Definition of Income

[Lawdog]

Wesley Snipes got the maximum time possible, 36 months in prison, on income tax related charges.

http://www.wesh.com/news/15979487/detail.html

Like some of you, Wesley Snipes once challenged the government to "show me the law" that says he has to pay income taxes.

Well, they showed Snipes the law...and the jury that convicted him.

Don't get me wrong, I take no pleasure in seeing Snipes go to prison. But consider this...he can afford VERY good lawyers. Don't you think they would show the judge "there's no law that requires Mr. Snipes to pay taxes" if there were even a colorable argument there?

Why do so many of you persist in thinking you know and understand the law better than attorneys and judges who have spent years...decades, in some cases...in the legal profession?

[psholtz]

Originally Posted by Lawdog

Don't get me wrong, I take no pleasure in seeing Snipes go to prison.

Don't lie.

Even if you're only lying to yourself, it's still very poor practice.

But consider this...he can afford VERY good lawyers.

Another reason not to use lawyers.

Don't you think they would show the judge "there's no law that requires Mr. Snipes to pay taxes" if there were even a colorable argument there?

Taxation attaches to status.

Why do so many of you persist in thinking you know and understand the law better than attorneys and judges who have spent years...decades, in some cases...in the legal profession?

Because many here *do* understand the Law, God's Law, much better than do attorneys and judges.

[indio007]

Originally Posted by mertensv16

No. The term "discharge of indebtedness" refers to the forgiveness of a debt. For example, if you borrow $50,000 from a bank and later on the bank settles with you by your paying only $40,000 in satisfaction of your loan, you have $10,000 in gross income, subject to the exceptions in Section 108.

^^^^^^^^^^^^^^^^^^^^^
What you described would be cancellation of debt.
you'd have to fill out a 1099-C

Don't confuse payment with discharge.

Discharge of indebtedness is alot of things. I listed some of them in my post from here. You can't pay debt anymore. Atleast not with cash or any other debt instrument. Debt can only be paid with substance. Otherwise it is discharge. The debt remains but it is without legal effect.


http://www.law.cornell.edu/uscode/26/usc_sec_26_00000108----000-.html


All excerpt from this section...

TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART III > § 108
Prev | Next
§ 108. Income from discharge of indebtedness

....
(d) Meaning of terms; special rules relating to certain provisions
(1) Indebtedness of taxpayer
For purposes of this section, the term “indebtedness of the taxpayer” means any indebtedness—
(A) for which the taxpayer is liable, or
(B) subject to which the taxpayer holds property.

....

(10) Indebtedness satisfied by issuance of debt instrument
(A) In general
For purposes of determining income of a debtor from discharge of indebtedness, if a debtor issues a debt instrument in satisfaction of indebtedness, such debtor shall be treated as having satisfied the indebtedness with an amount of money equal to the issue price of such debt instrument.

Translation in practical english

For purposes of determining income of a debtor from discharge of a bill, if a debtor pays either cash/check/money order in satisfaction of the bill, such debtor shall be treated as having satisfied the bill with an amount of money equal to the amount of such cash/check/money order.

(4) Acquisition of indebtedness by person related to debtor
(A) Treated as acquisition by debtor
For purposes of determining income of the debtor from discharge of indebtedness, to the extent provided in regulations prescribed by the Secretary, the acquisition of outstanding indebtedness by a person bearing a relationship to the debtor specified in section 267 (b) or 707 (b)(1) from a person who does not bear such a relationship to the debtor shall be treated as the acquisition of such indebtedness by the debtor. Such regulations shall provide for such adjustments in the treatment of any subsequent transactions involving the indebtedness as may be appropriate by reason of the application of the preceding sentence.


Translation

For purposes of determining income of the debtor, if a person related to the debtor receives a bill of the debtor , it will be as if the debtor received the bill. Discharge of the the same bill by the related party will be as if the debtor discharged the bill.


Hope this helps.

[indago]

Lawdog wrote:

Wesley Snipes got the maximum time possible, 36 months in prison, on income tax related charges.

It was reported, by the New York Times, 25 April 2008: "A jury found Mr. Snipes guilty on Feb. 1 of three misdemeanor counts of willfully failing to file tax returns, but acquitted him of felony conspiracy and tax fraud charges and three additional counts of failure to file."

You would think that if Mr. Snipes was guilty of "willfully failing to file tax returns", he would be guilty on all counts of "willfully failing to file tax returns", not just some of them. Maybe the jury flipped a coin to determine guilt or innocence, like they did in the US v Krzyske case.

[indio007]

If I remember correctly the gov't accused Snipes of using a fictitious instrument to pay taxes. Apparently the bill of exchange he tendered wasn't that fictitious.

[mertensv16]

Originally Posted by indio007

You can't pay debt anymore. At least not with cash or any other debt instrument. Debt can only be paid with substance. Otherwise it is discharge. The debt remains but it is without legal effect.

That's not the way it works. One has income from the discharge of indebtedness only where the debt is satisfied by the payment of less than the full amount owed. This is common sense, as exemplified by my previous example: you borrow $50,000 but only pay back $40,000 to extinguish the debt. It is obvious you’ve realized $10,000 in economic benefit, and that difference is gross income, subject to the exceptions in Section 108. If you pay the debt in full, however, you have no increase in your net worth, so you don't realize income.

Section 108 doesn't define what income from the discharge of indebtedness is in the first instance, as is apparent from section (a)(1):

Gross income does not include any amount which (but for this subsection) would be included in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if...

[BOBT12]

Originally Posted by indago

Lawdog wrote:

It was reported, by the New York Times, 25 April 2008: "A jury found Mr. Snipes guilty on Feb. 1 of three misdemeanor counts of willfully failing to file tax returns, but acquitted him of felony conspiracy and tax fraud charges and three additional counts of failure to file."

You would think that if Mr. Snipes was guilty of "willfully failing to file tax returns", he would be guilty on all counts of "willfully failing to file tax returns", not just some of them. Maybe the jury flipped a coin to determine guilt or innocence, like they did in the US v Krzyske case.

Of course, I am sad about the persecution of Snipes, he is being made to suffer at the hands of the heartless government.

Being he was convinced of a misdemeanor, he shouldn't serve more than a year (maximum) in confinement in any case. The government is making an example of Snipes in order to inspire fear in the people so they will comply with the burdensome tax scam. Yet, should be painfully clear this is a state of tyranny, where greater, and greater, numbers of people don't "consent" (see the Declaration of Independence for more information) to the current tax scheme.Thus, more unjust coercion must be used to keep the people in line. This is the very definition of tyranny.

”It will be of little avail to the people that the laws are made be men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man who knows what the law is today can guess what it will be tomorrow.” –James Madison, Federalist no. 62, 1788

Isn't this a warning against the tax system we see today? Madison was a framer of the Constitution, he may have had some "valid" ideas of what was intended, and what was not.

It has long been known that the Constitution was intended to be understood using the Federalist Papers, and Madison's Notes of the Constitutional Convention.

[indio007]

Originally Posted by mertensv16

Section 108 doesn't define what income from the discharge of indebtedness is in the first instance, as is apparent from section (a)(1):

Well the first part only lists the applicable exclusions to counting a discharge as gross income

A) the discharge occurs in a title 11 case,
(B) the discharge occurs when the taxpayer is insolvent,
(C) the indebtedness discharged is qualified farm indebtedness, or
(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness.

basically

Bankruptcy, insolvency,qualified farm debt, and qualified real property business debt.

The mortgage scenario you give is cancellation of debt.

This is from the 1099 C instructions -cancellation of debt

When Is a Debt Canceled

A debt is canceled on the date an identifiable event occurs. An identifiable event is: ......

....
6. A discharge of indebtedness under an agreement between the creditor and the debtor to cancel the debt at less than full consideration.

[farmer_giles_of_ham]

I hear the food is good at club fed. He will do 85% of 2 years then the balance plus another year on "supervised release" (i think)

Snipes made his point- maybe there was some other technicality, maybe he got something wrong however, but he apparently is man with heart.

No one ever plead he wasn't required to file. I dont know how he was charged with MORE than 3 counts of "failure to", because the statute of limits is 3 years- they must bring charges within 3 years of the alleged failure. Perhaps the jury understood this.

Yet he was charged with 6 counts, so where were his lawyers then? Shouldnt they have at least got these extra and impossible counts dismissed before hand.

Just goes to show attorneys make things worse. That's their training, dont rock the boat dont help the client and "protect rights" by quietly failing to make timely pleading as to the real subject matter, thereby waiving the issue.

If there are no appealable errors then "all" the clients rights have been protected. Not his best interests, but his rights on the record.

So helping to railroad the defendant without errors means the attorney did it's job.

I'd rather give the money away than pay it in taxes.

[yebliker]

It's a shame Snipes doesn't know how to do his own research. If he had spent $20 on Cracking the Code by Peter Hendrickson, he could have avoided all of this, most likely.
-Yebliker