Propeller-Headed CtC-ers don't know what "foreign" means?

[Famspear]

The Propeller Heads over at lost horizons are engaged in a classic discussion in a thread entitled Tax Return for a "Foreign" C-Corp. The thread was begun back in June 2008 by a user with the hilarious moniker of "TruthBearer".

See:

http://www.losthorizons.com/phpBB/viewtopic.php?t=677

In June 2008, "TruthBearer" wrote:

In preparing to file the 2007-2008 fiscal year corporate tax return, I came across an item which may be of interest to some in this forum. The item is Article I on the Form 1020-F (the company for which I serve as Secretary/Treasurer is a Nevada C-Corp and thus a ‘foreign’ corporation vis-à-vis the “United States”). In Article I the form asks for income derived “from U.S. sources not effectively connected with the conduct of a trade or business in the United States.” In other words, the listing would be of proceeds not from a trade or business, but still from within the “United States.”

It threw me for a moment, until I remembered the legal definition of “United States” and also “State.” Thus, quite correctly for a foreign corporation, the form wants listed in Section I any proceeds sourced from within the “United States” bailiwick even though not from a "trade or business.” It is an instance in which some earnings are taxable even if not derived from a "trade or business."

Article II of the Form 1120-F asks for a listing of “income effectively connected with the conduct of a trade or business in the United States.” It’s quite nice to know how all this stuff falls nicely into place as a result of being CtC savvy. Incidentally, we weighed whether to use Form 1120 or Form 1120-F. Both would effectively report zero taxable income, but we decided--for now anyway--that the form for “foreign” corporations would be the more legally accurate one, even though it may very well raise some hackles in Ogden, Utah. The return isn't due until September15th, so we have time to mull it over....

(bolding added).

In June, User "JL" responded with:

I too have struggled with the 1020 vs 1020-F issue and this line item caught me too.

[ . . . ]

I agree with your assessment that 1020-F is more legally accurate. I think you'll agree that the next logical conclusion is that you need not file at all. At least given that there are no outstanding information returns against your corp. Read over Who Must File on page two of the form instructions.

These people are dumber than a box of rocks.

In state law jargon, a corporation set up under Nevada law (for example) would be considered to be a "foreign" corporation as to Texas. If the Nevada corporation operated in Texas, it would be "foreign" as to Texas. The Propeller Heads seem to think (or seem to pretend to be thinking) that a Nevada corporation is "foreign" for purposes of the Internal Revenue Code.

For example, in September 2008, user "TruthBearer" wrote:

[ . . . ] some states require you to register in order to transact business legally... this from the FL incorporation site:

Foreign Corporation Registration
Authorization for a foreign entity to conduct/authorize/transact business in the State of Florida.
" a foreign entity is one which is out side Florida "

If you are to conduct business in the State of Florida, and you are a company, individual, or corporate entity, you must register as a foreign corporation, and obtain authorization to transact business in Florida, which is not your home state.

On December 30, there is a post from a user called "AMB":

Hello TruthBearer and Happy Holidays! I filed my 1120-F [on] September 15, 2008 and have recently received a notice from the IRS in Ogden UT.

They are holding up processing the 1120-F[,] stating "Our records indicate that you are a Corporation, however you filed a Form 1120-F, U. S. Income Tax Return of a Foreign Corporation, and you should be filing a Form 1120, U. S. Corporation Income Tax Return. Please provide a complete Form 1120, within 30 days from the date of this letter. If you do not respond within this time frame, we will remove your form from processing." I realize the notice stems from many years of filing the Form 1120[,] because we thought it was the form for us.

I plan to respond with a letter stating we are not a U. S. Corporation and cite the code sections to substantiate this. Do you have any additional suggestions?

Have you heard anything from the IRS along these lines concerning the 1120-F you filed?

My suggestion would be that you stop taking the Stupid Pills.

And, while you're at it, read paragraph (5) of subsection (a) of section 7701 of the Internal Revenue Code:

(5) FOREIGN. --The term "foreign" when applied to a corporation or partnership means a corporation or partnership which is not domestic.

(bolding added).

Now, read paragraph (4):

(4) DOMESTIC. --The term "domestic" when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State [ . . . ]

Section 7701(a)(10) provides:

(10) STATE. --The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.

And, of course, some of the Propeller-Headed followers of Blowhard Hendrickson -- who cannot or will not accept the correct meaning of the term "include" (or the meaning of the phrase "where such construction is necessary") -- will probably try to "interpret" this provision to mean that the District of Columbia is a state, but Nevada is not a state.

Ahh, a New Year is upon us -- a New Year that promises to be full of entertainment provided to us free of charge by the residents of Bizarro World. I can't wait for the PeterEricBlowhardMeister's latest criminal trial to begin.......

[notorial dissent]

That they don’t know or comprehend that “Foreign” has multiple meanings, both in the real world, as well as the world of law should be of no surprise, since they can’t seem to figure out “includes” either. Remember, in the world of Hendricksonia, context is nothing, and perish forfend that they should actually look up the real definition of “foreign” or “domestic” as it pertains to corporations and taxes per the IRC. Nah, that would mean they couldn’t misconstrue and outright torture the poor little things.

[Famspear]

That they don’t know or comprehend that “Foreign” has multiple meanings, both in the real world, as well as the world of law should be of no surprise, since they can’t seem to figure out “includes” either. Remember, in the world of Hendricksonia, context is nothing, and perish forfend that they should actually look up the real definition of “foreign” or “domestic” as it pertains to corporations and taxes per the IRC. Nah, that would mean they couldn’t misconstrue and outright torture the poor little things.

"Hendricksonia"!!! I like it!

And the residents of the World of Hendricksonia? Would they be ...... "Hendricksoniacs"?????

The disease (or disorder) they carry? "Hendricksoniomiasis"??

EDIT: That last term would be pronounced: "hen-drick-SOH-nee-oh-MY-uh-siss".

[LPC]

There's a popular tax protester "quote" used to support the idea that the federal government is foreign to the states:

“The government of the United States is a foreign corporation with respect to a state.”

Which is supposed to be from In re Merriam, 36 N.E. 505, 141 N. Y. 479 (1894), affirmed sub nom. United States v. Perkins, 163 U. S. 625 (1896), but isn't.

The above “quotation” does not appear in the opinion of the New York Court of Appeals, and does not appear in the opinion of the Supreme Court. In appears that some tax protester copied a one-sentence summary of the decision from an article or treatise (probably Corpus Juris Secundum) and thought the summary was a quote from the opinion, and other tax protesters have been happily cutting-and-pasting the “quotation” without ever checking to see what the case was about or courts actually said.

The issue in the case was the application of a New York tax to property that a decedent’s will gave to the United States government. The Court of Appeals held that the exemption for gifts to charitable corporations was limited to gifts to domestic corporations (i.e., corporations created under the laws of the state of New York) and so the gift to the United States did not qualify for the exemption and the gift was subject to tax.

In affirming, the U.S. Supreme Court agreed that the New York legislature “intended to allow an exemption only in favor of such corporations as it had itself created, and which might reasonably be supposed to be the special objects of its solicitude and bounty” (163 U.S. at 630) and that the exemption for charitable corporations was not intended to apply to “a purely political or governmental corporation, like the United States” (163 U.S. at 631).

In other words, New York decided to treat gifts to the United States government differently from gifts to domestic charitable corporations, and the U.S. Supreme Court agreed that it could. The case has nothing whatsoever to do with the power of the federal government to impose or collect taxes within the states of the United States.

These are all examples of the power of functional illiteracy combined with ignorance and self-delusion.

[Nikki]

You people need to read some of the authoritative sources regarding the location of a corporation.

A corportion is DOMESTIC only if it is incorporated and/or operates within the jurisdiction of the Federal Zone: the District of Columbia, Federal possessions and territories, and lands ceded by any of the 50 independant states to the Federal government.

Any artificial or natural person external to that zone is outside the jurisdiction of the de facto corporation which has usurped the de jure, lawfully established central government of the united States of America.

The allegedly-statutory language of any of the prima facia, non-positive law sections of the United States code has no relevance to a free, white, specifically non 14th Amendment citizen standing on the land outside the Federal Zone UNLESS that law was enacted peior to the usurpation of the central government by the Vatican, Illuminati, Zionists, Masons, and other non-registered foreign agents.

[Prof]

You people need to read some of the authoritative sources regarding the location of a corporation.

A corportion is DOMESTIC only if it is incorporated and/or operates within the jurisdiction of the Federal Zone: the District of Columbia, Federal possessions and territories, and lands ceded by any of the 50 independant states to the Federal government.

Any artificial or natural person external to that zone is outside the jurisdiction of the de facto corporation which has usurped the de jure, lawfully established central government of the united States of America.

The allegedly-statutory language of any of the prima facia, non-positive law sections of the United States code has no relevance to a free, white, specifically non 14th Amendment citizen standing on the land outside the Federal Zone UNLESS that law was enacted peior to the usurpation of the central government by the Vatican, Illuminati, Zionists, Masons, and other non-registered foreign agents.

You forgot to mention the Methodists and the Mormons. (The Jehovah's Witnesses don't count because there are only 144,000 of them.)

[Nikki]

I specifically did NOT nemtion the Mormons. That was supposed to be a secret.

However, I guess it's difficult to keep that factor concealed when the special Hendrickson-Processing unit is located in Ogden, Utah.