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What else could we possibly say.
- Citizens and all Tax Professionals generally determine what is to be included in “Gross Income” by starting with 26 USC § 61(a).
- 26 USC § 61(a) defines what is “Gross Income:”
“Gross income defined “(a) General definition
“Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: “(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;” (Emphasis added) - Once “Gross Income” is determined pursuant to 26 USC § 61(a),
Citizens and Tax Professionals generally proceed to 26 USC § 62 to determine what can be deducted from “Gross Income” which, when said items are deducted, then leaves a balance called “Adjusted Gross Income.”
- Once “Adjusted Gross Income” is determined, Citizens and Tax Professionals generally proceed to 26 USC § 63 to determine what further amounts can be deducted which, when said items are deducted, then leaves a balance known as “Taxable Income.”
- Once “Taxable Income” is determined, Citizens and Tax Professionals then generally proceed to 26 USC § 1 to determine their tax liability.
- However, Citizens and Tax Professionals rarely read and understand the first seven words of 26 USC § 61(a); “Except as otherwise provided in this subtitle.” This is the subtle clue to let Citizens and Tax Professionals know that there are other definitions of or exclusions from “Gross
Income” which supersede this 26 USC § 61(a) definition of “Gross Income.” For example full time ministers of the gospel are allowed to exclude from “Gross Income” the rental value of a home furnished to them by their church as part of their compensation. 26 USC § 107 states:
26 USC § 107. Rental value of parsonages In the case of a minister of the gospel, gross
income does not include— (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of
utilities. - As one can easily determine from 26 USC § 107, a minister’s home compensation is excluded from “Gross Income” and therefore cannot be taxed under any circumstances. Since 26 USC §§ 62 [adjusted gross income] and 63 [taxable income] both start from a value known as “Gross Income,” one cannot possibly have a federal tax liability or be subject to a federal tax without first having some amount of “Gross Income.”
- Pursuant to 26
USC § 61(a)(1), compensation for services is included in “Gross Income,” EXCEPT AS OTHERWISE PROVIDED IN THIS SUBTITLE. This means that if another section of subtitle A provides for a different definition of “Gross Income” or another section of subtitle A articulates what is to be included in or excluded from “Gross Income,” then the § 61(a) definition is not applicable. To state it another way, if another section of subtitle A excludes any portion of one’s
compensation from “Gross Income,” then the § 61(a)(1) definition does not apply.For the past several years, millions of Citizens have received compensation for services actually rendered and considered it to be included in “Gross Income.” In summary, 26 USC § 83 explains how property received in exchange for services rendered is taxed[1] Section 83 applies to all compensation paid for both the services of corporations, and for the services of individuals.[2] Labor is property[3].
“...It has been well said that, the property which every man has is his own labor, as it is the original foundation of all other property so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands, and to hinder his employing this strength and dexterity in what manner he thinks proper,
without injury to his neighbor, is a plain violation of the most sacred property” Butchers’ Union Co. v. Crescent City Co., 111 U.S. 746. 1883.
[1] See Montelepre Systemed, Inc. v. CIR., 956 F.2d 496, 498 at [1] (CA5 1992) [2] See 26 CFR § 1.83-3(e), (f); MacNaughton v. CIR, 888 F.2d 418 (CA6 1989); Pledger v.CIR, 641 F.2d 287 (CA5 1981); Alves v. CIR, 734 F.2d 478, 481 (CA9 1984); Klingler Electric Co. v. CIR, 776 F.Supp. 1158, 1164 at [1] (S.D.Miss. 1991); Robinson v. CIR, 82 USTC 444 (1984); Cohn v. CIR, 73 USTC 443, 446 (1979). [3] See ¶ 10 herein and also Butcher's Union Co. v. Crescent City Co., 111 U.S. 746, 757 (1883); Slaughterhouse Case, 83 U.S. 395, 419; 16 Wall. 36-130 (1873); Adair v. US., 208 U.S. 161, 172 (1908); Coppage v. Kansas, 236 U.S. 1 (1915); Black's Law Dictionery, 6 th Ed., “property.”
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