000 worth of ‘gross income’ at whatever tax rate he falls under (15% or more), yet for stock-player Pete he qualifies for the lesser sum of $9,000 worth of ‘gross income’ at a locked in tax rate of just 15%. I do not know about you, but to me that absolutely avoids all sense of equal protection.

Mr. White, you should really stop trying to discuss tax law because it's quite clear you haven't the foggiest clue what you're talking about. Joe received compensation in the form of $1000 of stock, and he would have included that amount in gross income in the year of receipt. His basis in the stock is therefore $1000 so that when he sells it later on for $10,000 he has a gain of $9000 that will be eligible to be taxed at the capital gains rate in effect at the time. Pete's basis in his stock is also $1000, and his gain is $9000. Just like Joe, his gain qualifies as capital gain. The only difference in the two scenarios is the fact that Joe had to include the initial $1000 in income because it was received as compensation. Pete used money he already had.

[Weston White]

Mr. White, you should really stop trying to discuss tax law because it's quite clear you haven't the foggiest clue what you're talking about. Joe received compensation in the form of $1000 of stock, and he would have included that amount in gross income in the year of receipt. His basis in the stock is therefore $1000 so that when he sells it later on for $10,000 he has a gain of $9000 that will be eligible to be taxed at the capital gains rate in effect at the time. Pete's basis in his stock is also $1000, and his gain is $9000. Just like Joe, his gain qualifies as capital gain. The only difference in the two scenarios is the fact that Joe had to include the initial $1000 in income because it was received as compensation. Pete used money he already had.

Well now, that is precisely the point, isn't it! The federal income tax, at least according to you and those of your caliber, does not provide equal protection to those of a lesser caste.

The above example was intended only to serve as a vessel for you to display your utter disdain towards the laboring class -as it would not have mattered what it actually entailed, because your response would have been vastly consistent to the above). Thank you for making my point.

[Sonny Tufts]

The federal income tax, at least according to you and those of your caliber, does not provide equal protection to those of a lesser caste.

I don't know what point you were trying to make, Mr. White, but it apparently galls you that Joe has to pay tax on his compensation. Would it make you feel any better if Joe's taxable income (including the $1000 of Apple stock he received) was low enough so that he didn't have to pay any income tax? After all, he might be in that 45-50% of U.S. families that pay no income tax. He also might have qualified for the earned income tax credit, so he not only paid no income tax, he actually got cash from the government.

Would it make you happier if you knew that Pete's $1000 that he used to buy the Apple stock was what was left over from $1538 in income he received and on which he had to pay an income tax of $538?

[Weston White]

I don't know what point you were trying to make, Mr. White, but it apparently galls you that Joe has to pay tax on his compensation. Would it make you feel any better if Joe's taxable income (including the $1000 of Apple stock he received) was low enough so that he didn't have to pay any income tax? After all, he might be in that 45-50% of U.S. families that pay no income tax. He also might have qualified for the earned income tax credit, so he not only paid no income tax, he actually got cash from the government.

Would it make you happier if you knew that Pete's $1000 that he used to buy the Apple stock was what was left over from $1538 in income he received and on which he had to pay an income tax of $538?

Better still, thank you again for further proving my point, by publicly expressing your progressive ideologies and discontent concerning the individual property rights of the laboring class.

As you are one that undoubtedly believes that the entire throng of the working class society should be ecstatic and unquestioning whenever they receive a refund back on the perpetual loan that has forced upon their own property by the federal government (including most all states) each subsequent year. Consider yourself, using only arbitrary tables and figures to be so conveniently manipulated in support of your wanton ideals. How contrived and shameful; so utterly desperate, yet still so utterly deplorable.

[Weston White]

* To those that are a bit confused on what the point that I was making was, the point (for the most part) was that the $1,000 of Apple stock could of just as well been any of: a stock of apples valued at $1,000, a $1,000 golden apple, 1,000 Dollars, or whatever else. Here, Sonny Jim’s response would have been near identical to the above.

[Sonny Tufts]

Surprisingly, Mr. White has once again said something that's accurate. Like the old saying goes, even a blind hog rooting under an oak tree is bound to come up with an acorn now and then.

It is irrelevant in what form an employee's compensation is paid. Treasury Regulation 1.61-2(d) provides:

(d) Compensation paid other than in cash.

(1) In general. Except as otherwise provided in paragraph (d)(6)(i) of this section (relating to certain property transferred after June 30, 1969), if services are paid for in property, the fair market value of the property taken in payment must be included in income as compensation. If services are paid for in exchange for other services, the fair market value of such other services taken in payment must be included in income as compensation.

The Supreme Court agrees:

[The tax code] is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected. C.I.R. v. Smith, 324 U.S. 177 (1945)

Mr. White, you have made an error common to many tax protesters: you assume that my describing the law means I must somehow be in favor of it. This is nonsense. There are many parts of the law that I don't like. But those who would like to see a different tax policy in place are not well served by crackpot legal theories that are churned out by people with no legal training and that are either touted as some kind of magic bullet that will stop the IRS or presented as evidence that the entire legal and governmental community is part of a huge conspiracy to hide the "real law".

[Wheeljack]

Mr. White, it's ludicrous for the very simple reason that the types of income listed in subsections (1) through (15) of Section 61(a) are not exclusive -- they are not the only things that are included in gross income. So even if Wheeljack is correct in interpreting subsection (1) as encompassing only self-employment income, it wouldn't change the fact that compensation for working for someone else is included in gross income as well. Why? Because Section 61(a) says that ALL income is included in gross income unless specifically excluded, and such compensation is clearly income.

As I stated previously subsection(1) includes any compensation received for working for someone else that is paid for the result of the work.

Commissions, Fees, Tips, Bonuses and Fringe Benefits.

Mr. White, the source of the laborer's compensation is his job and the labor he puts into it. The argument that before an item of income can be taxed its source must be determined is nonsense and has been rejected by the courts.

Wrong again, Mr. White. There is no kind of income earned by an individual that's "naturally excludable (i.e., by organic or fundamental law)". And when I referred to plain vanilla income, I was referring to income as characterized by the Supreme Court: an undeniable accession to wealth, clearly realized, over which one has control. A particular instance of such income may or may not be included in gross income. For instance, a dividend is but a gift is not.

It is generally accepted that if you have capital and invest that capital into buying stock, or purchasing property, that when you sell that stock or property, then the return of the original value of that capital, also known as cost, also known as the return of investment, is not taxable. However, any increase in value received over the return of the original value is the gain or profit, also known as the return on investment, which is what is taxable.


What is an employer asking for when he creates a job? For the employee-candidate to make an investment in his business.

That investment is the presentment of the candidate's ultimate capital, his physical and mental being, to be employed at the control and direction of the employer. This means the investment is in time. Can the employer return the investment in the form of time? No. Thus, the employer establishes the value of this investment in time, at the outset, as the hourly wage.

So on payday, the employee has invested 40 hours of time and the employer pays back the predetermined value of that time.

What is truly a ludicrous idea is that you want say that the cost to the laborer for those 40 hours was nothing, thus the employers payback is all gain.

The cost to the laborer in this transaction is the 40 hours served.

When you invest money as capital do you come back to ask what did it cost you to acquire the original capital in the first place and then use that as the cost for this investment. That would be ridiculous, but that is exactly what you are doing with regard to labor.

You are treating laborers as if they are self-employed.

A self-employed individual sells a service, which is the result of the work. So the money he receives is from his customers. Which is one transaction.
How does he pay for the time he invests to do his own work? Can he take the money out of his right pocket and put it in his left pocket and call it a transaction? No. Therefore the cost to this individual for his own labor is nothing.

[Sonny Tufts]

Mr. Wheeljack, if someone working for others has a cost basis in his labor, then it follows that a self-employed person also has a cost basis in the services he is selling, similar to the cost of goods sold deduction for a seller of goods. But neither of these notions has any legal basis.

[Taxpayers'] principal argument is that Congress, by denying deductions for personal, living, and family expenses in the computation of taxable income, has exceeded its authority under the Sixteenth Amendment to the Constitution to lay and collect taxes on "incomes." The cornerstone of petitioners' argument is the definition of income stated by the Supreme Court in Eisner v. Macomber, 252 U.S. 189, 207 (1920), as "the gain derived from capital, from labor, or from both combined." They argue that the "gain" from labor cannot be determined until the "cost of doing labor," i.e., their expenditures at issue, has been subtracted from the amount received from the sale of labor. Petitioners attempt to support their method of arriving at the figure reflecting "income" which may constitutionally be taxed by analogizing the "living expenses" of one who depends upon the sale of his services for his livelihood to the "cost of goods sold" concept in certain business contexts...Appeal is made to history and philosophy and to analysis of legal, social, and economic concepts, none of which leads, however, to the result they seek.

It is difficult, if not impossible, to respond to arguments such as petitioners have put forth without becoming embroiled in a game of semantics. The logical force requiring rejection of their arguments -- apart from their assertions of personal political philosophy which do not provide a basis for us, a Court sitting to interpret the law, to decide the questions dispositive of this case -- is essentially a matter of the definition of terms. Thus, should we hold that "gain" is an essential element of income, compare Conner v. United States, 303 F. Supp. 1187 (S.D. Tex. 1969), affd., revd., and remanded 439 F.2d 934 (5th Cir. 1971), with McGuire v. United States, an unreported case ( N.D. Cal. 1970, 25 AFTR2d 1127, 70-1 USTC par. 9384), we would still face the problem of defining what constitutes "gain." Compare Conner v. United States, supra, with McCabe v. Commissioner, 54 T.C. 1745, 1748 (1970). It is in situations like this that one can truly admire the wisdom of Mr. Justice Holmes, in particular, as he expressed in United States v. Kirby Lumber Co., 284 U.S. 1 (1931), "We see nothing to be gained by the discussion of judicial definitions." n4
n4
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 That petitioners place too much reliance upon the words used to define income in Eisner v. Macomber, 252 U.S. 189, 207 (1920), is aptly demonstrated by Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), where, at page 431, the Court rejected those words as "a touchstone to all future gross income questions."

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

Nevertheless, accepting the conclusion that some kind of "gain" must be realized for there to be income, the flaw in petitioners' analogy of what they call the "cost of doing labor" to the "cost of goods sold" concept -- essentially its failure to acknowledge the difference between people and property -- may be shown. The "cost of goods sold" concept embraces expenditures necessary to acquire, construct or extract a physical product which is to be sold; the seller can have no gain until he recovers the economic investment that he has made directly in the actual item sold...Labor, on the other hand, is, in the current context, behavior performed by human beings in exchange for compensation. One's living expenses simply cannot be his "cost" directly in the very item sold, i.e., his labor, no matter how much money he spends to satisfy his human needs and those of his family. Of course we recognize the necessity for expenditures for such items as food, shelter, clothing, and proper health maintenance. They provide both the mental and physical nourishment essential to maintain the body at a level of effectiveness that will permit its labor to be productive. We do not even deny that a certain similarity exists between the "cost of doing labor" and the "cost of goods sold" concept. But the sale of one's labor is not the same creature as the sale of property, and whether the distinction comports with petitioners' philosophical rationalization for their argument, it is recognized for Federal income tax purposes...One's gain, ergo his "income," from the sale of his labor is the entire amount received therefor without any reduction for what he spends to satisfy his human needs.

Without constitutional backing for their position concerning the definition of income, petitioners are left with a bald assertion that section 262 [which denies a deduction for personal living expenses] is unconstitutional. However, it has long been established that "Congress has power to condition, limit, or deny deductions from gross income in order to arrive at the net that it chooses to tax." Helvering v. Independent Life Ins. Co., 292 U.S. 371, 381 (1934). And, as the Supreme Court has also stated:

For income tax purposes Congress has seen fit to regard an individual as having two personalities: "one is [as] a seeker after profit who can deduct the expenses incurred in that search; the other is [as] a creature satisfying his needs as a human and those of his family but who cannot deduct such consumption and related expenditures." [Fn. ref. omitted.] United States v. Gilmore, 372 U.S. 39, 44 (1963).

Reading v. Commissioner, 70 T.C. 730 (1978)

When you invest money as capital do you come back to ask what did it cost you to acquire the original capital in the first place and then use that as the cost for this investment. That would be ridiculous, but that is exactly what you are doing with regard to labor.

But if I invest something other than money, I have to ask what it cost me to acquire the capital. For example, if you and I form a partnership with you contributing $100,000 and my contributing land worth $100,000 for which I paid $10,000, my cost basis in my partnership interest is only $10,000. Since the laborer paid nothing for his time, he has no cost basis in it.

This kind of argument has been rejected so often by the courts that people making it risk being sanctioned.

The taxpayer next argues that wages are not income but an exchange of property. As money is property and labor is property, so his argument goes, his work for wages is a non-taxable exchange of property. Wrong again. Wages are income. See, e.g., Schiff v. Commissioner, 751 F.2d 116, 117 (2d Cir. 1984). The argument that they are not has been rejected so frequently that the very raising of it justifies the imposition of sanctions.” Connor v. Commissioner, 770 F.2d 17, 20 (2nd Cir. 1985), (the court not only ruled against the taxpayer, but also imposed sanctions of $2,000 for making a frivolous appeal).

“Appellant’s contention that the amounts he received from his employers constituted an equal, nontaxable exchanges of property rather than taxable income is clearly without merit. This court specifically rejected this argument in United States v. Lawson, 670 F.2d 923, 925 (10th Cir. 1982), as did the Tax Court in Rowlee v. Commissioner, 80 T.C. 1111, 1119-22 (1983).... Merely raising the argument that value received for labor does not constitute taxable income, but rather constitutes a nontaxable exchange of property, justifies the imposition of sanctions.” Casper v. Commissioner, 805 F.2d 902, 906 (10th Cir. 1986).

“According to Buras, income must be derived from some source. Wages cannot be taxed because the wage earner enjoys no gain from that source. Since the wage earner exchanges his labor and personal time for its equivalent in money, he derives no gain and therefore cannot be taxed. ... Appellant’s argument is refuted by one of the cases he cites. In Stratton’s Independence, Ltd. v. Howbert, 231 U.S. 399, 415, 34 S.Ct. 136, 140, 58 L.Ed. 285 (1913), the Court did define income as gain derived from labor. The Court went on to explain, however, that ‘the earnings of the human brain and hand when unaided by capital’ are commonly treated as income.” United States v. Buras, 633 F.2d 1356, 1361 (9th Cir. 1980).

“Furthermore, Olson’s attempt to escape tax by deducting his wages as ‘cost of labor’ ... illustrate the frivolous nature of his position. This court has repeatedly rejected the argument that wages are not income as frivolous....” Olson v. United States, 760 F.2d 1003, 1005 (9th Cir. 1985).

"Even if wages are, in effect, an exchange of equal value for value, they are nevertheless taxable income. Rowlee v. Commissioner, 80 T.C. 1111, 1121-1122 (1983); Rice v. Commissioner, T.C. Memo. 1982-129. And even if we apply section 1001 to determine petitioner’s gain, his basis is defined under sections 1011 and 1012 as his cost, not fair market value. Since he paid nothing for his labor, his cost and thus his basis are zero. Rice v. Commissioner, supra. Consequently, even under section 1001, his taxable income from his labor is his total gain reduced by nothing, i.e., his wages. ... Petitioner’s argument fails for the same reason that other protesters’ arguments fail; the worker’s cost for his services--and thus his basis--is zero, not their fair market value.” Talmage v. Commissioner, T.C. Memo. 1996-114, aff’d 101 F.3d 695 (4th Cir. 1996).

“[A] review of the pleadings indicates that Mr. Ledford bases his entitlement to this relief on his view that the federal tax code does not tax compensation received for personal labor. Mr. Ledford’s view of the tax law is mistaken, as the tax code quite plainly defines income to include amounts received in compensation for services rendered. 26 U.S.C. § 61(a) (2000) (“[G]ross income means all income from whatever source derived including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items . . . .”). Indeed, every court that has considered the matter has found this argument to be wholly without merit -- so much so that merely raising it is considered sanctionable.” Ledford v. United States, 297 F.3d 1378, 1381, 2002 TNT 153-6, No. 02-5027 (Fed. Cir. 8/6/2002).

“In an attachment, entitled ‘Formal Tax Return Protest With Memorandum of Law,’ the petitioners argued that a portion of their wages was not taxable under the Sixteenth Amendment because it was a return on human capital, i.e., the ‘human machine.’ ... [W]e reject the argument that wages are not completely taxable because they are a return on human capital. This is a variation on an argument repeatedly rejected by courts that wages are not income because they are in equal exchange for labor.” Gary Boggs et ux. v. Commissioner, 569 F.3d 235 (6th Cir. 2009) (affirming sanctions of $10,000 imposed by the Tax Court and imposing additional sanctions of $8,000 imposed for a frivolous appeal).

[Weston White]

Surprisingly, Mr. White has once again said something that's accurate. Like the old saying goes, even a blind hog rooting under an oak tree is bound to come up with an acorn now and then.

...

Mr. White, you have made an error common to many tax protesters: you assume that my describing the law means I must somehow be in favor of it. This is nonsense. There are many parts of the law that I don't like. But those who would like to see a different tax policy in place are not well served by crackpot legal theories that are churned out by people with no legal training and that are either touted as some kind of magic bullet that will stop the IRS or presented as evidence that the entire legal and governmental community is part of a huge conspiracy to hide the "real law".

Simply, you are confusing the common day laborer with the activities of the business itself. Laboring by bartering, or as an even exchange, is not akin to providing (professional) services to another. You’re taking “compensation” completely out of its rightful context in order to justify your mischievous notions. “Services” by no means, entails the consideration of exchanging whatever personal items (that including money) or receiving aid from (that including lending a hand to) your neighbors, friends, family, or coworkers, for example, (e.g., Hey Joe will you give me a hand cutting down this large oak in my side-yard? Most certainly Pete, if you will help me prep and paint my toolshed next weekend. Or even, hey boss my car won’t start could you use your pickup with that tow trailer you had told me about last month to pull my vehicle to the service station down the way? Alright Billy-Bob, just make sure that you include whatever the standard tow fee would have been on your tax return this year as a gain to you.)

The larger problem for you (including others like you) is that you’re entirely blinded by your own prejudices, as a trite racist would be, being neither capable nor caring to observe or appreciate the humanity and potential in the object that so disgusts and disdains you; in this instance that object being us lowly “tax protesting” crackpots.

Clearly, you far exceed going beyond merely “describing the tax laws”, and as to whatever portion of such laws that you do not like, the individual income tax (to wit, livelihoods), SSI, FICA, PPACA, stoppage at the source, and the entire IRS’ mechanics of FRP-ACS and distraint are certainly not on any such hate-list of yours; for you and your “Quatlost!” peoples revere the “awesomeness” powers of the IRS well above the individual protections provided to America’s citizens by its own core fundaments, at least when the matter turns to anything directing national taxation.

False, what is nonsense however is you pretending that the courts would never dare play part to any such vastly momentous conspiracy (by the by, Jay Adkisson had himself played such a role as co-counsel in a survivor’s lawsuit filed against the Republic of Iraq regarding the OKC Bombing morphing into some hokey international terrorist conspiracy plot); but, sure just as never would any agency of law enforcement, right (yea, and Oswald and Sirhan were both just back-to-back loner Kennedy family hating nut-jobs, with Jack Ruby ending up being crazier than both of them combined; and John Hinckley’s family was not longtime friends with the Bushes prior to him deciding to shoot President Reagan, while George Bush Sr. was his VP)? Historically, this assertion of yours proves itself to be utterly false, bearing past mere ineptness. So why don’t you go ahead and save that higher than mighty/superior calling speech for those asleep at their own brain-helm.

As to the courts not being a willing player to such conspiracies, one simply need to look toward President Barry Soetoro (moniker: Barack H. Obama) himself; as for whatever little remains of Mr. Soetoro’s creditability it’s being ever rapidly destroyed by Breitbart from beyond the grave. See for example at: http://www.breitbart.com/Big-Journal...bart-Lit-Story

[Weston White]

Such notions (regarding the top post on this page by Sonny Jim) can be easily summarized, when one is involved in business activities they are participating in a privilege, which is and has always been indirectly taxable though excises, otherwise they are participating in an unalienable right to life and as such they require subsistence and provisions to accomplish that, and therefore often take on a livelihood in order to meet that objective.

The distinction is one clearly involving gains or profits versus a mere exchange, e.g., while the employed security guard earns say $11.50 an hour and perhaps pays into a partial coverage health care plan and receives a few other small perks here and there, their employer, that is to say the one that is actually proving the service is being paid many times that by those that hire the security guard for private protection. In this case the employee merely earns a living to the greater benefit of their employer, who even after paying all of their respective business expenses, insurance coverage, etc., still affords a nice profit; which is often why the employee drives home in a Honda, while their employer drives home in a Lexus.


* And this also plays a very large part as to why the IRS marks you down in their internal AMIS computer program as being SB/SE and not as an employee (even though they know that you are in fact an employee), it is necessary in order to get around the restrictive commands of the program. Ergo, the IRS has to treat you as if you are a business owner.

[Weston White]

But if I invest something other than money, I have to ask what it cost me to acquire the capital. For example, if you and I form a partnership with you contributing $100,000 and my contributing land worth $100,000 for which I paid $10,000, my cost basis in my partnership interest is only $10,000. Since the laborer paid nothing for his time, he has no cost basis in it.

So then if the land is lost in the course of the partnership due to a lawsuit, do you argue in court that the petitioner may only seek a claim on $10,000 worth of the partnership’s land, because the remaining $90,000 worth of your land had no “cost basis” in establishing the partnership?

No, the truth is that the cost basis is the value of whatever object you apply to the start up capital for the business, which can even include your own labor, e.g., a partner that is knowledgeable on setting up Websites could use that skill at whatever agreed upon price to setup and maintain a Website for their new company as part of their contribution; which according to you would be an impossibly simply because there is no “cost basis” in that partner's laboring.

And where within the IRC does “cost basis” theory come into play, meaning is there some statutory reference to that point or is this yet another red-herring you're tossing out there?

Moreover, according to your theory, employers should just take advantage of their employees and/or that employees should just work for free. Simply in that the employee is not really giving up anything; because they have established no “cost basis” in their labor, save for when they are actually paid or otherwise compensated. And to that end, employees could never win any lawsuits against employers that fail to pay or compensate them, for the fact that they have established no “cost basis” and thereby they hold no valid claim to a cause of action, save for a breach of contract to which bears no actual value in damages (noting that a sustained loss would be one of several requirements in filing suit) as no “cost basis” had yet been established, thus this contrived theory -however, insulting and ultimately bogus it might be- should bring about a brand new affirmative defense protecting the rights of employers from such as you say “frivolous claims”.

The totality of the fact is it that it’s the contract itself that establishes the “cost basis”, for it is wholly representative of the value that the individual laborer holds in their own, time, effort, skill, knowledge, locality, and required tools; whereas one employee for the same task may value their pay at $20 an hour another perhaps $12 an hour and an extended lunch at Chipotle.

And just the same, should an employee discover that their coworker is earning $2 more an hour than they, cannot take their employer to court and sue them, or if they did the judge would look only toward that employees own agreed upon contract to determine the proper amount of their pay and compensation and nothing else (that is aside from whatever minimum wage laws and whatnot).

[Wheeljack]

Mr. Wheeljack, if someone working for others has a cost basis in his labor, then it follows that a self-employed person also has a cost basis in the services he is selling, similar to the cost of goods sold deduction for a seller of goods. But neither of these notions has any legal basis.

I am not claiming expenses as is the case in Reading.

And the only cost basis a self-employed person has is for supplies used in his business.

But if I invest something other than money, I have to ask what it cost me to acquire the capital. For example, if you and I form a partnership with you contributing $100,000 and my contributing land worth $100,000 for which I paid $10,000, my cost basis in my partnership interest is only $10,000. Since the laborer paid nothing for his time, he has no cost basis in it.

As you point out cost denotes that you acquired something. The capital in question is the laborer himself. He exists in time. He does not acquire himself or time.

The market determines what the value of this capital is worth, not the laborer himself.

In the case of a self-employed individual, he determines the value of his services, which can include what the taxes may be for the income he receives and therefore he has passed all or a part of his income tax onto his customer.

This kind of argument has been rejected so often by the courts that people making it risk being sanctioned.

Because, As I pointed out in my original post these people did not establish that working for someone else is not a service or services.

Look at Ledford, the court notes personal labor, if this describes him laboring to fulfill a contract for services sold to a customer (self-employment), then he deserved to get whacked.

“According to Buras, income must be derived from some source. Wages cannot be taxed because the wage earner enjoys no gain from that source. Since the wage earner exchanges his labor and personal time for its equivalent in money, he derives no gain and therefore cannot be taxed. ... Appellant’s argument is refuted by one of the cases he cites. In Stratton’s Independence, Ltd. v. Howbert, 231 U.S. 399, 415, 34 S.Ct. 136, 140, 58 L.Ed. 285 (1913), the Court did define income as gain derived from labor. The Court went on to explain, however, that ‘the earnings of the human brain and hand when unaided by capital’ are commonly treated as income.” United States v. Buras, 633 F.2d 1356, 1361 (9th Cir. 1980).

The court in Stratton's defined income as gain derived from labor, not as the payment for labor.

The earnings of the human brain and hand applies to the money received for ideas and things done or made by hand. The laborer is not paid for his thoughts and does not own anything that is made by his labor. Therefore he doesn't receive any earnings of the human brain and hand.

[Weston White]

Wheeljack, I would say that your last couple of posts truly boils down the effervescences of the underlying matter. Very well stated.

To that I would only add, yet again, that earning a livelihood is relationally incomparable to the motivations or intentions of acquiring a 'gain'.

[Sonny Tufts]

when one is involved in business activities they are participating in a privilege, which is and has always been indirectly taxable though excises, otherwise they are participating in an unalienable right to life and as such they require subsistence and provisions to accomplish that, and therefore often take on a livelihood in order to meet that objective.

A specious distinction, Mr. White. The mom and pop who run a corner bakery are involved in business activities that provide the wherewithal for their subsistence.

And where within the IRC does “cost basis” theory come into play, meaning is there some statutory reference to that point or is this yet another red-herring you're tossing out there?

Mr. White, this is such a basic concept that your ignorance of it merely demonstrates that you shouldn't attempt to discuss tax law. Section 1012(a) of the Code provides,

The basis of property shall be the cost of such property, except as otherwise provided in this subchapter and subchapters C (relating to corporate distributions and adjustments), K (relating to partners and partnerships), and P (relating to capital gains and losses).

In my partnership example, my contribution of land worth $100,000 that I paid $10,000 for means that my basis in the land is $10,000. When I contribute it to the partnership, I do not recognize the built-in gain, because Section 721(a) says so: "No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership." It is because I don't recognize gain that Section 722 says my basis in my partnership interest is $10,000:

The basis of an interest in a partnership acquired by a contribution of property, including money, to the partnership shall be the amount of such money and the adjusted basis of such property to the contributing partner at the time of the contribution increased by the amount (if any) of gain recognized under section 721(b) to the contributing partner at such time.

No, the truth is that the cost basis is the value of whatever object you apply to the start up capital for the business

No, Mr. White, it's the cost of what you contribute, not its value. Section 722 states the rule for contributions to partnerships. Section 358 states a similar rule for contributions to corporations controlled by the transferor. Again, the reason is simple: because you don't recognize built-in gain when you contribute appreciated property to a business, your basis isn't increased to the value of the property. The law allows you to make a tax-free exchange of appreciated property in certain circumstances -- e.g., exchanging land for a partnership interest or for corporate stock. But the basis of what you receive is the same as your basis in the property given up in the exchange. Any other rule would allow you to escape being taxed on the built-in gain, and life ain't like that. In other words, Mr. White, there is no free lunch.

employees could never win any lawsuits against employers that fail to pay or compensate them, for the fact that they have established no “cost basis” and thereby they hold no valid claim to a cause of action, save for a breach of contract to which bears no actual value in damages (noting that a sustained loss would be one of several requirements in filing suit) as no “cost basis” had yet been established, thus this contrived theory -however, insulting and ultimately bogus it might be- should bring about a brand new affirmative defense protecting the rights of employers from such as you say “frivolous claims”.

Mr. White, you're as hopeless at contract law as you are at tax law. The measure of damages is what the employer promised to provide: the employee's wages. Cost basis is a tax law concept that can't be taken out of that context and inserted somewhere else.

[aksmith]

I can't know the motivations of the posters in this thread. But it is important to remember that we live in a lawless country. Yes, you may get a fair shake in court if you sue Joe Blow. And maybe even if you sue Joe Blow Corporation, although that's less likely. But if the government charges you for failure to file or failure to pay taxes, you are toast. You have a judge, the prosecutor, and most likely your own attorney working against you. And if you are defending yourself, you're an idiot.

I have watched Irwin Schiff be put away twice now, this time probably for the rest of his useful life. I have had friends who somehow believe that words on paper can protect them from the ravenous beast of government spend years in prison.

By not paying or filing, you put a noose around your neck, throw the rope over a branch, and hand the government the other end. You will be made an example of and you'll be left wondering just how it happened. Do not follow this advice. Minimize what you pay in taxes by all means legally possible. But do not waste your life over a few dollars. Make a Ron Paul president instead and force those taxes to be as small as possible. But your life is not worth making a point that nobody will pay attention to. I do not say this happily. I would love the non-payers and non-filers to be left alone and live happy lives. But they do not and it's just a matter of time.

[Weston White]

I can't know the motivations of the posters in this thread. But it is important to remember that we live in a lawless country. Yes, you may get a fair shake in court if you sue Joe Blow. And maybe even if you sue Joe Blow Corporation, although that's less likely. But if the government charges you for failure to file or failure to pay taxes, you are toast. You have a judge, the prosecutor, and most likely your own attorney working against you. And if you are defending yourself, you're an idiot.

I have watched Irwin Schiff be put away twice now, this time probably for the rest of his useful life. I have had friends who somehow believe that words on paper can protect them from the ravenous beast of government spend years in prison.

By not paying or filing, you put a noose around your neck, throw the rope over a branch, and hand the government the other end. You will be made an example of and you'll be left wondering just how it happened. Do not follow this advice. Minimize what you pay in taxes by all means legally possible. But do not waste your life over a few dollars. Make a Ron Paul president instead and force those taxes to be as small as possible. But your life is not worth making a point that nobody will pay attention to. I do not say this happily. I would love the non-payers and non-filers to be left alone and live happy lives. But they do not and it's just a matter of time.

The main problem with your argument is that Irwin Schiff was engaging in rightfully taxable activities and more than that he was acting willfully criminal by trying to hide his very large bag of money in off-shore accounts. Other than that I could only say to you:

“Contemplate the mangled bodies of your countrymen, and then say “what should be the reward of such sacrifices?” Bid us and our posterity bow the knee, supplicate the friendship and plough, and sow, and reap, to glut the avarice of the men who have let loose on us the dogs of war to riot in our blood and hunt us from the face of the earth? If ye love wealth better than liberty, the tranquility of servitude than the animated contest of freedom — go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that you were our countrymen!” - Samuel Adams

[Weston White]

A specious distinction, Mr. White. The mom and pop who run a corner bakery are involved in business activities that provide the wherewithal for their subsistence.

And thus your point would be…? Oh yes, I had forgotten, you never had one.

Mr. White, this is such a basic concept that your ignorance of it merely demonstrates that you shouldn't attempt to discuss tax law. Section 1012(a) of the Code provides, …

Alright, now that is wonderful news. Guess what here, Sonny Jim you have painted yourself into yet another corner on that one!

1. 26 USC Sects. 1011 and 1012, that is your “cost basis”, is respective only to affairs of business, property, and enterprise for the purposes of distinguishing the corpus from the gain or profit. The use of this term has nothing to do with determining the worth of contracts, labor, or livelihoods.
2. You are attempting to morph the term “cost basis” out from its appropriate application and into the private affairs of non-businesses and non-professionals. For that you are the one in the wrong, not me.

In my partnership example, my contribution of land worth $100,000 that I paid $10,000 for means that my basis in the land is $10,000. When I contribute it to the partnership, I do not recognize the built-in gain, because Section 721(a) says so: "No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership." It is because I don't recognize gain that Section 722 says my basis in my partnership interest is $10,000: …

No, Section 721(a) is speaking to the gain or loss of the transferred object as a contribution to the partnership, not the gain or loss to the partner prior to the formation of the partnership and subsequent contribution. For example, in your scenario I could opt to dump stocks (or whatever else) onto the partnership as my contribution that I purchased for $75,000 though have since been devalued to $2,500, which would be great for me, but a very bad deal for my partners. Moreover, nobody in their right mind would dare risking their $100K investment for a contribution that is to be valued at only 1/10 of that. And remember this is all in the context of 26 USC Sects. 1011 and 1012 (i.e. “The adjusted basis for determining the gain or loss from the sale or other disposition of property, whenever acquired, shall be the basis…”), otherwise what is ultimately going to happen is that $10K increase to $100K is going to end up getting taxed all over again, should it be sold or transferred or whatever else, and that contributing partner is going to suffer a massive loss in the process.

As well, I am fairly certain that Section was meant only to keep partners from both demanding more contributions from another partner whenever what they had contributed losses its value at the time of the contribution and also to prevent a partner from demanding more of a stake in the partnership whenever their contribution increases in value from the time of the contribution.

Also see, 26 USC Sec. 723: “The basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution increased by the amount (if any) of gain recognized under section 721 (b) to the contributing partner at such time.”

Regardless, it seems more correct that the above statutes have much more to do with business related sales, transfers, purchase, and windup/disposition than with the actual startup arrangements of the business. Additionally, the initial basis in the value of the property would be determined by the value as set forth by the contractual contribution.

No, Mr. White, it's the cost of what you contribute, not its value. Section 722 states the rule for contributions to partnerships. Section 358 states a similar rule for contributions to corporations controlled by the transferor. Again, the reason is simple: because you don't recognize built-in gain when you contribute appreciated property to a business, your basis isn't increased to the value of the property. The law allows you to make a tax-free exchange of appreciated property in certain circumstances -- e.g., exchanging land for a partnership interest or for corporate stock. But the basis of what you receive is the same as your basis in the property given up in the exchange. Any other rule would allow you to escape being taxed on the built-in gain, and life ain't like that. In other words, Mr. White, there is no free lunch.

Negative, that entire Subchapter is in the context of the “Gain or Loss on Disposition of Property”. You are merely attempting to confuse the real issue, e.g., whereas the partners “cost basis” might have very well been $10K that is not to mean they are permitted to claim only $10K of their property valued at $100K as their respective contribution. Also it should be noticed that the of filing tax returns are well-founded on honesty in one’s one self-assessment. If somebody really wants to refrain the reporting of certain sums they will, regardless of what rules any given statute has set forth, at any rate that is on them should they be audited they run the risk of additional penalty taxes and interest. However, as to your example you are presuming that the partner has yet to have paid taxes upon their realized gain, when in most cases they already had; and at any rate the transaction was very likely reported to the IRS by the other or another party. Additionally, the scenarios you are attempting to raise create a host of problems (e.g., passing a $90,000 fictitious gain the partnership from was what actually the startup capital, creating the potentiality for a double-taxation scenario, generating a massive loss to the affected partner, etc.)

And no, what you stated is without merit; what is withstanding is that you had transferred an item valued at $100K for a respective slice of “the action”, what you had originally invested or had done to obtain that item is of no direct consequence to the consideration of the contract (e.g., an inherited Babe Ruth baseball card, a variety of bullion purchased and held in possession since 1995, etc.)

Mr. White, you're as hopeless at contract law as you are at tax law. The measure of damages is what the employer promised to provide: the employee's wages. Cost basis is a tax law concept that can't be taken out of that context and inserted somewhere else.

Geez, Sonny Jim, you must have crashed your brain-ship into a reef and your brain-crew hath abandoned you!

What are you even talking about, you jabbering crack-monster! It was you that had originally insinuated that labors hold no “cost basis” in their labor and thereby all that they take in is pure gain and 100% taxable, given only to certain statutory exemption. I was only pointing out your utter lunacy on the issue. However, I am happy that you have finally come clean about your grave error -now just a few more remaining points for you to also clean up on.