Hi Chappy's I could not help but
elaborated on it, do I have everything correct below?
The current defining Congressional Code for taxing a paycheck
26 U.S. Code Chapter 1, Subchapter B - Computation of Taxable Income
PART II—ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME (§§ 71–90) (26 U.S. § 83 falls between §§ 71-90)
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26 U.S. § 83. Property transferred in connection with performance of
services
(a) General rule
If, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the (excess) of—
(1) the fair market value of such property (determined without regard to any restriction other than a restriction which by its terms will never lapse) at the first time the rights of the person having the beneficial interest in such property are transferable or are
not subject to a substantial risk of forfeiture, whichever occurs earlier, (over)
(2) the amount (if any) paid for such property, shall be included in the gross income of the person who performed such services in the first taxable year in which the rights of the person having the
beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable. The preceding sentence shall not apply if such person sells or otherwise disposes of such property in an arm’s length transaction before his rights in such property become transferable or not subject to a substantial risk of forfeiture.
Now, to put it all into prospective now read:
If, in connection with the performance of services, property is transferred to any person other than the person for whom such services are performed, the excess of … the fair market value of such property … (over) … the amount (if any) paid for such property, shall be included in the gross
income of the person who performed such services…
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Do not forget that "Your Labor" is considered by the U. S. Supreme Court to be "Your Most Sacred Property"
When you transfer your most sacred "Property" for compensation ($$) at the fair market value only the (excess) over and above the arms length transaction value is to be considered "Gross Income/Profit" and then carried over to tax return.
For example - You and another person agreed during an arms length transaction that the fair market value for you to wash his car by Saturday should be $100.00. On
Friday you found the time to get the job done early so you completed the wash job early. The the car owner was so happy to get his car washed a day early he gave you $120.00. Now you might have some Gross Income/Profit to deal with.
1) If the original arms length transaction did
not include addition compensation for completing the task early then the additional $20.00 would be considered to be a profit or gross income and would need to be included on tax return.
2) If the original arms length transaction did include addition compensation for completing the task early then
the additional $20.00 would not be considered to be a profit or gross income and would not need to be included on tax return.
This is exactly what 26 U.S. § 83 is in the tax code for, it is telling you how to determine the true gross income amount of your overall compensation.
Property transferred in connection with performance of services - GOOD GRIEF COULD IT BE ANY CLEARER ?
