Income Tax In A Nutshell Thanks to data mining, tax law is simple. Really, there are only two fundamental subjects: Excluded income or "income that is ... exempt" Taxable income or "income that is not ... exempt" Ultimately, all income is either excluded income or taxable income.   Also notice, the tax is just some percentage of taxable income, not a percentage of all incomes.   Data mining the code will produce the following...   1. Law: 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

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

* But, tax is still "imposed on the taxable income", not gross income.

4. Except as 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

• What happened to deductions? Why are deductions located under regulations? [And, why is the Treasury Secretary allowed to make the law, in regulations?]
• There are more items of gross income? What kind of "Items" shall be allocated "under regulations prescribed by the Secretary"?

5. Under regulations prescribed

"(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] what section 61 says about "all income", if "another section of the Code or of the regulations ... provides specific treatment for any item of income", it shall apply.

• "unless excluded by law"? - Then what is excluded income?
• Where are the deductions?
• What section provides "specific treatment for any item of income"?

6. Specific treatment for any item of income [e.g. taxable income, gross income, excluded income, eliminated income, exempt income, expenses, losses, and other deductions]

* Try one of these search engines from the Government Printing Office:
• http://ecfr.gpoaccess.gov (better search tools)
• http://www.gpoaccess.gov/cfr/index.html

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. "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")

There are more specific rules written in section 861. Also see boolean search results in regulations, and the search results from statutes - according to law and who is taxed.

Specific sources, specific guidance, excluded income, eliminated income, and even eliminated items are prescribed in Sec. 861.

The "specific treatment for any item" is written in section 861.

Deductions and Excluded Income

For "deductions to excluded income", regulations say "See paragraph (d)(2)." Then, in Sec. 1.861-8(d)(2), it says:

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

So, "For guidance", with "exempt, excluded, or eliminated income", we're told, "see Sec. 1.861-8T(d)(2)".

Thus, the obvious questions:

• What is exempt?
• What is not exempt?
  Both of these are prescribed exclusively in CFR 1.861-8T(d)(2).

This is the list of taxable income, located in 26 CFR Sec. 1.861-8T(d)(2)(iii).

Here is what this really says, in plain English...

	"Income that is not considered tax exempt [income that is taxable]. 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" [Domestic International Sales or Foreign Sales Corporation]   (C) "gross income of a possessions corporations" [Possessions are places like Puerto Rico, Virgin Islands, etc]   (D) "Foreign earned income" [The requirements for making foreign earned income are greater than you think. Search for the definition of "foreign earned income"]

A search technique called a boolean search confirms this is the list of taxable income. Even "exempt income" is defined immediately before the list. And, everything listed is applicable only to foreign related incomes.

* Notice, domestic income has been excluded from the list ("excluded by law"), thus, domestic income is not taxable.

We were told to expect this, by the statutes...

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

and by the regulations...

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

Domestic income is not in the list of taxable income, it has been excluded by law.

A doubter would say, "But, it doesn't say domestic income is excluded".

It doesn't have to, it's already the accepted condition in (all) statutory construction:

• 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."

Evidently, it's easier to list what is taxable, than to list what is not taxable.

Gross income "means all income from whatever source".

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

Taxable Income

The only item in the list of "income that is not ... exempt" applicable to most citizens is item D. If you make "foreign earned income", this means you. However, most Americans do not have any "foreign earned income".

Thus, according to code, most Americans do not owe any federal income tax, because most of their income has been "excluded by law."

Congress; Secretary; IRS; Judges:

If Sec. 861 is frivolous, then where is the law? What is the number of the statute, or regulation, requiring an income tax from US citizens? Thousands of people, including your own IRS agents, have asked you this before, many times, but you, and IRS Commissioner, Mark Everson, have ignored the question. What is the number?

If section 861 is not the law, simply produce the statute or regulation number.

Explain yourselves.

Either, there is a law, or you've all been lying. (Imagine, politicians and bureaucrats, lying)

"everyone who does evil hates the light, and doesn't come to the light, lest his works would be exposed. But he who does the truth comes to the light, that his works may be revealed..."
- John 3:20-21

The truth is, tax law is so simple a child could 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.

Congressmen Ron Paul knows the income tax, and the Federal Reserve are a scam. Yet, the Congress, Secretary, and judges, enforce what is clearly a fraud.

The Code remains, still precise, impartial, and truthful.

The conflict of interest involved with judges who are payed by the same system which prosecutes does not simply vanish at the bench. This is not justice. What should we expect a tax judge to say, "Take my job away"? Only under color of law do they rule.

Even after one million frivolous rulings, you will not be able to avoid section 861, the truth is manifest. It will always return to the courts because code does not lie.

The slaves are waking up, and the masters will not be able to hide from millions of angry former-slaves.

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