Exempt income

Exempt income and exempt asset defined

Sec. 1.861-8(d)(2)(ii)
  the term exempt income means any gross income to the extent that it is exempt, excluded, or eliminated for Federal income tax purposes.

Want to find definition yourself?

1. Go to National Archives, www.ecfr.gov
2. Find "the term exempt income means" or "Exempt income and exempt asset defined" (use quotes)

This is the U.S. government's codified, legal definition of Exempt income (also at GovInfo.gov)

But, Exempt incomes are not listed.

Is "any gross income" not exempt?

Find "Income that is not considered tax exempt"

Income that is not

Income that is not considered tax exempt

Sec. 1.861-8T(d)(2)(iii)
The following items are not considered to be exempt, eliminated, or excluded income and, thus, may have expenses, losses, or other deductions allocated and apportioned to them:
  (A) a foreign taxpayer ... gross income
  (B) the gross income of a DISC or a FSC
[Domestic International Sales Corp or a Foreign Sales Corp]
 (C) For further guidance, see
§ 1.861-8(d)(2)(iii)(C) through (E).

- - (C) through (E) - -

(C) Dividends for which a deduction is allowed under section 245A;
  (D) Foreign earned income as defined in section 911
  (E) Inclusions for which a deduction is allowed under section 965(c). See § 1.965-6(c).

Notice
Income thats not exempt is taxable income.

Income can be exempt?

Its certainly worth repeating (~3 trillion/year). According to U.S. tax regulations...

the term exempt income means any gross income to the extent that it is exempt, excluded, or eliminated
- CFR Sec. 1.861-8(d)(2)(ii)

Exempt Incomes are any which have been excluded from taxation.

If not all gross income is taxable income, which gross incomes are taxable?

Which incomes are not exempt?

✅ The following items are not ... exempt

➜ Only 5 items are not exempt: A, B, C, D, E

Income that is not ... exempt

Sec. 1.861-8T(d)(2)(iii)
"The following items are not ... exempt
(A) a foreign taxpayer ... gross income
(B) gross income of a DISC or a FSC
(C) For further guidance, see
§ 1.861–8(d)(2)(iii)(C) through (E).

- - (C) through (E) - -

  (C) Dividends for which a deduction is allowed under section 245A;
  (D) Foreign earned income as defined
  (E) Inclusions for a deduction under section 965(c)."

Do you earn any Income thats not exempt?

One definition

Because U.S. tax laws are codified, there is only One definition.

Among all the titles of United States Code, and Code of Federal Regulations (thousands of pages) only One section can provide the legal definition for Exempt income and Income that is not.

Is there any other definition more necessary or relevant for determining income tax? Why aren't these required code definitions followed and obeyed by our government?

True or False

1. All income is exempt, except Income that is not.
2. Income that is not exempt is Taxable income.

Congress shall have

According to U.S. Constitution, "The Congress shall have Power To lay and collect Taxes."

Why doesn't Congress know where Exempt income and Income that is not are defined? Don't they file taxes? How do they know what is taxed? Ask them, its their job.

Ask your Congressman, if you have Power to lay why are you collecting from Americans not making any Income thats not exempt?

➜   If your politician tells you its frivolous ... tell them:

1. It's codified
2. Follow the law

Follow the law

Sec. 1
The tax imposed is upon taxable income

Sec. 63
‘‘taxable income’’ means gross income minus the deductions allowed" (USC)

Sec. 61 (a)
Gross income means all income ... unless excluded by law.

Unless excluded by law?

What is excluded?

Sec. 61 (b)
more common items ... are included in or excluded from gross income entirely , ... To the extent that another section of the Code or of the regulations thereunder, provides specific treatment for any item of income, such other provision shall apply notwithstanding section 61 and the regulations thereunder.

Sec. 861-8 (d) (2) (ii)
exempt income means any gross income ... that ... is exempt, excluded, or eliminated for Federal income tax purposes.

Notice

✅ common items are excluded, entirely

✅ any item of income

✅ notwithstanding section 61 (in spite of)

✅ any gross income that is excluded

Excluded by what law?

specific treatment

Which items of income (gross incomes) are specifically listed as being taxable income?

Sec. 861-8T
✅ Income that is not considered tax exempt.
  The following items are not ... exempt, eliminated, or excluded income and, thus, may have ... deductions

[only 5 items of income are listed]

Is your income ‘‘taxable income’’ or is it excluded by law?

Notice

➜ Sec. 861-8T is accurately defined and described in Sec. 63 ... ‘‘taxable income’’ means gross income minus the deductions allowed."

Which is it?
☑

☐ Exempt income

  : Income that is not subject to income tax
  - Black's Law Dictionary, 9th Edition

☐ Income that is not considered tax exempt

  1 : Income that is subject to income tax
  2 : Taxable income

Its only half a law

The same Sec. 61, which states, Gross income means all income - also says - more common items ... are ... excluded from gross income entirely, ... notwithstanding section 61.   Why is the second half (the important part) obfuscated, ignored, and dismissed?

➜ If all income is taxable, why define Exempt income?

➜ If all income is taxable, why list Taxable income?

Not all gross income is "taxable income"  if more common items are excluded, entirely.

✅   Its codified

~33% of all labor

Tax Freedom Day® usually occurs in April. Consider all the money you've earned from January 1st to mid-April to represent your average yearly tax bill. It means ~33% of our working years are used just to pay our government's various taxes. (In New York its mid-May, 36%) One day is spent to pay tax from each 3 days of labor. Its 2 for you and 1 for them - for life.

One of the largest taxes is Federal Income tax. But according to United States Code of Federal Regulations, most Americans do not earn any Income that is not exempt.

❓ If an Income is not included in the only (codified) list of taxable income, why is it taxed?

Who is hiding law?

The tax imposed is upon taxable income.

Why is the list of taxable income concealed by using an alternate name; "Income that is not considered tax exempt?"

Why isn't "taxable income" called by its actual name ... Taxable income?

Who is hiding the list of taxable incomes in tax law: Treasury, Fed, judges, politicians, tax collectors in IRS? All of them? Who profits?

Ignorantia juris non excusat

Refunds are due!

Own and control

Government does not own the people.
The People own the government.

And according to the Declaration of Independence ... it is the Right of the People to alter or to abolish it.

Politicians are public servants and temp employees - not owners. Tell the servants to obey tax law; theft will no longer be tolerated. And, ask for your money back. (Is it yours?) Then show friends, neighbors, and co-workers their required, codified, income tax definitions.

Look, again. Is your income "taxable income?"

Code Source

United States Code of Federal Regulations
www.ecfr.gov
www.govinfo.gov
www.archives.gov
www.federalregister.gov

United States Code
www.govinfo.gov/app/collection/uscode

❓ Why Follow Regulations

The IRS is bound by the regulations.

Internal Revenue Manual, 4.10.7.2.3.4