Accession to wealth

[farmer_giles_of_ham]

http://en.wikipedia.org/wiki/Commiss...nshaw_Glass_Co

Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955),[1] was a case in which the United States Supreme Court held that Congress, in enacting the income taxation statutes, intended to tax all gain except that which was specifically exempted. Also of importance, the Court offered a more comprehensive test for income which required the taxpayer to have, 1) undeniable accessions to wealth, 2) clearly realized, and 3) over which the taxpayer has complete dominion.

The definition of "what come in".

1) undeniable accessions to wealth

2) clearly realized

3) over which the taxpayer has complete dominion

The above is neutral. The sort of wealth that is taxable is gains or profits. So without prejudice to any other issue, just to be on the safe side, we need to eliminate at least one of these elements- the more the better.

1. avoid ever realizing any gain or profit, an essential element of the 'gross'. "even-exchange" or "compensation for loss"

2. avoid complete dominion before the time limits expire (in the 7th year) "loan process/security interest"

3. avoid any accessions to wealth- "already have it" or "arms-length trust settlement".

or some combination of the above.

Now here's what I found in Title 26: all this talk about 'basis cost ' and whatnot applies to itemized deductions- these occur after the imputation of gross income. Nowhere have I yet found any indication of what made a receipt 'gross' in the first place.

Notwithstanding any court cases to the contrary, neither have I found any law excluding labor, energy, opportunity cost inflation or even time-value from either itemized deductions or the initial imputation.

[mertensv16]

Originally Posted by farmer_giles_of_ham

Now here's what I found in Title 26: all this talk about 'basis cost ' and whatnot applies to itemized deductions- these occur after the imputation of gross income. Nowhere have I yet found any indication of what made a receipt 'gross' in the first place.

Gross income under Section 61(a)(3) includes "gains derived from dealings in property".

Section 1001 defines the gain from the sale or other disposition of property as the amount realized minus the
adjusted basis under Section 1011. Section 1011 refers you to Section 1012, which provides the general rule that basis is cost (subject to the exceptions found in Sections 1013-1022 and certain other places in the Code).

So all of these calculations go into determinng gross income from sales or exchanges of property. Itemized deductions have nothing to do with it. In fact, people who don't itemize their deductions but take the standard deduction instead would be regally ticked off if they could deduct their cost basis only as an itemized deduction.

Notwithstanding any court cases to the contrary, neither have I found any law excluding labor, energy, opportunity cost inflation or even time-value from either itemized deductions or the initial imputation.

Taxable income is gross income minus (a) the personal exemption and (b) either itemized deductions or the standard deduction. If the Code doesn't say something is an itemized deduction, then it isn't one because itemized deductions are matters of legislative grace. The Code doesn't need to specifically exclude something in order to make it nondeductible, although it occasionally does so when the expense would otherwise fall within a specifically allowable deduction (e.g., interest can be an itemized deduction under Section 163, but Section 265 makes interest incurred to purchase or carry a tax-exempt obligation specifically nondeductible).

The short answer why the items you listed aren't included as "costs" or "expenses" is that in enacting Sections 1012, 162, and 212, Congress intended to use "cost" and "expense" in their ordinary sense of out-of-pocket expenditures. Otherwise, you'd be forced to argue that in going through all the trouble to enact the Code, Congress never really intended to impose an income tax on anyone, and if you believe that, good luck trying to convince anyone other than the most paranoid conspiracy theorists (btw, I don't think you're a paranoid conspiracy theorist).

[farmer_giles_of_ham]

(Pasted from other thread)

Originally Posted by mertensv16

Receiving loan proceeds doesn't increase one's wealth because of the obligation to repay. Receiving life insurance proceeds does.

If there is only one "out" here then the whole system fails. All exchanges can now be transacted on loan process terms. See the leverage on capital accounts, the entire current share price, including "unrealized gains".

And insurance against damage or loss of value to existing property is excluded by the same logic. That makes 2 "outs".

Don't kid yourself -- the law does indeed tax wealth creation and exchange.

Here I thought it taxed gross income. But a concept that calls death "no loss" seems economically questionable, to say the least. Anything may or may not be 'legislative grace'...but the working of the current system is the issue here.

If you really want to argue what the law is, don't just rely on your particular interpretation of the statute -- show me a court decision that agrees with your analysis. As much as you wish to avoid court cases (and it's easy to see why you would), you can't if you want to accurately argue what the law really is, not merely what you think it ought to be.

I agree 100%. However basic arithmetic is also legitimate- I will go out on a limb and guess even the courts agree there.

New cases get made all the time, and how many get dropped or avoided...I am making my case right here, for practice.

The short answer why the items you listed aren't included as "costs" or "expenses" is that in enacting Sections 1012, 162, and 212, Congress intended to use "cost" and "expense" in their ordinary sense of out-of-pocket expenditures.

I am researching this code so we'll see what is found.

All of the items I listed have to come from somewhere, whether pockets, sweat, blood or tears. Regardless, it's basis cost @ fair-market-value that counts, right?

Otherwise, you'd be forced to argue that in going through all the trouble to enact the Code, Congress never really intended to impose an income tax on anyone, and if you believe that, good luck trying to convince anyone other than the most paranoid conspiracy theorists.

If the shoe fits, wear it. Since these taxes are defined as legal obligations (not lawful requirements), the rules define the operation of a modality. If I want to participate in social security, I must have some gross employment income to declare. If a company wants to operate in certain venue, they may be required to conduct business accordingly, and so will any participants further on down the line.

I guarantee from personal experience many people just like the feeling they are part of something bigger and complicated. Makes a great chance for kvetching.

The means of mass media and education go to great pains to plant certain ideas (this discussion would hardly occur in any mainstream environment) Why so much effort if things are as simple as applying an objective formula?

I don't think you're a paranoid conspiracy theorist.

I'm more of a wild-eyed fanatic, with a brush of capitalist running dog.

[farmer_giles_of_ham]

Title 26. (some reductions to basis)

Section 108. Income from discharge of indebtedness

Section 1017. Discharge of indebtedness

Section 114. Extraterritorial income

Section 118. Contributions to the capital of a corporation

Section 1031. Exchange of property held for productive use or investment

Section 1033. Involuntary conversions

Section 1032. Exchange of stock for property

Section 1035. Certain exchanges of insurance policies

Section 1019. Property on which lessee has made improvements

Section 1021. Sale of annuities

Section 1016. Adjustments to basis

also see "Section 1221. Capital asset defined"

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But first, the elements of income- how may ways are there to avoid:


1) undeniable accessions to wealth

2) clearly realized

3) over which the taxpayer has complete dominion

transfers in trust, annuities, secured transactions, investment, and mere purchase- to name a few. Then there are the exemptions like gifts. The list is long.

With so many options and possibilities, it should be impossible to meet any standard of probable cause, civil or criminal. There would always be competing likelihoods that weigh against the plaintiff's case.

If there are 20 alternate possibilities in any given situation, and only one of them is "revenue-taxable event"- with 90% of all transactions in general inherently excluded... the value of a case with such a low chance on it's face fails to meet the test.

Besides the law being void for vagueness, it denies equal protection for making impossible speculative requirements.

Which is why there has to be some voluntary act to attach the obligation: it's statistically too difficult to prove "profit or gain" just by mathematical deduction- in fact it's the polar opposite.

[farmer_giles_of_ham]

bumping the thread- responses and perspectives encouraged.