Income Tax In A Nutshell Fundamentally, there are only two (2) objects in income tax law... Exempt income "income that is ... exempt" Taxable income "Income that is not ... exempt" Ultimately, income is either exempt or taxable   In addition, the actual tax due is only a percentage of taxable income, not a percentage of all income.   Data mining income tax code will produce the following... 1. Tax imposed "There is hereby imposed on the taxable income of every individual...a tax" - 26 USC Sec. 1     2. "taxable income" "In general ... the term ``taxable income'' means gross income minus the deductions" - 26 USC Sec. 63 “deductions”

Taxes, Too Complicated? The Supreme Court has said, it is a "well-settled rule that the citizen is exempt from taxation unless the same is imposed by clear and unequivocal language, and that where the construction of a tax law is doubtful, the doubt is to be resolved in favor of those upon whom the tax is sought to be laid" - 192 U.S. 397, p-416 News commentator Paul Harvey, on January 22, 2007, explains how this Supreme Courst decision was put into action... "Now for what it's worth, the 9th circuit panel in San Francisco has been reversed. The Internal Revenue Service, the IRS, has ruled that Valerie and Robert McKee owed the government $31,000 in unpaid taxes, until Valerie and Robert demonstrated in court that the tax law is so complex nobody can understand it. The court had to agree that the law was indeed so complex that nobody can understand it, and the court reversed itself, and the IRS gets the bill. The government also sought and got us...ha ha ha (laugh)... your government also tried to get a stipulation that this verdict would not be made public, but it just was... Paul Harvey, Good Day!!" Case Information: ROBERT C. MCKEE v. COMMISSIONER OF INTERNAL REVENUE No. 04-74846 IRS No. 4036-03 -- To hear this Paul Harvey sound clip and more, visit HearLiberty.com

3. "gross income"

"Except as otherwise provided in this subtitle, gross income means all income from whatever source derived"
- 26 USC Sec. 61

4. Otherwise provided

"Items of gross income, expenses, losses, and deductions, other than those specified in sections 861(a) and 862(a), shall be allocated or apportioned to sources within or without the United States, under regulations prescribed by the Secretary."
- 26 USC Sec. 863

Where's the “deductions”?

Search "under regulations" for “deductions”

(Include HTML characters and semicolon)

Sec. 861. Coincidence?

5. "under regulations"

"(a) Gross income means all income from whatever source derived, unless excluded by law."
"(b) ...To the extent that another section of the Code or of the regulations thereunder, provides specific treatment for any item of income, such other provision shall apply notwithstanding section 61 and the regulations thereunder."
- 26 CFR Sec. 1.61-1

 

So, "notwithstanding (in spite of) section 61" (and it's claim to "all income from whatever source"), if another section "provides specific treatment ... such other provision shall apply".

6. Such other provision

  Source: Government Printing Office - http://ecfr.gpoaccess.gov

Search for:

1. "how to determine taxable income" - 26 CFR Sec. 1.861-8(a)(1)



2. "specific sources" - Sec. 1.861-8(a)(1)



3. "specific guidance" - Sec. 1.861-8(a)(1)



4. "excluded income" - Sec. 1.861-8 and 1.861-8T



5. "deductions to excluded income" - Sec. 1.861-8(a)(4)



6. "eliminated income" - Sec. 1.861-8(d), and 1.861-8(d)(2), and 1.861-8T(d)(2)



7. "eliminated items" - Sec. 1.861-8T(d)



8. "Allocation and apportionment to exempt, excluded, or eliminated income." - Sec. 1.861-8(d)(2)



9. "exempt, eliminated, or excluded income" - Sec. 1.861-8T(d)(2)(iii)



10. "the sources of income for purposes of the income tax" - Sec. 1.861-1(a)
    
    
11. "income that is exempt or excluded" - Sec. 1.861-8T(d)(2)



12. "gross income may include excluded income" - Sec. 1.861-8(b)(1)



13. "specific rules for allocation and apportionment of deductions" - Sec. 1.861-8(a)(5)(ii)



14. "expenses, losses, or other deductions" - Sec. 1.861-8T(d)(2)(iii)



15. "income that is not considered tax exempt" - Sec. 1.861-8T(d)(2)(iii) - The list of taxable items (Income not exempt)

For more, see boolean search results from regulations, and search results from statutes - According to law and who is taxed.

7. "Allocation and apportionment to exempt, excluded, or eliminated income."

For "deductions to excluded income" the regulations tell us to "See paragraph (d)(2)" ...

Sec. 1.861-8(d)(2)
Allocation and apportionment to exempt, excluded, or eliminated income. [Reserved] For guidance, see Sec. 1.861-8T(d)(2).

And Sec. 861-8(d)(2) tells us to see Sec. 861-8T(d)(2) ... T is for temporary.

8. "For guidance, see Sec. 1.861-8T(d)(2)"

What is "exempt income"?

What income is not exempt? i.e. Taxable income

Sec. 1.861-8T(d)(2)(iii) lists taxable income - what is taxed.

Supporting terms found in 861: specific sources, specific guidance, excluded income, eliminated income, eliminated items, & the legal definition for exempt income.

	The list of taxable income Sec. 1.861-8T(d)(2)(iii) "Income that is not considered tax exempt [i.e. taxable income]. The following items are not considered to be exempt, eliminated, or excluded income [i.e. The following items are taxable income] and, thus, may have expenses, losses, and other deductions allocated and apportioned to them: (A) "a foreign taxpayer... gross income (whether domestic or foreign source)" [ e.g. "all income from whatever source" ] (B) "gross income of a DISC or a FSC" [These are Domestic International Sales or Foreign Sales Corporations] (C) "gross income of a possessions corporation" [Possessions are places like Guam, American Samoa, Northern Mariana Islands.] (D) "Foreign earned income" [The requirements for making foreign earned income are greater than you think. Search for the definition of "foreign earned income." e.g. Just because you might be making money from another country doesn't mean you make foreign earned income.]

Notice domestic earned income has been excluded from the list of taxable items.

Domestic earned income is "excluded by law" - the term doesn't even exist in the code or regulations.

It shouldn't be a surprise that something has been excluded by law. We are told by statutes to expect this...

"Except as otherwise provided" - 26 USC Sec. 61

And by regulations...

"all income from whatever source ... unless excluded by law." - 26 CFR Sec. 1.61-1(a).

But, Domestic earned income is not in the list of taxable income, because it is "excluded by law".

• Expressio unius est exclusio alterius: A principle in statutory construction: when one or more things of a class are expressly mentioned others of the same class are excluded. - Findlaw.com
  
  *This principle is a "well established, common-sense cannon of statutory construction."

Fact:

Gross income "means all income from whatever source".

But, the tax is "imposed on the taxable income".

Taxable Income

The only item from the list of "income that is not ... exempt" which is applicable to American citizens is Item D, . "Foreign earned income". However, most Americans do not have any "Foreign earned income".

Thus, according to law, most Americans do not owe federal income tax. Their income has been "excluded by law."

Congress, Secretary, IRS, Judges, CPAs, tax lawyers, tax software writers, ...

Explain yourselves! Ignorance of the law is no excuse. Right? We expect accuracy when we pay you to work.

If Sec. 861 is frivolous, then where is the law that you claim to follow? Thousands of people, including your own IRS agents, have asked you this many times, but you, and IRS Commissioner, Mark Everson, have ignored this question.

What is the section number? ... Evidently, it is Sec. 861.

Either you know the law or you're not the experts you pretend to be.

The truth is tax law is so simple a child can figure it out. It shouldn't be long before many of them do. (If teenagers can hack into NASA, the Air Force, government computers, etc, they can easily figure out a simple tax code.)

• CNN: Teen charged with hacking into Air Force system
• PBS: Interview: anonymous. Young hacker caught breaking into NASA's computers
• Zdnet: Teen hacks 27 ISPs, gains root access
• Cooltech: Another teen hacks NASA

The Code does not lie, but judges, politicians, and bureaucrats do.

All of the Titles of Law are suspect of your color of law, and all are candidates for data mining.