You Are Stupid. And I will Prove it.

[Farmer Giles]

The term "derived" shows a limitation. Its not, "income from any source.". It's, "from any source derived". Does that mean if I accrue income it isnt taxable? No, it means its not generally possible to "accrue" income. Its not in the nature of income to just stick by accident like a burr or something; you've basically got sign up somewhere. For the Voyage, which brings us back to Admiralty.

Of the word "derived" limitation is shown. It is not that "source." It is empty earnings. It's "Derived" of source" which the source is emply. It's not taxable earnings, if it occurs, that as for average. Calling to obtain, as for that it means "generally possibly to accrue" Earnings. Exactly with respect to essence of earnings that accidentally notches or like what in the stick which is not; you're somewhere where you participate to obtain those earnings, basically. For travelling which resets us to the naval headquarters.

I'm laughing.

[silversopp]

But if I'd signed a W4 or a W9 allowing this relationship I guess it has to be gross income, because its been run through the system. maybe there's some argument to be made for non-disclosure or unfair consideration.

Regardless of what forms have been signed, my net worth is increasing - is it not? Do we agree that each pay check I receive increases my net worth?

[Farmer Giles]

Famspear - remember the adage of expending effort at teaching a pig to sing.

It would be better if a thing once trampled into the dust of nonsense couldn't be reassembled or regurgitated by narcissistic opportunists. As the 'net proliferates we can only expect to see the ignorant stumble along on the same nonsensical paths.

talk about a word salad!

Nope, only you and David are guilty of spouting word salad here. Judge Roy Bean's statement is perfectly understandable and correct. This also proves that you do not know what is word salad and what is not.

It is a word salad. Since you are one of the posters quoted at the beginning of this thread, and you had asked why this was important, I thought you'd be interested in the response. Remember the premise, Everything is Forgiven. I think you are big enough with an open enough mind to have asked that question before you got carried away with all this so lets hear what your real, intelligent response is to the thread.

[Famspear]

It is a word salad. Since you are one of the posters quoted at the beginning of this thread, and you had asked why this was important, I thought you'd be interested in the response. Remember the premise, Everything is Forgiven. I think you are big enough with an open enough mind to have asked that question before you got carried away with all this so lets hear what your real, intelligent response is to the thread.

We're waiting, Giles. Let's hear it.

[Farmer Giles]

But if I'd signed a W4 or a W9 allowing this relationship I guess it has to be gross income, because its been run through the system. maybe there's some argument to be made for non-disclosure or unfair consideration.

Regardless of what forms have been signed, my net worth is increasing - is it not? Do we agree that each pay check I receive increases my net worth?

No we do not agree. Obviously you are owed money by the company; clearly you have invested or lent your efforts to that enterprise and they owe you money now. Any court would agree. You are a stakeholder.

So your net worth increased already. getting that check is no increase at all, it's exactly what you already have invested or left with the company. So your paycheck, that whole transaction, does nothing to increase your wealth. You could just as easily have sold these accumulated rights to someone else, and they receive the paycheck. At that level, it's all an even exchange.

But you have increased you net worth overall, just not from that paycheck. There is no tax on accumulation. Nobody dreams of taxing you on the projected value of your life (some probably do). There has to be an actual transaction of a certain nature. See, work is it's own reward, in every respect. We've lost sight that we never "worked for money", we work to complete tasks, to produce results, to succeed at some endeavour.


But to disregard the forms you've signed is impossible, because the IRS and co. regards them with especial scrutiny. They presume every piece of paperwork that reaches them is true, subject to it's proportionate weight. You know, Poor Pete Hendrickson and Co. made some mistakes and errors but he pointed out a basic tactic that is totally sensible. Just that who ever makes a claim has status. First comes those tax informations but then comes our sworn testimony, the correction form. Which the IRS has to regard as superior until proven otherwise or a controversy is established. They would have to have a qualified "general assessment" to offer any evidence of liability in court, because it has to be verified and only certain experts at the Agency can do this.

[Farmer Giles]

It is a word salad. Since you are one of the posters quoted at the beginning of this thread, and you had asked why this was important, I thought you'd be interested in the response. Remember the premise, Everything is Forgiven. I think you are big enough with an open enough mind to have asked that question before you got carried away with all this so lets hear what your real, intelligent response is to the thread.

We're waiting, Giles. Let's hear it.

its a lot of writing and this computer i'm on is a bit fritzy. I'm getting there! Folks can respond 24 hours later or whenever if they want to, rome wasn't built in a day.

[The Operative]

Nope, only you and David are guilty of spouting word salad here. Judge Roy Bean's statement is perfectly understandable and correct. This also proves that you do not know what is word salad and what is not.

It is a word salad. Since you are one of the posters quoted at the beginning of this thread, and you had asked why this was important, I thought you'd be interested in the response. Remember the premise, Everything is Forgiven. I think you are big enough with an open enough mind to have asked that question before you got carried away with all this so lets hear what your real, intelligent response is to the thread.

Judge Roy Bean's statement was sensible and is easy to understand. My question, which you quoted at the beginning of this thread, was asked EARLY in the other thread. While that thread was still open, I figured out why you were so interested in it. It is because you do not know WTF you are talking about. My answers and the answers of others, like Famspear and Red Cedar PM, have already shown that you are wrong. You are just too thick to realize it.

[Farmer Giles]

And so we get to this idea of economic structures. A clear example is when I improve a house and enjoy market pressure too but instead of selling it I mortgage it to the bank for 100% ltv. Ive got my money, for sure; but its a loan. And literally if I let the bank just take the title and forfeit the collateral the whole transaction will end as an even exchange.

No, not exactly. The receipt of the loan proceeds is a non-taxable event -- because it is not an "income" event. You don't realize "income" under the Federal income tax law when the amount of the loan proceeds equals the amount you are legally obligated to pay back. And if you let the bank take the house, you will realize income (for federal income tax purposes) equal to the excess, if any, of the amount realized on the disposition of the house over your basis in that house. Notice that I said "realized," not "recognized." Notice also that I said "income" without saying what kind of income. And notice that I did not say whether you would incur a federal income tax.

Let's suppose that this is a house you bought and used for investment (i.e., you never lived in the house yourself; you just rented it out to tenants). Let's suppose you bought the house with 100% financing. Original cost is equal to the amount you borrowed. Let's suppose that the house was always worth exactly the amount of the principal on the debt -- and you never paid down on the debt (except for the interest expense, which we'll just say you deducted as you paid it). Let's assume, as well, that the debt was what we call recourse debt (you had personal liability on the debt).

If the bank takes the house back at fair market value equal to the debt, you now have "realized" income. You may or may not have "recognized" income, and you may or may not have a federal tax liability. (Notice that I did not say what kind of income.)

Do you know why you have "realized" income here? And do you know what additional information you would need to tell how much? Do you know what additional information you would need to tell you whether the income is also "recognized" by you?

Now change the facts. Assume that the debt is non-recourse (you have no personal liability). You now have realized a particular kind of income called a GAIN FROM THE DISPOSITION of an asset. Not only that, but you have "recognized" that gain. And you may even owe a tax (depending on other factors not given in the example).

Remember, in all these situations, on the facts I gave you, the fair market value of the property and the principal of the debt were equal in amount. That is, there was an "even exchange" (in the sense in which I believe you use the term). I am telling you that YOU ARE RIGHT that there is an even exchange of value, and I am telling you that there is nevertheless SOME SORT OF INCOME being "realized" by YOU under the Internal Revenue Code in these fact patterns (though there may or may not be a tax, depending on information not yet provided).

you post an awful lot of nonsense before you actually get to the point, which is one reason it takes so long to respond. I'm still back here, without having answered this very interesting post! so give me a chance to get through this and at least the next one and then respond again.

and the Stupids take up a fair part of time, as well, but thats also within the scope of the thread. I said i would Prove They Were Stupid... the Reader will judge.

[Farmer Giles]

Judge Roy Bean's statement was sensible and is easy to understand. My question, which you quoted at the beginning of this thread, was asked EARLY in the other thread. While that thread was still open, I figured out why you were so interested in it. It is because you do not know WTF you are talking about. My answers and the answers of others, like Famspear and Red Cedar PM, have already shown that you are wrong. You are just too thick to realize it.

thats is Unfortunate. Why do you think the Intl Acct people are so interested in it then? They originally published it. Do they not know WTF they're talking about? If you're so smart, why don't YOU tell us what it means and how it applies to taxation? Or maybe you know better than this Int'l body of learned scholars and experts.

[Dr. Caligari]

Why do you think the Intl Acct people are so interested in it then? They originally published it. Do they not know WTF they're talking about? If you're so smart, why don't YOU tell us what it means and how it applies to taxation? Or maybe you know better than this Int'l body of learned scholars and experts.

The United States Supreme Court decided, in the Thor Power Tool case, that tax accounting and financial accounting are two different things-- that something can be "income" for tax purposes even if it's not income for financial accounting purposes, and vice versa. So whatever you think the "International Accounting Standards" mean, that has nothing to do with tax law.

[Famspear]

And so we get to this idea of economic structures. A clear example is when I improve a house and enjoy market pressure too but instead of selling it I mortgage it to the bank for 100% ltv. Ive got my money, for sure; but its a loan. And literally if I let the bank just take the title and forfeit the collateral the whole transaction will end as an even exchange.

No, not exactly. The receipt of the loan proceeds is a non-taxable event -- because it is not an "income" event. You don't realize "income" under the Federal income tax law when the amount of the loan proceeds equals the amount you are legally obligated to pay back. And if you let the bank take the house, you will realize income (for federal income tax purposes) equal to the excess, if any, of the amount realized on the disposition of the house over your basis in that house. Notice that I said "realized," not "recognized." Notice also that I said "income" without saying what kind of income. And notice that I did not say whether you would incur a federal income tax.

Let's suppose that this is a house you bought and used for investment (i.e., you never lived in the house yourself; you just rented it out to tenants). Let's suppose you bought the house with 100% financing. Original cost is equal to the amount you borrowed. Let's suppose that the house was always worth exactly the amount of the principal on the debt -- and you never paid down on the debt (except for the interest expense, which we'll just say you deducted as you paid it). Let's assume, as well, that the debt was what we call recourse debt (you had personal liability on the debt).

If the bank takes the house back at fair market value equal to the debt, you now have "realized" income. You may or may not have "recognized" income, and you may or may not have a federal tax liability. (Notice that I did not say what kind of income.)

Do you know why you have "realized" income here? And do you know what additional information you would need to tell how much? Do you know what additional information you would need to tell you whether the income is also "recognized" by you?

Now change the facts. Assume that the debt is non-recourse (you have no personal liability). You now have realized a particular kind of income called a GAIN FROM THE DISPOSITION of an asset. Not only that, but you have "recognized" that gain. And you may even owe a tax (depending on other factors not given in the example).

Remember, in all these situations, on the facts I gave you, the fair market value of the property and the principal of the debt were equal in amount. That is, there was an "even exchange" (in the sense in which I believe you use the term). I am telling you that YOU ARE RIGHT that there is an even exchange of value, and I am telling you that there is nevertheless SOME SORT OF INCOME being "realized" by YOU under the Internal Revenue Code in these fact patterns (though there may or may not be a tax, depending on information not yet provided).

you post an awful lot of nonsense before you actually get to the point, which is one reason it takes so long to respond. I'm still back here, without having answered this very interesting post! so give me a chance to get through this and at least the next one and then respond again.....

No, I don't post nonsense. And yes, I will "give you a chance."

Judge Roy Bean's statement was sensible and is easy to understand. My question, which you quoted at the beginning of this thread, was asked EARLY in the other thread. While that thread was still open, I figured out why you were so interested in it. It is because you do not know WTF you are talking about. My answers and the answers of others, like Famspear and Red Cedar PM, have already shown that you are wrong. You are just too thick to realize it.

thats is Unfortunate. Why do you think the Intl Acct people are so interested in it then?

What are you talking about, Giles? Why do you keep referring to the International Accounting Standard and International Accounting people?

Answer: Because you don't know what you're talking about. International accounting standards are standards that apply to how FINANCIAL STATEMENTS are presented. Financial accounting standards, fella. International accounting standards are not determinative of definitions of terms found in U.S. federal income tax law. Sure, it is possible that a court somewhere may have referred to financial accounting standards in a discussion of federal tax law. But you obviously don't know what you're talking about.

PS (some background information): In the U.S. accounting profession, the term "financial statement" is something of a term of art. The financial information in a federal income tax return -- even the Schedule L balance sheet found in a Form 1120 return -- is not generally considered to be a "financial statement" for purposes of financial accounting standards promulgated by the Financial Accounting Standards Board, etc.

[Farmer Giles]

The definition of income in the "International Accounting Standard" is a financial accounting definition, not a tax accounting definition.

are you saying financial accounting is substantially different or based on some other power over property? Thats doubtful since ordinary meanings and constructions generaly apply and there is hardly a seperation between finance and taxation, the same professionals deal with both sides of one coin, the issue of "profits and losses".

Im going to continue using that Intl Acct Standard because it is meaningful and noteworthy. it ties in to a general explanation of what is income. When this standard speaks of 'income' it is speaking of the same income referred to in most any law, including the 16th amendment.

post a better defintion! Post some information to show a contrary position. You claim to have "secret knowledge" and a "much better understanding" than I do, so LAY IT OUT! meanwhile I will continue to work on a response to your posted criticisms. We are in danger of using up too many posts and having the thread justifiably shut down for being too long.

Which maybe is the Stupid's Revenge, and they can have it! maybe there will be a
Dumbass!(c) award for them at the end.

The United States Supreme Court decided, in the Thor Power Tool case, that tax accounting and financial accounting are two different things-- that something can be "income" for tax purposes even if it's not income for financial accounting purposes, and vice versa. So whatever you think the "International Accounting Standards" mean, that has nothing to do with tax law.

Thank You! Do us a favor and please link to that case by way of an edit to your post, and we'll save board space that way too. i'd like very much to see the body of the relevant text.

[Famspear]

The definition of income in the "International Accounting Standard" is a financial accounting definition, not a tax accounting definition.

are you saying financial accounting is substantially different or based on some other power over property?

Power over property???? What in the world are you asking?

One more time, Giles: International financial accounting standards (or, for that matter, U.S. financial accounting standards) are not determinative of U.S. federal income tax law. Haven't you ever taken an accounting course?

Thats doubtful since ordinary meanings and constructions generaly apply and there is hardly a seperation [sic] between finance and taxation, the same professionals deal with both sides of one coin, the issue of "profits and losses".

You are completely out of your mind, Giles. What part of this do you not understand? HAVE YOU EVER TAKEN AN ACCOUNTING COURSE????

Im going to continue using that Intl Acct Standard because it is meaningful and noteworthy.

Are you serious? This is what passes for logic with you? Well, I'm going to continue to point out that you HAVE NO IDEA WHAT YOU'RE TALKING ABOUT.



Even long before Thor Power Tool, anyone with a bachelor's degree in accounting knew the difference between financial accounting and tax accounting, Giles.

[Dr. Caligari]

Do us a favor and please link to that case by way of an edit to your post, and we'll save board space that way too. i'd like very much to see the body of the relevant text.

The Thor Power Tool case is here:

http://caselaw.lp.findlaw.com/scripts/g ... &invol=522

The Supreme Court said, in that case:

Third, the presumption petitioner postulates is insupportable in light of the vastly different objectives that financial and tax accounting have. The primary goal of financial accounting is to provide useful information to management, shareholders, creditors, and others properly interested; the major responsibility of the accountant is to protect these parties from being misled. The primary goal of the income tax system, in contrast, is the equitable collection of revenue; the major responsibility of the Internal Revenue Service is to protect the public fisc. Consistently with its goals and responsibilities, financial accounting has as its foundation the principle of conservatism, with its corollary that "possible errors in measurement [should] be in the direction of understatement rather than overstatement of net income and net assets." 18 In view of the Treasury's markedly different goals and responsibilities, understatement of income is not destined to be its guiding light. Given this diversity, even contrariety, [439 U.S. 522, 543] of objectives, any presumptive equivalency between tax and financial accounting would be unacceptable. 19

This difference in objectives is mirrored in numerous differences of treatment. Where the tax law requires that a deduction be deferred until "all the events" have occurred that will make it fixed and certain, United States v. Anderson, 269 U.S. 422, 441 (1926), accounting principles typically require that a liability be accrued as soon as it can reasonably be estimated. 20 Conversely, where the tax law requires that income be recognized currently under "claim of right," "ability to pay," and "control" rationales, accounting principles may defer accrual until a later year so that revenues and expenses may be better matched. 21 Financial accounting, in short, is hospitable to estimates, probabilities, and reasonable certainties; the tax law, with its mandate to preserve the revenue, can give no quarter to uncertainty. This is as it should be. Reasonable estimates may be useful, even essential, in giving shareholders and creditors an accurate picture of a firm's overall financial health; but the accountant's conservatism cannot bind the Commissioner in his efforts to collect taxes. "Only a few reserves voluntarily established as a matter [439 U.S. 522, 544] of conservative accounting," Mr. Justice Brandeis wrote for the Court, "are authorized by the Revenue Acts." Brown v. Helvering, 291 U.S., at 201 -202.

Finally, a presumptive equivalency between tax and financial accounting would create insurmountable difficulties of tax administration. Accountants long have recognized that "generally accepted accounting principles" are far from being a canonical set of rules that will ensure identical accounting treatment of identical transactions. 22 "Generally accepted accounting principles," rather, tolerate a range of "reasonable" treatments, leaving the choice among alternatives to management. Such, indeed, is precisely the case here. 23 Variances of this sort may be tolerable in financial reporting, but they are questionable in a tax system designed to ensure as far as possible that similarly situated taxpayers pay the same tax. If management's election among "acceptable" options were dispositive for tax purposes, a firm, indeed, could decide unilaterally - within limits dictated only by its accountants - the tax it wished to pay. Such unilateral decisions would not just make the Code inequitable; they would make it unenforceable. [439 U.S. 522, 545]

[The Operative]

Judge Roy Bean's statement was sensible and is easy to understand. My question, which you quoted at the beginning of this thread, was asked EARLY in the other thread. While that thread was still open, I figured out why you were so interested in it. It is because you do not know WTF you are talking about. My answers and the answers of others, like Famspear and Red Cedar PM, have already shown that you are wrong. You are just too thick to realize it.

thats is Unfortunate.

Not for me it is not. I understand what that definition means and why it is worded the way it is. You, on the other hand, do not.

Why do you think the Intl Acct people are so interested in it then?

Because the determination of a company's income for the financial statements is important for the users of the financial statements.

They originally published it. Do they not know WTF they're talking about? If you're so smart, why don't YOU tell us what it means and how it applies to taxation? Or maybe you know better than this Int'l body of learned scholars and experts.

Of course they know what they are talking about. It has already been explained to you what it means. It was explained in the prior thread and it has been explained in this thread. I'm not going to repeat it since you obviously refuse to listen.

BTW, if the government wanted to tax the equity contributions of owners to a corporation, they probably could. The IASB definition in the IFRS has nothing whatsoever to do with what is taxed and what is not. In fact, net income from the income statement is sometimes a greatly different amount than the taxable income of the corporation.

[Famspear]

For those here who are not accountants, the following is provided as a very brief background to this discussion.

Financial accounting refers to the set of rules that govern how financial statements (not tax returns) are presented.

In the United States, financial accounting standards are set primarily by a private, non-profit board called the Financial Accounting Standards Board (FASB). The FASB issues standards that companies use in presenting their financial statements, although governmental entities such as the Securities and Exchange Commission also have authority.

The international accounting standard about which Farmer Giles is confused is almost surely part of the set of standards promulgated by the International Accounting Standards Board (IASB). The IASB is "an independent group of 15 experts with an appropriate mix of recent practical experience of standard-setting, or of the user, accounting, academic or preparer communities."

http://www.iasb.org/The+organisation/Me ... e+IASB.htm

See also:

http://www.iasb.org/The+organisation/IASCF+and+IASB.htm

Neither the FASB (in the USA) nor the IASB (internationally) is authoritative in determining definitions for terms used in U.S. federal income tax law. Everyone who earns a bachelor's level degree in accounting from an accredited college or university in the United States should know the difference between financial accounting standards (such as "generally accepted accounting principles", or "GAAP") and tax accounting. The phrase "book-tax differences" is a standard part of the daily jargon of Certified Public Accountants in the United States.

Now, there is much overlap between financial accounting and tax accounting. Indeed, there are probably more similarities than there are differences between the two. But Farmer Giles has little or no clue about the similarities and the differences. Farmer Giles obviously not only does not understand the financial accounting literature he is reading, he also does not understand that the financial accounting literature would be something rarely (if ever) cited when presenting an argument about the meaning of a term in U.S. federal income tax law. In other words, Farmer's attempt to cite an international accounting standard for "income" as a means to reaching the false conclusion that his compensation is not taxable (which is almost certainly one of the places where Giles is trying to go with this) is analogous to the habit of other tax protesters who erroneously cite Adam Smith for the U.S. constitutional definition of "direct tax". Giles has neither the training nor the experience to be attempting to use international accounting standards in this discussion of tax law.

Giles suffers from another deficiency: Word Salad Posting Syndrome (or "WSPS") (yes, I just coined that term). Like David Merrill Not Really So Very Much Van Pelt, Giles has not mastered the use of the technical jargon. And, like David, Giles appears to be unaware of his deficiency.

[Farmer Giles]

Regardless of what forms have been signed, my net worth is increasing - is it not? Do we agree that each pay check I receive increases my net worth? - While it may increase your net worth, for purposes of taxation, it is considered earned income (or any of its related synonyms) as opposed to unearned income, such as capitasl gains, dividends, interest and such.

see, thats where you distort the IRC itself. "Items" are not Income. Items are Items. The law says: "item income". That is, income realized from these items. Like, "salary income". The income that is found within these items.

You have falsely read what's right in front of you; there is no tax on transactional structures, whether we call a payment "compensation" "wages" or anything else. The tax is on income DERIVED from those items, actually ALL INCOME from WHATEVER source derived, INCLUDING these items. they don't necessarily generate ANY INCOME, just for being an item.

Obviously you are owed money by the company; clearly you have invested or lent your efforts to that enterprise and they owe you money now. Any court would agree. You are a stakeholder. - No, you are just owed the money, a stakeholder would be more along the lines of a person who owns stock in the company, who has an equity position. As an employee, you are more akin to a creditor to the corporation, which includes bondholders and anyone else expecting a payment from the company.

Its the same thing, bond or equity, i'm a stakeholder. in fact the best way to see it is "bonded equity".

getting paid by a company provides you with no equity position whatsoever and it is earned income for tax purposes.

getting paid provides me with an equity position in a check, which i'm glad you brought up, because the next transaction when i deposit at the bank will be an even-exchange too. perhaps you'd like to categorize that as income as well? Is the change I receive from a purchase at the store income? It "came-in", didn't it? It has an accounted concept.

You show the common malaise of the confused businessman, i hear especially these arguments coming from people who have invested everything in the assumption that administrative concepts are real... The System divides the brain in its left and right hemispheres so we can't think straight anymore. What you are really saying is there's a tax on working, which there is not. The tax here is always framed in reference to INCOME.

Getting paid by the company did NOT increase any net worth. An INCREASE is required for there to be any income, remember? I'm being told the tax defintion for income is somehow different from the financial definition, but so far i haven't seen any.

[iplawyer]

Im going to continue using that Intl Acct Standard because it is meaningful and noteworthy. it ties in to a general explanation of what is income. When this standard speaks of 'income' it is speaking of the same income referred to in most any law, including the 16th amendment.

post a better defintion! Post some information to show a contrary position. You claim to have "secret knowledge" and a "much better understanding" than I do, so LAY IT OUT! meanwhile I will continue to work on a response to your posted criticisms. We are in danger of using up too many posts and having the thread justifiably shut down for being too long.

Which maybe is the Stupid's Revenge, and they can have it! maybe there will be a
Dumbass!(c) award for them at the end.

Giles, you do win the Stupid award here. The more you post - the more apparent it becomes. I'm surprised that the posters have politely put up with your drivel for as long as they have.

[Farmer Giles]

Do us a favor and please link to that case by way of an edit to your post, and we'll save board space that way too. i'd like very much to see the body of the relevant text.

The Thor Power Tool case is here:

http://caselaw.lp.findlaw.com/scripts/g ... &invol=522

maybe you can show us how this is relevant? If anything tax accountancy is better for my position since it only attaches to "full realizations" whereas a financial view sees increase before this actually happens. Which is the point: the way this tax system is structured a secured transaction comes out even.

[Farmer Giles]

Giles, you do win the Stupid award here. The more you post - the more apparent it becomes. I'm surprised that the posters have politely put up with your drivel for as long as they have.

take your tagline's advice.