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 Taxable Sources

As written, the statutes in the USC say to use regulations Section 861 to determine if income is taxable.  Per the plain language of the regulations, "Items" of income can only be taxed if they come from taxable "sources."  The list of "sources", which is the same word as found in the 16th Amendment, is found in Section 861. 

The list of these "sources" found at Section 861 is limited to foreign source income and foreign taxpayers.  Again, per the plain language of the regulations, wages, salaries and even capital gains earned by ordinary Americans within the fifty states are not taxable.

The IRS does not want you to look at Section 861.

Note:  These questions were not asked at the Hearing due to time limitations.  No video testimony or transcript is available.
       
       
Section Summary    
Question & Evidence Overview    
Findings & Conclusions    
 
 
Questions 442 - 457
  1. Admit that the term "from whatever source derived" as used in the Sixteenth Amendment does not mean that the source of income or the situs for taxation is irrelevant or inconsequential in determining taxable income.

Exhibit 442

  1. Admit that interpreting the phrase "from whatever source derived" to mean that the source or situs is irrelevant, makes the federal income tax applicable to any country or location in the world and renders 26 U.S.C. 861 and 26 U.S.C. 862 irrelevant and unnecessary, which clearly, is an irrational and nonsensical conclusion to reach.

    See 26 U.S.C. 861 and 26 U.S.C. 862
    Exhibit 443a, 443b

  2. Admit that the federal income tax applies only to taxable income, which, generally speaking, is "gross income" minus allowable deductions.

    Exhibit 444, "gross income" defined

  3. Admit that the federal income tax regulations generally define "gross income" to mean "all income from whatever source derived, unless excluded by law." as follows:

26 CFR 1.61-1(a): (a) General definition. Gross income means all income from whatever source derived, unless excluded by law. Gross income includes income realized in any form, whether in money, property, or services. Income may be realized, therefore, in the form of services, meals, accommodations, stock, or other property, as well as in cash. Section 61 lists the more common items of gross income for purposes of illustration. For purposes of further illustration, Sec. 1.61-14 mentions several miscellaneous items of gross income not listed specifically in section 61. Gross income, however, is not limited to the items so enumerated.  

See 26 CFR 1.61-1(a) definition of "gross income"
Exhibit 445

  1. Admit that there are certain types of income which Congress has exempted by statute as identified in 26 CFR 1.61-1(a).

  2. Admit that there are other types of income not enumerated above which are not exempted by statute, but are nonetheless excluded by law, for income tax purposes, because they are excluded from taxation by the Constitution itself.

26 CFR 39.21-1  (1956):      (emphasis added)

(a) The tax imposed by chapter 1 is upon income. Neither income exempted by statute or fundamental law, nor expenses incurred in connection therewith, other than interest, enter into the computation of net income as defined by section 21.

26 CFR 39.22(b)-1 (1956):   (emphasis added)

Certain items of income specified in section 22(b) are exempt from tax and may be excluded from gross income. These items, however, are exempt only to the extent and in the amount specified. No other items may be excluded from gross income except (a) those items of income which are, under the Constitution, not taxable by the Federal Government; (b) those items of income which are exempt from tax on income under the provisions of any act of Congress still in effect; and (c ) the income excluded under the provisions of the Internal Revenue Code (see particularly section 116).

  1. Admit that the phrase "fundamental law" indicated above in the older regulations means the U.S. Constitution.

  2. Admit that the above older regulations, 26 CFR 39.21-1 (1956) and 26 CFR 39.22(b)-1 (1956) have never been explicitly repealed or superceded by newer regulations and are still in force.

  3. Admit that the regulations under 26 U.S.C. 863 state:

26 CFR 1.863-1(c)

"Determination of taxable income. The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States."  

26 CFR 1.863-1(c)
Exhibit 450

  1. a. 26 USC 61 lists some of the more common "items" of income which are taxable, such as compensation for services, interest, and dividends, among others.

    26 USC 61
    Exhibit 451a
  1. b. Admit that section 1.861-8(d)(2) of the federal income tax regulations are to be   consulted in determining in which situations these "items" of income are excluded for federal income tax purposes.
  2. 26 CFR 1.861-8(d)(2)
    Exhibit 451b

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

  1. Admit that 26 CFR 1.861-8T(d)(2) of the regulations lists several types of income which are, quote, not considered to be exempt, eliminated, or excluded income, end quote as follows:

26 CFR 1.861-8T(d)(2)(iii)

(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:

(A) In the case of a foreign taxpayer (including a foreign sales corporation (FSC)) computing its effectively connected income, gross income (whether domestic or foreign source) which is not effectively connected to the conduct of a United States trade or business;

(B) In computing the combined taxable income of a DISC or FSC and its related supplier, the gross income of a DISC or a FSC;

(C) For all purposes under subchapter N of the Code, including the computation of combined taxable income of a possessions corporation and its affiliates under section 936(h), the gross income of a possessions corporation for which a credit is allowed under section 936(a); and

(D) Foreign earned income as defined in section 911 and the regulations thereunder (however, the rules of Sec. 1.911-6 do not require the allocation and apportionment of certain deductions, including home mortgage interest, to foreign earned income for purposes of determining the deductions disallowed under section 911(d)(6)).

26 CFR 1.861-8T(d)(2)(iii)
Exhibit 452

  1. Admit that only income derived from certain activities related to international or foreign commerce are included on that list of non-exempt types of income appearing in 26 CFR 1.861-8T(d)(2)(iii) above.

  2. Admit that the domestic income of most U.S. citizens is absent, and therefore excluded, from the list appearing in 26 CFR 1.861-8T(d)(2)(iii).

  3. Admit that 26 USC 861(b), and the related regulations beginning at 26 CFR 1.861-8, the sections to use to determine one's taxable income from sources within the United States, regardless of citizenship and residency.

    26 USC 861(b) and 26 CFR 1.861-8
    Exhibit 455, 455b

  4. Admit that for U.S. citizens living and working exclusively in the 50 states and receiving all income from within the 50 states, that 26 U.S.C. 861(b) and related regulations beginning at 26 CFR 1.861-8 do not show such income to be taxable.

    26 CFR 1.861-8
    Exhibit 456

  5. Admit that "items" of income are identified in 26 U.S.C. 61 while "sources" of income are identified in 26 U.S.C. 861 and 26 U.S.C. 862.

    26 U.S.C. 61, 26 U.S.C. 861, and 26 U.S.C. 862
    Exhibit 457a, 457b, 457c
 
 
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