Re: Larken is wrong about 861?

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Topic:	Politics > Politics-USA
User:	"Hale Westman"
Date:	28 Aug 2004 09:54:17 AM
Object:	Re: Larken is wrong about 861?

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:yK%Xc.1741>

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message

Arthur L. Rubin wrote:

"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 1.61-1]

Part I (section 861 and following),
subchapter N, chapter 1 of the Code,
and the regulations thereunder
determine the sources of income
for purposes of the income tax.
[1.861-1(a)]

What part of "sources" as defined below don't you understand?

How does that modify section 61?

ANY OTHER section of code or the REGULATIONS THEREUNDER.
SUCH OTHER PROVISION SHALL APPLY N O T W I T H S T A N D I N G...

Providing which sources an item of income can come from "for purposes
of the income tax" is pretty damn specific. It "specifies" whether
the item is taxable and under what conditions.

Section 61 DOES NOT MAKE IT ALL TAXABLE.
http://home.sprintmail.com/~dalereastman/tax/senter.html

Where does section 861

"or the REGULATIONS THEREUNDER." Go look at the regulations for sec.
61 again. "or the REGULATIONS THEREUNDER.".... And here is what the
REGULATIONS THEREUNDER state:

"Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax."
[1.861-1(a)]

provide for specific treatment of income or classes of
income UNLESS one of the operative sections applies, or
the taxpayer is not a US person?

"Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax."
[1.861-1(a)]

http://home.sprintmail.com/~dalereastman/861/source/source.html
http://home.sprintmail.com/~dalereastman/tax/opsections.html

The regulations CANNOT be legally interpreted to say something the LAW

does

not say:

Your BS has been addressed... In detail.
http://home.sprintmail.com/~dalereastman/861/source/source.html

SECTION 861. INCOME FROM SOURCES WITHIN THE UNITED STATES

(a) GROSS INCOME FROM SOURCES WITHIN UNITED STATES

The following items of gross income shall be treated as income from

sources

within the United States:

(1) INTEREST. . .(2) DIVIDENDS . . .(3) PERSONAL SERVICES . . .(4)

RENTALS

AND ROYALTIES . . .(5) DISPOSITION OF UNITED STATES REAL PROPERTY

INTEREST

(6) SALE OR EXCHANGE OF INVENTORY PROPERTY . . . (7) Amounts received as
underwriting income. . . (8) SOCIAL SECURITY BENEFITS

(b) TAXABLE INCOME FROM SOURCES WITHIN UNITED STATES

From the items of gross income specified in subsection (a) as being

income

from sources within the United States there shall be deducted the

expenses,

losses, and other deductions properly apportioned or allocated thereto

and a

ratable part of any expenses, losses, or other deductions which cannot
definitely be allocated to some item or class of gross income. The
remainder, if any, shall be included in full as taxable income from

sources

within the United States. In the case of an individual who does not

itemize

deductions, an amount equal to the standard deduction shall be

considered a

deduction which cannot definitely be allocated to some item or class of
gross income.

SECTION 862. INCOME FROM SOURCES WITHOUT THE UNITED STATES

(a) GROSS INCOME FROM SOURCES WITHOUT UNITED STATES

The following items of gross income shall be treated as income from

sources

without the United States:

(1) interest other than that derived from sources within the United

States

as provided in section 861(a)(1);

(2) dividends other than those derived from sources within the United

States

as provided in section 861(a)(2);

(3) compensation for labor or personal services performed without the

United

States;

(4) rentals or royalties from property located without the United States

from any interest in such property. . .

(5) gains, profits, and income from the sale or exchange of real

property

located without the United States; . . .

(6) gains, profits, and income derived from the purchase of inventory
property. . .

(7) underwriting income other than that derived from sources within the
United States. . .

(8) gains, profits, and income from the disposition of a United States

real

property interest. . .

(b) TAXABLE INCOME FROM SOURCES WITHOUT UNITED STATES

From the items of gross income specified in subsection (a) there shall

deducted the expenses, losses, and other deductions properly apportioned

allocated thereto, and a ratable part of any expenses, losses, or other
deductions which cannot definitely be allocated to some item or class of
gross income. The remainder, if any, shall be treated in full as taxable
income from sources without the United States. In the case of an

individual

who does not itemize deductions, an amount equal to the standard

deduction

shall be considered a deduction which cannot definitely be allocated to

some

item or class of gross income.

SECTION 863. SPECIAL RULES FOR DETERMINING SOURCE

(a) ALLOCATION UNDER REGULATIONS

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. Where items of gross income are separately allocated

sources within the United States, there shall be deducted (for the

purpose

of computing the taxable income therefrom) the expenses, losses, and

other

deductions properly apportioned or allocated thereto and a ratable part

other expenses, losses, or other deductions which cannot definitely be
allocated to some item or class of gross income. The remainder, if any,
shall be included in full as taxable income from sources within the

United

States.

(b) INCOME PARTLY FROM WITHIN AND PARTLY FROM WITHOUT THE UNITED STATES

In the case of gross income derived from sources partly within and

partly

without the United States, the taxable income may first be computed by
deducting the expenses, losses, or other deductions apportioned or

allocated

thereto and a ratable part of any expenses, losses, or other deductions
which cannot definitely be allocated to some item or class of gross

income;

and the portion of such taxable income attributable to sources within

the

United States may be determined by processes or formulas of general
apportionment prescribed by the Secretary. Gains, profits, and

income--

(1) from services rendered partly within and partly without the

United

States,

(2) from the sale or exchange of inventory property (within the

meaning

of section 865(i)(1)) produced

(in whole or in part) by the taxpayer within and sold or

exchanged

without the United States, or

produced (in whole or in part) by the taxpayer without and sold or
exchanged within the United States, or

(3) derived from the purchase of inventory property (within the

meaning

of section 865(i)(1)) within a

possession of the United States and its sale or exchange within

the

United States,

shall be treated as derived partly from sources within and partly from
sources without the United States.

http://www.861.info.tax.scams <--- "They" don't want you to look here.

does this help?
http://evans-legal.com/dan/tpfaq.html
The claim is that the Internal Revenue Code does not apply to most of the
income of citizens of the United States because the only definitions of
"sources of income" apply only to nonresident aliens and foreign
corporations. (See I.R.C. section 861 and its regulations.) This argument is
completely contrary to the express language of the Internal Revenue Code and
its regulations.
Section 61(a) of the Internal Revenue Code states the general rule that
"gross income" (which is the starting point for the calculation of taxable
income) "means all income from whatever source derived...."
The regulations confirm that U.S. citizens (and residents) are taxed on all
of their income, regardless of where the source is located, and so the
source of income is irrelevant to U.S. citizens and residents.
"In general, all citizens of the United States, wherever resident, and all
resident alien individuals are liable to the income taxes imposed by the
Code whether the income is received from sources within or without the
United States." Treas. Reg. � 1.1-1(b).
This has been confirmed by the U.S. Court of Claims:
"The determination of where income is derived or 'sourced' is generally of
no moment to either United States citizens or United States corporations,
for such persons are subject to tax under section 1 and section 11,
respectively, on their worldwide income." Great-West Life Assur. Co. v.
United States, 230 Ct. Cl. 477, 678 F.2d 180, 183 (1982)
The general rule, therefore, is that all income is included in gross income,
and the burden is on the taxpayer to find a statute or regulation that
excludes the income from tax.
So how can tax protesters claim that their income is not subject to tax? By
a selective and very tortured reading of section 861 of the Internal Revenue
Code and its regulations. Briefly, many tax protesters claim that:
"Taxable income" and the "sources" of taxable income can be determined only
by reference to section 861 and its regulations; and
The regulations under section 861, specifically � 1.861-8(f), list all
possible taxable sources of income; and
The incomes of most citizens are not described in Treas. Reg. � 1.861-8(f).
Needless to say, every step in the "logic" of tax protesters is wrong.
As already explained, the Internal Revenue Code and regulations are quite
clear in stating that citizens and residents of the United States are taxed
on all income, regardless of source.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	28 Aug 2004 12:00:38 PM

The sock puppet making the play on my name and posting as Hale Westman
wrote:
The following graffiti on the http://www.861.info/ URL.

http://www.861.info.tax.scams <--- "They" don't want you to look here.

After reading something that is not quite as infantile as the graffiti
above, read what the sock puppet has posted below, then read my page.
Re: http://home.sprintmail.com/~dalereastman/861/source/source.html

Re: http://home.sprintmail.com/~dalereastman/861/source/source.html
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Frank Keiser"
Title: Re: Larken is wrong about 861?	28 Aug 2004 03:53:14 PM

Then there is the Court's reply to Dale's argument (one of many I might
add):
Carlsbad Current-Argus
Carlsbad, NM
August 22, 2004
Six plead no contest to tax evasion
By Erin Green/Current-Argus Staff Writer
CARLSBAD - Six people protesting taxes have pleaded no contest to tax
evasion charges in District Court, officials said. Israel and Leslie Catano,
Jimmy and Norma Lara, Kathy Kump and Estella Carrillo entered their pleas on
Tuesday to charges of attempting to defeat or evade taxes, making false
statements and fraud.
Senior Trial Prosecutor D'Ann Read said while the group's tax protest is not
associated with that of former Carlsbad police Officer Debra Kupcak, the
point behind it is. Kupcak was recently found guilty of three counts of tax
evasion and not guilty of three counts of making false statements. She
contended that she did not have to pay income taxes and contended that no
law exists that proves she had to provide taxes out of her income. Kupcak
was at the plea proceeding and spoke with the group afterward at the county
courthouse.
This group's claim started years ago, with all six stating they did not owe
taxes, Read said. The claim is nonsense, she added. She said she is angry
over their claims. She said living and working in the United States are
privileges and that paying taxes is one of the things that makes life in
this country better than the standard of living in much of the rest of the
world. She said the life Americans enjoy should not be taken lightly.
"Living in the United States is a privilege," she said. "We pay for this
privelege by paying taxes."
Sentencing guidelines in this case are not set in stone, Read said. They
will be given indeterminate sentences of anywhere from one to five years in
prison, a fine of up to $5,000 or some combination of these, she said.
Indeterminate sentencing allows prison officials to determine when to allow
an inmate out of prison and is generally imposed in felony cases in which
the defendant will be sent to prison.
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	28 Aug 2004 06:57:54 PM

Frank Keiser wrote:

Then there is the Court's reply to Dale's argument (one of many I
might add):
Six plead no contest to tax evasion

No courage when faced with a rigged court system.

By Erin Green/Current-Argus Staff Writer

CARLSBAD - Six people protesting taxes have pleaded no contest to
tax evasion charges in District Court, officials said. Israel and
Leslie Catano, Jimmy and Norma Lara, Kathy Kump and Estella
Carrillo entered their pleas on Tuesday to charges of attempting to
defeat or evade taxes, making false statements and fraud.

I plead not guilty. Let's get to the trial.
Should I use section 861(b) & Regulation 1.861-8 to determine my
taxable domestic income?
Do these sections show my income to be taxable?
If I should not use these sections for this purpose, Please show where
the rules state who should & who should not use those sections for that.
Ladies & Gentlemen of the jury, I was one of 1,200 people who asked
those three questions, plus three more. Here is the government's
reply to those questions:
http://home.sprintmail.com/~dalereastman/tax/1111.JPG
Ladies and Gentlemen of the jury, you are here to decide if I
willfully failed to file taxes as required. Make the judge show you
the law I am alleged to have violated. If the judge can not show you
the actual wording of the law I am alleged to have violated, then it
does not exist and you must find me not guilty.
Sec. 7201. Attempt to evade or defeat tax
-STATUTE-
Any person who willfully attempts in any manner to evade or
defeat any tax imposed by this title or the payment thereof shall,
in addition to other penalties provided by law, be guilty of a
Make sure the judge shows you the law I am alleged to have willfully
attempted to evade, or actually evaded.
Sec. 7203. Willful failure to file return, supply information, or
pay tax
-STATUTE-
Any person required under this title to pay any estimated tax or
tax, or required by this title or by regulations made under
authority thereof to make a return, keep any records, or supply any
information, who willfully fails to pay such estimated tax or tax,
Please have the judge show you the actual wording of the law that
requires me to do anything regarding this title that I am alleged to
have willfully not complied with.
The judge REFUSED to allow the jury to see the law in the Whitey
Harrel case.
Gaylon Harrel's acquittal happened in spite of a biased judge.
Hear what one of those juror's has to say.
http://nontaxpayer.info/Media/part3.ram 2mb
2 minutes through 9 minutes on this clip.

Senior Trial Prosecutor D'Ann Read said while the group's tax
protest is not associated with that of former Carlsbad police
Officer Debra Kupcak, the point behind it is. Kupcak was recently
found guilty of three counts of tax evasion and not guilty of three
counts of making false statements. She contended that she did not
have to pay income taxes and contended that no law exists that
proves she had to provide taxes out of her income.

Hey, That's just what I contend, because IRS Commissioner Mark Everson
publicly FAILED to clearly and concisely answer the question, "what
law makes me liable for the tax". He's the head of the IRS. Surely he
should know what law makes one liable for the income tax.
http://www.givemeliberty.org/WTP-tv/4MinLinks.htm
That would be the same law that one is alleged to willfully evade or
attempt to evade, or the same law that one is alleged to willfully
fail to pay, or make return.
In fact, a second level ranking IRS agent that reports directly to
Mark Everson publicly FAILED to clearly and concisely answer the same
question, "what law makes me liable for the tax".
http://www.givemeliberty.org/WTP-tv/More3MinLinks.htm
That would be the same law that one is alleged to willfully evade or
attempt to evade.

Kupcak was at the plea proceeding and spoke with the group
afterward at the county courthouse.

This group's claim started years ago, with all six stating they did
not owe taxes, Read said. The claim is nonsense, she added.

It's such nonsense that Everson & Olson dance to dodge a clear
question, as shown above.
It's such nonsense that the IRS sends goofy form letters out in reply
to simple questions, as shown above.

She said she is angry over their claims.

Tough ***** Ms. Read. Here's the six questions. Please answer them,
and Larken Rose (among others) will post your answers on their
websites. Otherwise.... The image of you wearing a British Red Coat
comes to mind, and I'll stop describing the rest of the image in my
mind now.

She said living and working in the United States are privileges

Wrong answer bimbo. Living and working in the United States is a
BIRTHRIGHT for those of us born here.
Working for the Government is a privilege, and one you don't deserve
you communist *****.

and that paying taxes is one of the things that makes life in this
country better than the standard of living in much of the rest of
the world.

Yep. Paying 87 billion for Shrub to get us in another Vietnam like
quagmire sure is making my standard of living better. And it certainly
helped the standard of living for all the casualties in this UnWar.
If it was truly about weapons of mass destruction and unstable
leaders, why aren't our troops in Pyongyang, North Korea?
Choice A. Because N. Korea actually does have nukes and the delivery
platform.
Choice B. Because WMD's were just a ruse to get the people behind the
liar.
And since I am on the subject, what about that second airliner that
hit the second tower. Ya' all know about it doncha'. The one with the
modifications and NO WINDOWS.
http://letsroll911.org/
But I digress.

She said the life Americans enjoy should not be taken
lightly.

Neither should your comfy government job, Bimbo.

"Living in the United States is a privilege," she said.

When it is not a birthright.

"We pay for this privelege by paying taxes."

Sorry bimbo, you are full of *****. Case in point 87 billion and
counting for another Vietnam.

Sentencing guidelines in this case are not set in stone, Read said.
They will be given indeterminate sentences of anywhere from one to
five years in prison, a fine of up to $5,000 or some combination
of these, she said. Indeterminate sentencing allows prison
officials to determine when to allow an inmate out of prison and is
generally imposed in felony cases in which the defendant will be
sent to prison.

I will pay my fair share of taxes by paying EXACTLY what I am legally
liable for... According to the 80 years of law. Not what some corrupt
judge, who has not bothered to read the friggin' law claims.
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard Macdonald"
Title: Re: Larken is wrong about 861?	29 Aug 2004 03:44:40 AM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:6_8Yc.2589$JT3.87@newsread3.news.atl.earthlink.net...

Frank Keiser wrote:

Then there is the Court's reply to Dale's argument (one of many I
might add):

Six plead no contest to tax evasion

No courage when faced with a rigged court system.

Ah yes, the final line of defense of the tax
protester crown, the courts are corrupt.
Dale, if the courts are so corrupt, why with
the exception of tax protester drivel does the
IRS lose about 50% of the time.
--
Richard A Macdonald, CPA/EA
Dedicated student of Fr Luca Paccioli, Master Juggler.
Gib mir schokolade und niemand wird verletzt!!
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	29 Aug 2004 05:03:11 PM

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:6_8Yc.2589$JT3.87@newsread3.news.atl.earthlink.net...

Frank Keiser wrote:

Then there is the Court's reply to Dale's argument (one of many I
might add):

Six plead no contest to tax evasion

No courage when faced with a rigged court system.

You can dance and spin all you want.
You fail to mention where the procedings start.
With good reason, because if it starts in "tax court" you have cited
NOTHING.
Neither you, nor the IRS can get me into tax court. By going to tax
court, one is admitting that they are a taxpayer.
"The revenue laws are a code or system in regulation of tax
assessment and collection. They relate to taxpayers, and not
to nontaxpayers. The latter are without their scope. No
procedure is prescribed for nontaxpayers, and no attempt is
made to annul any of their rights and remedies in due course
of law. With them [nontaxpayers] Congress does not assume to
deal, and they are neither of the subject nor of the object
of the revenue laws". [emphasis added]
Economy Plumbing and Heating Co. v. United States,
470 F. 2d 585 (1972)
They simply do not have jurisdiction. And To prove jurisdiction, they
must prove that the laws touch my money. They must prove that I have
a liability.
You fail to make the point as to what law makes ME liable for the
income tax.
http://home.sprintmail.com/~dalereastman/tax/notaxdue.html
You fail to address why Everson & Olson FAIL TO ANSWER a simple
question, 'what law makes one liable for the income tax'.
When asked what law(s) make one liable Mark Everson DANCES TO ANSWER:
http://www.givemeliberty.org/WTP-tv/4MinLinks.htm
When asked what law(s) make one liable Nina Olson DANCES TO ANSWER:
http://www.givemeliberty.org/WTP-tv/More3MinLinks.htm
You fail to mention how the judges tilt the playing field.
You fail to address the actual tilting of the playing field, the
corruption readily apparent in this exerpt of the Simkanin Case
http://home.sprintmail.com/~dalereastman/tax/stinking.html
You fail to address the corruption that was readily apparent to 12
members of the Harrel acquittal.
http://nontaxpayer.info/Media/part3.ram 2mb
2 minutes through 9 minutes on this clip.
Your blatherings do not change the fact that domestic income from
domestic commerce by human citizens of the US, in the US, is NOT
taxable, and has NOT BEEN taxable for almost 90 years. The prior
statutes and regs say the same thing.
The answers you demanded regarding what law...
What FUNDAMENTAL law, the regulations stand on has been addressed on
this page:
http://home.sprintmail.com/~dalereastman/861/source/source.html
Reading your blather about the courts is like reading Ferret Face
telling the shopkeeper, "Don Corleone has found your position on the
RICO laws frivolous, yes or no?"
So you just continue serve your corrupt masters. While doing so, you
continue to serve me.
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard Macdonald"
Title: Re: Larken is wrong about 861?	29 Aug 2004 05:40:40 PM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:zosYc.6225$6o3.591@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:6_8Yc.2589$JT3.87@newsread3.news.atl.earthlink.net...

Frank Keiser wrote:

Then there is the Court's reply to Dale's argument (one of many I
might add):

Six plead no contest to tax evasion

No courage when faced with a rigged court system.

You can dance and spin all you want.

All the time while you live in total denial.

You fail to mention where the procedings start.
With good reason, because if it starts in "tax court" you have cited
NOTHING.

Just the Courts analysys of the law which is coinsistent across the
Tax Court, District Courts and Circuit Courts of Appeal, all of the
same opinion; that the 861 argument is frivolous and without merit.

Neither you, nor the IRS can get me into tax court. By going to tax
court, one is admitting that they are a taxpayer.

Of course not, you would have to initiate the suit there, or of
course pay the disputed tax and then sue for refund in district
court or the court of claims.

"The revenue laws are a code or system in regulation of tax
assessment and collection. They relate to taxpayers, and not
to nontaxpayers. The latter are without their scope. No
procedure is prescribed for nontaxpayers, and no attempt is
made to annul any of their rights and remedies in due course
of law. With them [nontaxpayers] Congress does not assume to
deal, and they are neither of the subject nor of the object
of the revenue laws". [emphasis added]
Economy Plumbing and Heating Co. v. United States,
470 F. 2d 585 (1972)

They simply do not have jurisdiction. And To prove jurisdiction, they
must prove that the laws touch my money. They must prove that I have
a liability.

The courts have consistently ruled that the liability is created by the
imposition of the Income Tax in Sections 26 USC 1 or 11.
"Purportedly in support of his claim, plaintiff submitted a statement along
with the Form 1040, in which he
argues that no provision of the IRC establishes an income tax 'liability.'
The plain language of the IRC,
however, belies this assertion, stating in section 1 that a tax is 'hereby
IMPOSED on the taxable income of
every individual' (emphasis added). Although plaintiff attempts to
distinguish between 'imposing' a tax and
creating a 'liability' for a tax, there is no difference. Every individual
has an affirmative duty to pay taxes.
Gabelman v. Commissioner, 86 F.3d 609, 611 (6th Cir. 1996)." Porcaro v.
United States, 84
AFTR2d Par. 99-5547, No. 99-CV-60406-AA (U.S.D.C. E.D. Mich. October 25,
1999).

You fail to make the point as to what law makes ME liable for the
income tax.

You have been told many times and still persist in your delusions.
--
Richard A Macdonald, CPA/EA
Dedicated student of Fr Luca Paccioli, Master Juggler.
Gib mir schokolade und niemand wird verletzt!!
.

User: "Archmedes"
Title: Re: Larken is wrong about 861?	29 Aug 2004 07:48:24 PM

"Richard Macdonald" <rmacdonald@verizon.net> wrote:

You fail to make the point as to what law makes ME liable for the
income tax.

You have been told many times and still persist in your delusions.

Persist is really the wrong word. It implies control, that somehow he can turn
his delusions on and off at will. He went over the edge long ago and, like
Simkanin, will lose everything, including his freedom, if he actually has
unreportable income of any significance, which I doubt. 30 jobs in 30 years
sounds like a SSDI play to me.
.

User: "Hale Westman"
Title: Re: Larken is wrong about 861?	29 Aug 2004 07:52:07 PM

"Archmedes" <me@privacy.net> wrote in message
news:2pfbqkFkam6dU1@uni-berlin.de...

"Richard Macdonald" <rmacdonald@verizon.net> wrote:

You fail to make the point as to what law makes ME liable for the
income tax.

You have been told many times and still persist in your delusions.

Persist is really the wrong word. It implies control, that somehow he can

turn

his delusions on and off at will. He went over the edge long ago and, like
Simkanin, will lose everything, including his freedom, if he actually has
unreportable income of any significance, which I doubt. 30 jobs in 30

years

sounds like a SSDI play to me.

could be describing dale eastman -- he claims 50 jobs in 20 years
FRIVOLOUS FILING POSITION BASED ON SECTION 861
The Internal Revenue Service and the Treasury Department are aware that
certain persons are promoting the view that U.S. citizens and residents are
not subject to tax on their wages and other income earned or derived within
the United States based on the claim that the Internal Revenue Code imposes
taxes only on income derived from certain foreign-based activities. The
Service and Treasury are issuing this notice to inform taxpayers that this
reporting position has no basis in law.
The proponents of this position misread the Code and the Treasury
Regulations. Although the proponents acknowledge that section 1 imposes
income tax on "taxable income," that "taxable income" consists of "gross
income" minus deductions (section 63) and that "gross income" is income
"from whatever source derived" (section 61), they assert that sections 861
through 865 of the Code and the regulations thereunder (in particular,
Treasury regulation section 1.861-8) limit taxable "sources" of income to
certain foreign-based activities.
That assertion is refuted by the express and unambiguous terms of the Code.
Section 61 includes in gross income "all income from whatever source
derived." As the Supreme Court stated in Commissioner v. Glenshaw Glass Co.,
348 U.S. 426, 429 (1955), "Congress applied no limitations as to the source
of taxable receipts . . .." Nothing in sections 861 to 865 of the Code
limits the gross income subject to United States taxation to foreign-source
income. The rules of sections 861 through 865 have significance in
determining whether income is considered from sources within the United
States or without the United States, which is relevant, for example, in
determining whether a U.S. citizen or resident may claim a credit for
foreign taxes paid. See Great-West Life Assurance Co. v. United States, 678
F.2d 180, 183 (Ct. Cl. 1982) (stating that "[t]he determination of where
income is derived or 'sourced' is generally of no moment to either United
States citizens or United States corporations, for such persons are subject
to tax under I.R.C. section 1 and I.R.C. section 11, respectively, on their
worldwide income" and that "[l]ikewise, the income of a resident alien
individual is taxed under I.R.C section 1 without regard to source"). The
source rules do not operate to exclude from U.S. taxation income earned by
United States persons from sources within the United States. Williams v.
Commissioner, 114 T.C. 136 (2000) (rejecting the claim that income was not
subject to tax because it was not from any of the sources listed in Treas.
Reg. sec. 1.861-8(a)); Aiello v. Commissioner, T.C. Memo. 1995-40 (1995)
(rejecting the claim that section 861 lists the only sources of income
relevant for purposes of section 61).
The courts have categorically rejected contentions that U.S. citizens are
not lawfully subject to Federal income tax on their income from all sources
and have upheld criminal convictions of individuals who based their refusal
to pay Federal income tax on such contentions. See, e.g., United States v.
Condo, 741 F.2d 238 (9th Cir. 1984).
The Internal Revenue Service and the Treasury Department advise taxpayers
that if they file returns reflecting this theory that only certain
foreign-source income is taxable, they may be subject to penalties
including, but not limited to, the accuracy-related penalty under section
6662 and the frivolous return penalty under section 6702. Under some
circumstances, taxpayers adopting this position on tax returns may be
subject to additional sanctions, including failure to file or pay penalties
under section 6651 and civil fraud penalties under section 6663, and may be
prosecuted for criminal violations of the tax law. In addition,
practitioners advocating this position may be subject, under some
circumstances, to the return preparer penalty under section 6694 or aiding
and abetting penalties under section 6701, and may be prosecuted for
criminal violations of the tax law.
The Internal Revenue Service and the Treasury Department recognize that some
taxpayers may have chosen not to file or have filed incorrect tax returns,
taking the position that they were not required to report wages or other
income earned in the United States for taxation. We advise these taxpayers
to take prompt action to file correct returns and to comply with the tax
laws. Taxpayers can obtain tax forms, including those necessary to amend
previously-filed returns, via the IRS web site (http://www.irs.gov), obtain
them through the IRS' TaxFax Services (from a fax machine call: 703-368-9694
(not a toll-free number)), or order the forms by phone: 1-800-TAX-FORM
(1-800-829-3676).
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	29 Aug 2004 09:05:00 PM

Archmedes wrote:

"Richard Macdonald" <rmacdonald@verizon.net> wrote:

You fail to make the point as to what law makes ME liable for the
income tax.

You have been told many times and still persist in your delusions.

http://home.sprintmail.com/~dalereastman/861/source/source.html
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	29 Aug 2004 06:02:15 PM

Richard Macdonald wrote:

All the time while you live in total denial.

Let's have a little look at what you are in denial about.
McCullough v. Com. Of Virginia, 172 U.S. 102 (1898)
"It is elementary law that every statute is to be read in
the light of the constitution. However broad and general
its language, it cannot be interpreted as extending beyond
those matters which it was within the constitutional power of
the legislature to reach."
Income Tax Regulations
The Federal Income Tax Regulations (Regs.) are the official
Treasury Department interpretation of the Internal Revenue
Code and follow the numbering sequence of Internal Revenue
Code sections.
"It is elementary law that every statute is to be read in
the light of the constitution. However broad and general
its language, [ the official Treasury Department
interpretation of the Internal Revenue Code ] cannot
extend [] beyond those matters which it was within
the constitutional power of the legislature to reach."
McCullough v. Com. Of Virginia, 172 U.S. 102 (1898) as parsed
with IRM 4.10.7.2.3.1 (05-14-1999) relating to Income Tax
Regulations.
CFR Sec. 1.861-1 Income from sources within the United
States.
Sec. 1.861-1(a) Categories of income. Part I (section 861 and
following), subchapter N, chapter 1 of the Code, and the
regulations thereunder determine the sources of income for
purposes of the income tax.
CFR 1.861-8T(d)(2)(iii) Income that is not considered tax
exempt. The following items are not considered to be exempt,
eliminated, or excluded income and, thus, may have expenses,
losses, or other deductions allocated and apportioned to them:
http://home.sprintmail.com/~dalereastman/861/source/source.html
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "esenter"
Title: Re: Larken is wrong about 861?	29 Aug 2004 10:43:07 PM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

Congress has the Power to Lay and Collect Taxes, Duties, Imposts, and
Excises...

Income Tax Regulations
The Federal Income Tax Regulations (Regs.) are the official
Treasury Department interpretation of the Internal Revenue
Code and follow the numbering sequence of Internal Revenue
Code sections.

"It is elementary law that every statute is to be read in
the light of the constitution. However broad and general
its language, [ the official Treasury Department
interpretation of the Internal Revenue Code ] cannot
extend [] beyond those matters which it was within
the constitutional power of the legislature to reach."

McCullough v. Com. Of Virginia, 172 U.S. 102 (1898) as parsed
with IRM 4.10.7.2.3.1 (05-14-1999) relating to Income Tax
Regulations.

CFR Sec. 1.861-1 Income from sources within the United
States.
Sec. 1.861-1(a) Categories of income. Part I (section 861 and
following), subchapter N, chapter 1 of the Code, and the
regulations thereunder determine the sources of income for
purposes of the income tax.

In context, those "sources" are categories of income and there are only
three: 1-from within the U.S., 2-from without the U.S., and 3-partially
within and partially without the U.S. Sorry, eastboy, THERE ARE NO OTHER
"SOURCES".

CFR 1.861-8T(d)(2)(iii) Income that is not considered tax
exempt. The following items are not considered to be exempt,
eliminated, or excluded income and, thus, may have expenses,
losses, or other deductions allocated and apportioned to them:

Note that this section does NOT say "thus, may be TAXABLE" like eastboy and
his bumping buddies claim. It says, "thus, may have expenses, losses, or
other deductions allocated and apportioned to them." The ONLY reason you
are in these sections is to allocate and apportion deductions so that
"taxable income" may be categorized into one of the three categories.
It is clear, when one actually reads and thinks, these sections of the code
and regs have nothing to do with determining anything to be "taxable". The
proponents of these 861 claims are conducting a shell game-trying to prove a
claim by merely repeating the claim.
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	29 Aug 2004 11:19:42 PM

Yoohoo, Eddy, come get a clue.
http://home.sprintmail.com/~dalereastman/861/source/source.html
esenter wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

Congress has the Power to Lay and Collect Taxes, Duties, Imposts, and
Excises...

Note that this section does NOT say "thus, may be TAXABLE" like eastboy and
his bumping buddies claim. It says, "thus, may have expenses, losses, or
other deductions allocated and apportioned to them." The ONLY reason you
are in these sections is to allocate and apportion deductions so that
"taxable income" may be categorized into one of the three categories.

It is clear, when one actually reads and thinks, these sections of the code
and regs have nothing to do with determining anything to be "taxable". The
proponents of these 861 claims are conducting a shell game-trying to prove a
claim by merely repeating the claim.

--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard Macdonald"
Title: Re: Larken is wrong about 861?	30 Aug 2004 03:30:49 AM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

So you cite your interpretation of the Treasury's interpretation of
the Statutes enacted by Congress in preference to the Courts
interpret of the Statutes enacted by Congress. Remember the
Treasury Regulations are ONLY AN INTERPRETATION
of the law and not the law itself.
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	30 Aug 2004 11:50:16 AM

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

So you cite your interpretation of the Treasury's interpretation of
the Statutes enacted by Congress in preference to the Courts
interpret of the Statutes enacted by Congress. Remember the
Treasury Regulations are ONLY AN [OFFICIAL] INTERPRETATION
of the law [IN LIGHT OF THE CONSTITUTION] and not the law itself.

Your ***** has been addressed on this page.
http://home.sprintmail.com/~dalereastman/861/source/source.html
I don't care whether you read anything or listen to anything on any
link I supply. In fact I prefer you continue to "don't do links",
because the lurkers that do, can then see you and your position for
what you, and you position, are.
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard A. Macdonald"
Title: Re: Larken is wrong about 861?	30 Aug 2004 12:06:12 PM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:cVIYc.8256$6o3.5316@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

So are Sections 861-865 in accordance with the U.S.
Constitution as amended? Yes or No?

Your problem is that the Statutes ARE in accord with the U.S.
Constitution and your interpretation of the regulations is not in
accord with statute and nomatter how you attempt to twist
regulations into little pretzles, it CANNOT CHANGE THE LAW.
26 USC SEC 61. GROSS INCOME DEFINED
(a) GENERAL DEFINITION
Except as otherwise provided in this subtitle, gross income means all
income from whatever source derived, including (but not limited to) the
following items:
26 USC SEC 861. INCOME FROM SOURCES WITHIN THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHIN UNITED STATES
The following items of gross income shall be treated as income from
sources within the United States:
26 USC SEC 862. INCOME FROM SOURCES WITHOUT THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHOUT UNITED STATES
The following items of gross income shall be treated as income from sources
without the United States:
26 USC SEC 863. SPECIAL RULES FOR DETERMINING SOURCE
(a) ALLOCATION UNDER REGULATIONS
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. Where items of gross income are separately
allocated to sources within the United States, there shall be deducted (for
the purpose of computing the taxable income therefrom) the expenses,
losses, and other deductions properly apportioned or allocated thereto and
a ratable part of other expenses, losses, or other deductions which cannot
definitely be allocated to some item or class of gross income. The
remainder, if any, shall be included in full as taxable income from sources
within the United States.
(b) INCOME PARTLY FROM WITHIN AND PARTLY FROM
WITHOUT THE UNITED STATES
In the case of gross income derived from sources partly within and partly
without the United States, the taxable income may first be computed by
deducting the expenses, losses, or other deductions apportioned or
allocated thereto and a ratable part of any expenses, losses, or other
deductions which cannot definitely be allocated to some item or class of
gross income; and the portion of such taxable income attributable to
sources within the United States may be determined by processes or formulas
of general apportionment prescribed by the Secretary. Gains, profits, and
income--
None of these sections act to exempt any income from becoming
Gross Income and their associated regulation written under their
authority CANNOT do so since the statutes do not do so.
--
Richard A. Macdonald, CPA/EA
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	30 Aug 2004 12:30:47 PM

Richard A. Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:cVIYc.8256$6o3.5316@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:XftYc.6569$6o3.2851@newsread2.news.atl.earthlink.net...

Richard Macdonald wrote:

All the time while you live in total denial.

So are Sections 861-865 in accordance with the U.S.
Constitution as amended? Yes or No?

http://home.sprintmail.com/~dalereastman/861/source/source.html

26 USC SEC 61. GROSS INCOME DEFINED
(a) GENERAL DEFINITION
Except as otherwise provided in this subtitle, gross income means all
income from whatever source derived, including (but not limited to) the
following items:

26 USC SEC 861. INCOME FROM SOURCES WITHIN THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHIN UNITED STATES
The following items of gross income shall be treated as income from
sources within the United States:

26 USC SEC 862. INCOME FROM SOURCES WITHOUT THE UNITED STATES
(a) GROSS INCOME FROM SOURCES WITHOUT UNITED STATES
The following items of gross income shall be treated as income from sources
without the United States:

26 USC SEC 863. SPECIAL RULES FOR DETERMINING SOURCE
(a) ALLOCATION UNDER REGULATIONS
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. Where items of gross income are separately
allocated to sources within the United States, there shall be deducted (for
the purpose of computing the taxable income therefrom) the expenses,
losses, and other deductions properly apportioned or allocated thereto and
a ratable part of other expenses, losses, or other deductions which cannot
definitely be allocated to some item or class of gross income. The
remainder, if any, shall be included in full as taxable income from sources
within the United States.
(b) INCOME PARTLY FROM WITHIN AND PARTLY FROM
WITHOUT THE UNITED STATES
In the case of gross income derived from sources partly within and partly
without the United States, the taxable income may first be computed by
deducting the expenses, losses, or other deductions apportioned or
allocated thereto and a ratable part of any expenses, losses, or other
deductions which cannot definitely be allocated to some item or class of
gross income; and the portion of such taxable income attributable to
sources within the United States may be determined by processes or formulas
of general apportionment prescribed by the Secretary. Gains, profits, and
income--

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	30 Aug 2004 12:31:28 PM

Richard A. Macdonald wrote:

None of these sections act to exempt any income from becoming
Gross Income and their associated regulation written under their
authority CANNOT do so since the statutes do not do so.

Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax.
1.861-1(a)
http://home.sprintmail.com/~dalereastman/861/source/source.html
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard A. Macdonald"
Title: Re: Larken is wrong about 861?	30 Aug 2004 12:38:10 PM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:QvJYc.8292$6o3.3419@newsread2.news.atl.earthlink.net...

Richard A. Macdonald wrote:

None of these sections act to exempt any income from becoming
Gross Income and their associated regulation written under their
authority CANNOT do so since the statutes do not do so.

Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax.
1.861-1(a)

Yes, from Within the United States, From Without the
United States, and From Within and Without the United
States. There is no statutory basis for anything else and
these ARE the categories cited in 26 CFR 1.861-1 and
that's all there is. Operative Sections are not sources.
--
Richard A. Macdonald, CPA/EA
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	30 Aug 2004 12:57:44 PM

Richard A. Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:QvJYc.8292$6o3.3419@newsread2.news.atl.earthlink.net...

Richard A. Macdonald wrote:

None of these sections act to exempt any income from becoming
Gross Income and their associated regulation written under their
authority CANNOT do so since the statutes do not do so.

Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax.
1.861-1(a)

Operative Sections define the "specific sources & activities" (read:
Commerce) that are >>>THE<<< SOURCES of income "for purposes of the
income tax."
You are arguing against this:
http://home.sprintmail.com/~dalereastman/861/source/source.html
Don't you think it is time that you actually read that page to see
what you are fighting?
--
"You take the BLUE PILL, you wake up in your own bed,
and you BELIEVE WHAT YOU WANT TO.
You take the RED PILL, you stay in WONDERLAND,
and I'll show you HOW DEEP THE RABBIT HOLE GOES." - Morpheus
red pill:
http://www.861.info/ <--- "They" don't want you to look here.
.

User: "Richard A. Macdonald"
Title: Re: Larken is wrong about 861?	30 Aug 2004 01:16:04 PM

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:sUJYc.8340$6o3.1070@newsread2.news.atl.earthlink.net...

Richard A. Macdonald wrote:

"Dale Eastman" <dalereastman@sprintmail.com> wrote in message
news:QvJYc.8292$6o3.3419@newsread2.news.atl.earthlink.net...

Richard A. Macdonald wrote:

None of these sections act to exempt any income from becoming
Gross Income and their associated regulation written under their
authority CANNOT do so since the statutes do not do so.

Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the
sources of income for purposes of the income tax.
1.861-1(a)

Operative Sections define the "specific sources & activities" (read:
Commerce) that are >>>THE<<< SOURCES of income "for purposes of the
income tax."

No the Operative Sections are Sections of the IRC that
require seperate calculations to determine the allowability
of deductions and certain tax credits. That is all they are
and nothing more. "gross income from a specific source
or activity which must first be determined in order to arrive
at "taxable income" from which specific source or activity
under an operative section." [26 CFR 1.861-8(a)(4)]
Part I (section 861 and following), subchapter N, chapter 1
of the Code, and the regulations thereunder determine the sources
of income for purposes of the income tax. [1.861-1(a)]
which identify the sources as being from within, without,
or within and without the United States.
--
Richard A. Macdonald, CPA/EA
.

User: "Dale Eastman"
Title: Re: Larken is wrong about 861?	30 Aug 2004 02:25:40 PM

Richard A. Macdonald wrote:

Part I (section 861 and following), subchapter N, chapter 1 of the
Code,

************************************
************************************
** and the regulations thereunder **
************************************
************************************

determine the sources of income for purposes of the income tax.
[1.861-1(a)] which identify the sources

************************************
************************************
** for purposes of the income tax **
************************************
************************************

as being from within,
without, or within and without the United States.

User: "Richard A. Macdonald"
Title: 861 Loser - Williams	30 Aug 2004 12:19:30 PM

114 T.C. No. 8
UNITED STATES TAX COURT
STEPHEN W. WILLIAMS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23179-97.
Filed March 1, 2000.
P mailed two Forms 1040, U.S. Individual Income Tax Return, for 1991 to the
IRS. The first Form 1040 included a deduction for "Non Taxable Compensation"
equal to P's total income, and P failed to sign it. P stipulated that this
Form 1040 is not a valid return.
In the second Form 1040, P reported taxes owed of $36,621. P however
attached a disclaimer statement to the second Form 1040 stating that he
denied all tax liability and did not admit that the stated amount of tax was
due.
Held: P is liable for the deficiency.
Held, further, P's second Form 1040 is not a valid return; therefore, P is
not liable for the accuracyrelated penalty pursuant to sec. 6662(a), I.R.C.
Held, further, P is liable for the addition to tax pursuant to sec.
6651(a)(1), I.R.C. Held, further, P is liable for a penalty under sec. 6673,
I.R.C.
[-2-]
Stephen W. Williams, pro se.
M. Kathryn Bellis and Marion S. Friedman, for respondent.
OPINION
VASQUEZ, Judge: Respondent determined a deficiency of $42,934, an addition
to tax pursuant to section 6651(a)(1) of $9,492, and an accuracy-related
penalty pursuant to section 6662(a) of $8,587 in petitioner's 1991 Federal
income tax.1 Pursuant to Rule 122, the parties submitted this case fully
stipulated. The stipulations of fact, the supplemental stipulations of fact,
and the attached exhibits are incorporated herein by this reference. At the
time the petition was filed, petitioner resided in Spring, Texas.
After concessions,2 the issues for decision are: (1) Whether petitioner is
liable for the deficiency determined by respondent in petitioner's 1991
taxes; (2) whether petitioner's Form 1040, U.S. Individual Income Tax
Return, containing a disclaimer statement constituted a valid return, and if
so, whether petitioner is liable for a penalty pursuant to section 6662; (3)
whether petitioner is liable for an addition to tax [-3-] pursuant to
section 6651(a)(1); and (4) whether petitioner is liable for a penalty
pursuant to section 6673.
Background
During 1991, petitioner was employed as a veterinarian by Stephen W.
Williams P.C., an S corporation (Williams P.C.). Petitioner received
extensions of time for filing his 1991 income tax return until October 15,
1992.
On October 1, 1994, petitioner mailed a Form 1040 for 1991 to the Internal
Revenue Service (IRS). Petitioner altered the Form 1040 (altered 1040) by
marking through the captions on lines 7 and 18 and typing his own caption,
"Non Taxable Compensation". Petitioner reported income of $20,500 and
$135,861 on lines 7 and 18, respectively. Next, petitioner whited out the
captions on lines 24a and b and typed in "Non Taxable Compensation Eisner v.
Macomber 252 U.S. 189". Petitioner reported a deduction of $156,861 on line
24a, which brought his adjusted gross income to $0. Petitioner did not sign
the altered 1040.
The IRS treated the altered 1040 as a frivolous return under section 6702
and fined petitioner $500. Petitioner stipulated that the altered 1040 was a
frivolous return and not a return within the meaning of section 6501(a).
On November 21, 1996, petitioner mailed another Form 1040 (disclaimer 1040)
for 1991 to the IRS. On the disclaimer 1040, petitioner reported adjusted
gross income of $150,852 consisting [-4-] of wages of $20,500, taxable
interest income of $14, a capital loss of ($2,986), and rents and
partnership income of $133,324. Petitioner reported a total tax of $41,586
and an amount owed of $36,621. Petitioner, this time, did not strike or
change any language on the form. Instead, beside the amount owed reported on
line 64, petitioner placed an asterisk. At the bottom of the page,
petitioner stated that the asterisk denoted "The admitted liability is zero.
See attached Disclaimer Statement." The attached disclaimer statement (the
disclaimer) read in part: The above named taxpayer respectfully declines to
volunteer concerning assessment and payment of any tax balance due on the
return or any redetermination of said tax. Be it known that the above said
taxpayer, therefore, denies tax liability and does not admit that the stated
amount of tax on return is due and collectable. * * *
Petitioner signed the disclaimer 1040.
Except for the altered 1040 and the disclaimer 1040, petitioner did not mail
to or file with the IRS any other Forms 1040 for 1991.
During 1991, petitioner received income and incurred losses as follows:
Wages from Williams P.C. $20,500
Interest from Vista Properties 14 (Vista)
Interest from Charles Schwab 3
Net short term capital loss (2,986)
Rents from Williams P.C. 29,000
Nonpassive loss from Vista (1,637)
Nonpassive income from
Williams P.C. 105,961
Rents from Summit Outdoor
Advertising (Summit) 900
[-5-]
Discussion
I. Deficiency Liability
Petitioner does not challenge either the facts on which respondent's
determination is based or respondent's calculation of tax. In fact,
respondent based the computation of the deficiency on the amounts reported
by petitioner on the altered 1040 and the disclaimer 1040. Petitioner,
nevertheless, contends he is not liable for the deficiency. Petitioner
claims that (1) he did not volunteer to self-assess or pay his taxes, and he
therefore cannot be held liable for any deficiency; (2) his income is not
from any of the sources listed in section 1.861-8(a), Income Tax Regs., and
thus is not taxable; and (3) the notice of deficiency was improperly issued
because petitioner disclaimed the tax liability shown on the return.
Petitioner's arguments are reminiscent of tax-protester rhetoric that has
been universally rejected by this and other courts. We shall not
painstakingly address petitioner's assertions "with somber reasoning and
copious citation of precedent; to do so might suggest that these arguments
have some colorable merit." Crain v. Commissioner, 737 F.2d 1417, 1417 (5th
Cir. 1984). Accordingly, we conclude that petitioner is liable for the
deficiency determined by respondent.
II. Accuracy-related Penalty
Respondent determined that petitioner is liable for an accuracy-related
penalty pursuant to section 6662(a) for his [-6-] underpayment of tax
attributable to negligence or disregard of rules or regulations. The penalty
under section 6662(a) applies only where a return has been filed. See sec.
6664(b). We therefore must determine whether the disclaimer 1040 constitutes
a valid return.
Generally, pursuant to section 6011(a), taxpayers are required to file
returns that conform to the forms and regulations prescribed by the
Secretary. See sec. 1.6011-1(a), Income Tax Regs. The Form 1040 is the form
prescribed by the Secretary for use by individual taxpayers in filing
returns. See Steines v. Commissioner, T.C. Memo. 1991-588. Section 6065
requires returns to contain or be verified by a written declaration that
they are made under the penalties of perjury. To facilitate a taxpayer's
compliance with this requirement, the Form 1040 contains a preprinted
jurat.3 By signing the jurat included within the Form 1040, a taxpayer
satisfies the requirement that his return be executed under penalty of
perjury. See Sloan v. Commissioner, 102 T.C. 137, 146-147 (1994), affd. 53
F.3d 799 (7th Cir. 1995); Sochia v. Commissioner, T.C. Memo. 1998-294.
The U.S. Supreme Court has also held that certain documents [-7-] drafted by
taxpayers that do not comply with the forms prescribed by the Secretary will
nevertheless be treated as valid returns, for purposes of the statute of
limitations, if they contain certain elements. See Badaracco v.
Commissioner, 464 U.S. 386 (1984); Commissioner v. Lane-Wells Co., 321 U.S.
219 (1944); Zellerbach Pager Co. v. Helvering, 293 U.S. 172 (1934); Lucas v.
Pilliod Lumber Co., 281 U.S. 245 (1930); Florsheim Bros. Drygoods Co. v.
United States, 280 U.S. 453 (1930). In Beard v. Commissioner, 82 T.C. 766,
777 (1984), affd. 793 F.2d 139 (6th Cir. 1986), we summarized the Supreme
Court's test for a valid return as follows:
First, there must be sufficient data to calculate [the] tax liability;
second, the document must purport to be a return; third, there must be an
honest and reasonable attempt to satisfy the requirements of the tax law;
and fourth, the taxpayer must execute the return under penalties of perjury.
The fourth requirement is the same requirement found in section 6065 and can
be satisfied by signing the jurat on the Form 1040. In Beard, we applied the
Supreme Court's test in our analysis of whether the document at issue was a
tax return for purposes of section 6651(a)(1). See id.; see also Martin
Fireproofing Profit Sharing Plan & Trust v. Commissioner, 92 T.C. 1173
(1989) (applying Beard in section 6033 context); Dunham v. Commissioner,
T.C. Memo. 1998-52 (applying Beard in the section 6651(f) context). We see
no reason why the same test should not apply in determining whether a
document constitutes a tax return [-8-] for purposes of section 6662(a).
We first determine whether the disclaimer 1040 complies with the form
prescribed by the Secretary. Although petitioner used a Form 1040,
petitioner added the disclaimer to the form. Respondent contends that the
addition of the disclaimer to the Form 1040 vitiated petitioner's signature
under the jurat. In the past, we have analyzed the effect of tax protesters'
alterations to the Form 1040, and in particular to the jurat, and determined
whether the altered Form 1040 constituted a valid return. In the beginning,
tax protesters simply crossed out the entire text of the jurat, and we held
that the Forms 1040 were not valid returns. See Cupp v. Commissioner, 65
T.C. 68, 78-79, affd. without published opinion 559 F.2d 1207 (3rd Cir.
1977); see also Mosher v. Internal Revenue Service, 775 F.2d 1292, 1294 (5th
Cir. 1985)(per curiam). Next, tax protesters deleted particular words from
the jurat such as "under penalties of perjury" and/or "true, correct, and
complete". In those cases, we held that the Forms 1040 did not constitute
valid returns. See Sochia v. Commissioner, supra; Jenkins v. Commissioner,
T.C. Memo. 1989-617.
Recently, tax protesters have begun to add to rather than strike out the
text of the jurat. We have generally found that the addition of language to
the jurat invalidated the Form 1040 [-9-] as a return.4 See Andrews v.
Commissioner, T.C. Memo. 1999-281; Hodge v. Commissioner, T.C. Memo.
1998-242; Counts v. Commissioner, T.C. Memo. 1984-561. For example, in Sloan
v. Commissioner, supra at 141, immediately following the preprinted text of
the jurat and immediately above the taxpayer's signature (i.e., within the
jurat box), the taxpayer wrote "Denial and Disclaimer attached as part of
this Form." The following statement was attached to the Form 1040:
[-10-]
DENIAL AND DISCLAIMER
OF LORIN G. SLOAN
FOR THE YEAR
I submit this "Denial and Disclaimer" as an attachment to the IRS Form 1040
for the year stated above. I deny that I am liable or made liable for any
"1040 income tax" for the above stated year. I claim all of my rights and
waive none of them merely for exercising my right to work. I submit the 1040
form to prevent the further theft of my property and loss of my liberty. My
signature on the form is not an admission of jurisdiction or submission to
subject status. I "disclaim liability" for any tax shown on the form. [Id.
at 141.]
We stated in Sloan that the above "Denial and Disclaimer" statement
"[raised] serious questions about whether petitioner [was] 'denying' the
accuracy of the information contained in the return, 'disclaiming' the jurat
altogether, or simply protesting the tax laws." Id. at 145. We held that, by
adding the disclaimer to the jurat, the return was invalidated. In affirming
our decision in Sloan, the U.S. Court of Appeals for the Seventh Circuit
stated in part: It is a close question whether the "Denial & Disclaimer"
should be interpreted in this light--that is, as an attempt to retract or
qualify the jurat. * * * But we think that the Internal Revenue Service
should be entitled to construe alterations of the jurat against the
taxpayer, at least when there is any doubt. * * * The government receives
tens of millions of tax returns and if taxpayers start embellishing the
jurat the staggering task of processing all these returns may become
entirely unmanageable. [Sloan v. Commissioner, 53 F.3d at 800.]
Against the foregoing backdrop, we consider for the first time whether
disclaimer language added outside the jurat box invalidates the Form 1040 as
a return because it fails to comply [-11-] with the form prescribed by the
Secretary. Petitioner argues that his disclaimer is "nowhere near the
jurat;" therefore, he executed a valid return.
It is true that petitioner has carefully avoided adding language within the
jurat box. We, however, believe that this is just another attempt by a
taxpayer to alter the essence of the jurat and the Form 1040 without
actually tampering with the preprinted form. While not physically deleting,
altering, or adding words to the jurat, the disclaimer negated the meaning
of the jurat. The jurat states that the signatory declares, under penalties
of perjury, that the return is true, correct, and complete. The disclaimer
at a minimum calls into question the veracity, accuracy, and completeness of
the disclaimer 1040 and can be construed as a denial of the jurat
altogether. Although petitioner physically signed the return below the
jurat, his disclaimer, in effect, vitiated his verification of the
truthfulness of the return as required by the regulations prescribed by the
Secretary and by section 6065. We have previously stated that the acceptance
of documents which vary from the form prescribed by the Secretary adversely
affects the form's useability by respondent. The tampered form, * * *, must
be handled by special procedures and must be withdrawn from normal
processing channels. * * *, it substantially impedes the Commissioner's
physical task of handling and verifying tax returns. * * * [Beard v.
Commissioner, 82 T.C. at 776-777.]
See also Reiff v. Commissioner, 77 T.C. 1169, 1177 (1981). We [-12-] refuse
to require respondent to engage in guessing games to determine what
disclaimers like this one mean. To require such would drastically hinder the
Commissioner's ability to process returns effectively and efficiently. We
find that the disclaimer 1040 does not comport with the form prescribed by
the Secretary. The disclaimer 1040 may, nevertheless, be treated as a valid
return if it contains the four elements outlined in the Supreme Court's
test. Under the Supreme Court's test, in order for a document to be a valid
return, a taxpayer must execute the document under penalties of perjury. As
we found above, by his disclaimer, petitioner altered the meaning of the
jurat to the extent that it cannot be said that petitioner executed the
document under penalties of perjury. Additionally, under the Supreme Court's
test, there must be an honest and reasonable attempt to satisfy the
requirements of the tax laws. The disclaimer contained tax protester legal
gibberish that has been consistently rejected by courts. Petitioner's denial
of tax liability and refusal to self-assess does not evidence a reasonable
attempt to satisfy his obligation to file a return under the tax laws. We
find that petitioner has not filed a valid return under the Supreme Court's
test. We conclude that the disclaimer 1040 does not constitute a valid
return; therefore, petitioner is not liable for the penalty pursuant to
section 6662(a).
[-13-]
III. Addition to Tax
Respondent determined that petitioner is liable for an addition to tax
pursuant to section 6651(a)(1). Section 6651(a)(1) imposes an addition to
tax for failure to file a return on the date prescribed (determined with
regard to any extension of time for filing), unless the taxpayer can
establish that such failure is due to reasonable cause and not due to
willful neglect. The taxpayer has the burden of proving the addition is
improper. See Rule 142(a); United States v. Boyle, 469 U.S. 241, 245 (1985).
The amount added to the tax under this section is 5 percent for each month
or faction thereof during which the return is late, up to a maximum of 25
percent. See sec. 6651(a)(1).
The due date for petitioner's 1991 return, as extended, was October 15,
1992. Petitioner stipulated that the altered 1040 was mailed on October 1,
1994, almost 2 years late. Petitioner mailed the disclaimer 1040 on November
21, 1996. Regardless of whether either of these forms was a valid return,
neither was filed within 5 months of the extended due date. Petitioner
offered no evidence showing that his failure to file timely was due to
reasonable cause and not due to willful neglect. Accordingly, we hold
petitioner is liable for the maximum addition to