Re: Weekly Dale E.
- From: "Paul Thomas" <paulthomascpa@xxxxxxxxxxxxx>
- Date: Sat, 21 Apr 2007 21:32:19 -0400
"Dale Egghead" wrote
....and having real life demand my attention for a very large amount of
time,
Busy preparing yoru tax returns before the deadline eh?
You all know what exertion, effort, or toil goes into your LABOR.
Labor isn't taxed you idiot.
http://www.irs.gov/businesses/small/article/0,,id=106503,00.html
Contention: Wages, tips, and other compensation received for personal
services are not income.
This argument asserts that wages, tips, and other compensation received for
personal services are not income, because there is allegedly no taxable gain
when a person "exchanges" labor for money. Under this theory, wages are not
taxable income because people have basis in their labor equal to the fair
market value of the wages they receive; thus, there is no gain to be taxed.
Some take a different approach and argue that the Sixteenth Amendment to the
United States Constitution did not authorize a tax on wages and salaries,
but only on gain or profit.
The Law: For federal income tax purposes, "gross income" means all income
from whatever source derived and includes compensation for services. I.R.C.
§ 61. Any income, from whatever source, is presumed to be income under
section 61, unless the taxpayer can establish that it is specifically
exempted or excluded. In Reese v. United States, 24 F.3d 228, 231 (Fed. Cir.
1994), the court stated, "an abiding principle of federal tax law is that,
absent an enumerated exception, gross income means all income from whatever
source derived."
All compensation for personal services, no matter what the form of payment,
must be included in gross income. This includes salary or wages paid in
cash, as well as the value of property and other economic benefits received
because of services performed, or to be performed in the future.
Furthermore, criminal and civil penalties have been imposed against
individuals relying upon this frivolous argument.
Relevant Case Law:
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) - Referring
to the statute's words "income derived from any source whatever," the
Supreme Court stated, "this language was used by Congress to exert in this
field 'the full measure of its taxing power.' . . . And the Court has given
a liberal construction to this broad phraseology in recognition of the
intention of Congress to tax all gains except those specifically exempted."
Commissioner v. Kowalski, 434 U.S. 77 (1977) - The Supreme Court found that
payments are considered income where the payments are undeniably accessions
to wealth, clearly realized, and over which a taxpayer has complete
dominion.
United States v. Connor, 898 F.2d 942, 943-44 (3d Cir.), cert. denied, 497
U.S. 1029 (1990) - The court stated, "[e]very court which has ever
considered the issue has unequivocally rejected the argument that wages are
not income."
Lonsdale v. Commissioner, 661 F.2d 71, 72 (5 th Cir. 1981) - The court
rejected as "meritless" the taxpayer's contention that the "exchange of
services for money is a zero-sum transaction . . . ." Reading v.
Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8 th Cir. 980) - The
court said the entire amount received from the sale of one's services
constitutes income within the meaning of the Sixteenth Amendment. United
States v. Richards, 723 F.2d 646, 648 (8 th Cir. 1983) - The court upheld
conviction and fines imposed for willfully failing to file tax returns,
stating that the taxpayer's contention that wages and salaries are not
income within the meaning of the Sixteenth Amendment is "totally lacking in
merit."
United States v. Romero, 640 F.2d 1014, 1016 (9 th Cir. 1981) - The court
affirmed Romero's conviction for willfully failing to file tax returns,
finding, in part, that "[t]he trial judge properly instructed the jury on
the meaning of ['income' and 'person']. Romero's proclaimed belief that he
was not a 'person' and that the wages he earned as a carpenter were not
'income' is fatuous as well as obviously incorrect." Abrams v. Commissioner,
82 T.C. 403, 413 (1984) - The court rejected the argument that wages are not
income, sustained the failure to file penalty, and awarded damages of $5,000
for pursuing a position that was "frivolous and groundless . . . and
maintained primarily for delay."
Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193
(1999) - Noting that "[c]ourts have consistently held that compensation for
services rendered constitutes taxable income and that taxpayers have no tax
basis in their labor," the court found Cullinane liable for the failure to
file penalty, stating, "[his] argument that he is not required to pay tax on
compensation for services does not constitute reasonable cause."
Dale, go get a job driving trucks again. You suck at selling tax scams over
the internet.
--
"Under certain circumstances profanity
provides a relief denied by prayer"
Mark Twain
---------------------------------------------
Paul A. Thomas, CPA
Athens, Georgia
.
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