Extremely difficult tax question ...

[AndyK]

40 posts in response to an illiterate, inane troll.

Time to close the thread?

[wserra]

No, time to stop feeding the troll.

[grixit]

Agreed. Amish death penalty imposed.

[daddy]

So, despite all the posts and less-thought-out replies, you have nothing.

"Fammy-o" seems to have great difficulty comprehending that the word "question" can mean "matter open for discussion" - just like my quote said, but which Fammy-o chose to misinterpret - and which is exactly what this topic is. Is Fammy-o intentionally lying?

It (and many similar arguments such as "income is not defined") have lost so many times that they are deemed frivolous and are subject to BIG financial penalties by the courts.

Prove it!

And yes, daddy is still here.

[NYGman]

Why doesn't Daddy post a citation of a case where the government lost while trying to assess tax on bartered gains.

[Duke2Earl]

There is nothing to "discuss" with daddy. No matter what he says or what insults he posts the actual fact in actual reality is that he owes income tax. Period. He can feel that's unfair all he wants....he can make up any rationale he wants...but the answer still remains....income tax is owed and if he doesn't pay it he will be in trouble. Governments everywhere have been imposing taxes on people in their territory since before Jesus....usually at a much higher rate than we owe here. Daddy is just urinating into the wind. Don't feed the troll.

[Cpt Banjo]

As Wserra pointed out, the troll's example doesn’t give enough information to determine whether any tax is owed, although it’s obvious he wasn't bright enough to realize this. It's easy to conceive of a situation in which the guy in the example ends up with more material than when he started yet owes no tax.

For example, suppose he starts with 20 pounds of lead for which he paid $5 per pound. Further assume that this is the only asset he owns with which to barter. He swaps 5 pounds of lead (basis = $25) for a certain amount of iron worth $25. Later, the price of lead drops to $2.50 per pound, but the price of iron has stayed the same. He then swaps the iron (value = basis = $25) for 10 pounds of lead worth $25. Result: he ends up with 25 pounds of lead, but he has not realized any gain and doesn't owe tax.

[Gregg]

Second reading, with expanded comments:

"Man" stole a barn full of chemicals no one knew about when his idiot best friend got arrested having carnal knowledge of some local livestock. "Man" took these chemicals, which were worth about $50,000 when BubbaJoeBillyBob put them in the barn and moved them to his trailer in his mother's basement. (in some parts of the Deep Stupid, its possible to have a trailer in Momma's basement, but not a double wide). After reading some stuff on the internet, "Man" made a batch of really terrible Methamphetamine and sold it on an online anonymous exchange market, and now has $85,000 worth of Bitcoin, which he wishes to convert to useless fiat currency so he can buy a trailer of his own to park his Camaro on cinder blocks in front of.

The only thing is, if he has to pay taxes on the $85K, for which he can show no basis or source of, he won't have enough to have the Camaro towed out to his new Double Wide "Villa-Daddy" and set up on custom cinder blocks.

So, he needs you to explain to him how he can not have to pay taxes or explain to the bank where the hell he got that kind of money anyhow.

[Arthur Rubin]

Second reading, with expanded comments:

[Famspear]

So, despite all the posts and less-thought-out replies, you have nothing.

We don't need to have something more than "nothing." You're the one who created the thread. We've already been through this. You've come up with nothing. The rest of the world is not here to come up with "something" in response to your nothing. Again, you are not a Special Snowflake.

"Fammy-o" seems to have great difficulty comprehending that the word "question" can mean "matter open for discussion"

No, I don't seem to have any difficulty at all. And no, I haven't chosen to "misinterpret" anything you have written,

Is Fammy-o intentionally lying?

No, and your question contains a redundancy. In relevant part, to "lie" means "to make a statement that one knows to be false, esp. with intent to deceive". Webster's New World Dictionary of the American Language, p. 815, World Publishing Company (2d Coll. Ed. 1978). In this sense, there is no such thing as "unintentionally" lying, so modification of the verb "to lie" with the adverb "intentionally" is a clumsy redundancy. Now, there is a rhetorical device sometimes known as emphatic redundancy or intensive redundancy, but you're not sophisticated enough to handle that.

Oh, and in case you don't know: The word "clumsy" means "lacking grace or skill [ . . . ] badly contrived; inelegant". Webster's New World Dictionary of the American Language, p. 270, World Publishing Company (2d Coll. Ed. 1978).

Try to pay closer attention. Collect your thoughts. Focus. Breathe . . . . . . .



You're afraid to come out and state a position. You're afraid to step into a trap.

[Famspear]

"daddy', our latest victim, did bring up the word "barter," which is interesting from a U.S. Federal income tax standpoint. The verb "to barter" generally means "to trade by exchanging goods or services without using money". Webster's New World Dictionary of the American Language, p. 115, World Publishing Co. (2d Coll. Ed. 1978).

Consider the situation where a shepherd exchanges one of his sheep for some shoes he receives from a cobbler. A tax protester would typically argue that the transaction is not subject to tax.

A person learned in U.S. Federal income tax law, however, would correctly say that the transaction is subject to the Federal income tax. To be specific, the shepherd's income (if any) from the transaction would be income from a barter transaction. (The cobbler's income, if any, from the transaction would also be income from a barter transaction.) Whether there would actually be income in this transaction is a separate issue. Whether there would actually be a tax liability generated in this transaction is also a separate issue.

The shepherd would realize barter income -- a barter gain -- if the current fair market value of the shoes he received exceeded the shepherd's adjusted basis amount in the sheep he transferred. The cobbler would realize income if the fair market value of the sheep he received exceeded the cobbler's adjusted basis amount in the shoes he transferred.

Of course, it is possible that the shepherd (or the cobber, or both) could have an adjusted basis amount that equals or exceeds the applicable amount realized -- in which case, the shepherd (or cobbler, etc.) might have zero income from the barter transaction. So, although the transaction would be subject to the tax (in some broad, technical sense), the amount of the income could be zero. The amount of the tax could thus be zero.

Tax protesters get this part wrong by trying to argue that the income, the gain, is computed by comparing the current value of the sheep with the current value of the shoes.

But, that is not how a "gain" or "income" is computed under U.S. Federal income tax law. You don't compare the current values. You compare the gross amount realized (generally, the current fair market value of the thing you received) with the adjusted basis in the thing you gave up. If the amount realized exceeds your basis, you have a gain. If the basis exceeds the amount realized, you have a loss. In most cases, the adjusted basis of an asset is not changed as the asset increases in value. Thus, in most cases where an asset has increased in value after the time it was acquired, the disposition of that asset results in a gain.

Receipt of a non-monetary asset (whether it be a sheep or a pair of shoes, and whether the transaction be a barter transaction or not) is generally a taxable event. Whether a tax liability will arise as a result of that taxable event depends in part on the specific facts of the case.

[Famspear]

For tax protesters, the concept of taxability of a receipt of non-monetary income typically comes up in a case involving compensation for services -- often as an employee of an employer. Generally, the concept of gross income for U.S. Federal income tax purposes encompasses any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which the compensation is made. Gross income, for Federal income tax purposes, includes compensation received in forms other than money.

[Famspear]

Even where non-monetary income is realized, there are of course exceptions to the rule that the non-monetary income is taxable to the recipient.

The U.S. Congress provides those exceptions -- in specific provisions in the Internal Revenue Code. Examples may include some types of income from debt discharge (section 108), certain kinds of meals and lodging furnished by an employer to an employee (section 119), etc.

[Famspear]

Let us pose what actually might be an "extremely difficult tax question".

First, a fact pattern.

Suppose that Mary has an asset and that Mary's tax basis in that asset is $100,000. Suppose that Mary transfers that asset to Susan and that Mary receives from Susan in exchange an asset with a current fair market value of $75,000. Under current Federal tax law, Mary would have a $25,000 loss.

But, suppose that Congress has changed the Internal Revenue Code so that the concept of "basis" -- as something you subtract from gross receipts to compute gain or loss -- is simply repealed. Under the new law, the income tax is imposed on the current value of gross receipts (whether monetary or non-monetary). Now, assume that the previously described transaction between Mary and Susan occurs after the effective date of this change.

Based on this change, the Internal Revenue Service takes the position that the entire $75,000 of value realized by Mary is treated as income, and is taxed as income to her.

Mary disputes this treatment. She argues that the new law is unconstitutional. Mary argues that under the U.S. Constitution, Congress cannot tax, as income, something that is not income.

The IRS agrees that the $75,000 receipt is not income within the meaning of the Sixteenth Amendment, but the IRS argues that under the Constitution as amended, the Congress has the power to tax the receipt as income even though it is not really income.

Mary takes the government to court.

In court, who wins? Mary? Or the government?

[daddy]

Is Fammy-o intentionally lying?

No, and your question contains a redundancy. In relevant part, to "lie" means "to make a statement that one knows to be false, esp. with intent to deceive". Webster's New World Dictionary of the American Language, p. 815, World Publishing Company (2d Coll. Ed. 1978). In this sense, there is no such thing as "unintentionally" lying, so modification of the verb "to lie" with the adverb "intentionally" is a clumsy redundancy. Now, there is a rhetorical device sometimes known as emphatic redundancy or intensive redundancy, but you're not sophisticated enough to handle that.

Oh, and in case you don't know: The word "clumsy" means "lacking grace or skill [ . . . ] badly contrived; inelegant". Webster's New World Dictionary of the American Language, p. 270, World Publishing Company (2d Coll. Ed. 1978).

Try to pay closer attention. Collect your thoughts. Focus. Breathe . . . . . . .



You're afraid to come out and state a position. You're afraid to step into a trap.

Oh, this is so wonderful that you couldn't make it up. What poor Fammy-o doesn't know is that my intention with the question was threefold, namely:

1. emphatic redundancy
2. stating a correct sentence without pleonasms.
3. setting a trap.

because I happen to be familiar with ALL of the definitions of "lying" or "to lie", one of which is "to create a false impression" or "to tell lies or untruths" - see Merriam-Webster and Thefreedictionary.com - and "lie - noun" defined as "an untrue or inaccurate statement that may or may not be believed true by the speaker or writer".

But hey, apparently Fammy-o is the one with the trap

Oh daddy is going to be sleeping like a baby tonight - yes he is, yes he iiiiiss, your daddy is.

More on the rest of your posting later. But for now, you merely posited, not proved.

[jcolvin2]

Let us pose what actually might be an "extremely difficult tax question".

First, a fact pattern.

Suppose that Mary has an asset and that Mary's tax basis in that asset is $100,000. Suppose that Mary transfers that asset to Susan and that Mary receives from Susan in exchange an asset with a current fair market value of $75,000. Under current Federal tax law, Mary would have a $25,000 loss.

But, suppose that Congress has changed the Internal Revenue Code so that the concept of "basis" -- as something you subtract from gross receipts to compute gain or loss -- is simply repealed. Under the new law, the income tax is imposed on the current value of gross receipts (whether monetary or non-monetary). Now, assume that the previously described transaction between Mary and Susan occurs after the effective date of this change.

Based on this change, the Internal Revenue Service takes the position that the entire $75,000 of value realized by Mary is treated as income, and is taxed as income to her.

Mary disputes this treatment. She argues that the new law is unconstitutional. Mary argues that under the U.S. Constitution, Congress cannot tax, as income, something that is not income.

The IRS agrees that the $75,000 receipt is not income within the meaning of the Sixteenth Amendment, but the IRS argues that under the Constitution as amended, the Congress has the power to tax the receipt as income even though it is not really income.

Mary takes the government to court.

In court, who wins? Mary? Or the government?

Presumably the new gross receipts tax would be a Constitutionally permissible excise tax under the case law that rejected Pollock.

However, one might also want to consider the Max Sobel Liquor case, in which the Supreme Court held that the very definition of income was gross receipts reduced by COGS. The court might have a problem with Congress attempting to redefine a word with settled usage.

It looks like we might be revisiting these weird old controversies in Washington state, where a state court of appeals recently held that an income tax passed by the city of Seattle was a property tax (and subject to certain uniformity requirements), rather than an excise tax.

https://www.courts.wa.gov/opinions/pdf/794477.pdf

[AnOwlCalledSage]

Another playing chess with a pigeon thread.

[jcolvin2]

Another playing chess with a pigeon thread.

Wonder if the troll de jour thinks the tax code is the product of intelligent design?

[Famspear]

Presumably the new gross receipts tax would be a Constitutionally permissible excise tax under the case law that rejected Pollock.

However, one might also want to consider the Max Sobel Liquor case, in which the Supreme Court held that the very definition of income was gross receipts reduced by COGS. The court might have a problem with Congress attempting to redefine a word with settled usage.

If you're referring to Max Sobel Wholesale Liquors v. Commissioner, 69 T.C. 477 (1977), aff'd, 630 F.2d 670 (9th Cir. 1980), I don't see where the Supreme Court heard that case.

I know of some cases where courts have stated, perhaps in dicta, that the power of Congress to tax incomes is limited to the definition of "income" as that term is used in the Sixteenth Amendment. In particular, some people have cited the leading U.S. Supreme Court case of Eisner v. Macomber, 252 U.S. 189 (1920), as standing for the proposition that Congress can tax, as income, only something that is income within the meaning of the Constitution. Although I haven't reviewed this subject in a long time, I recall that not everyone agrees that this was a precise holding in the case.

And, even if it is a precise holding, not everyone agrees that the holding remains viable today. I believe that even after Eisner v. Macomber, at least one court of appeals has held that the Congressional power to impose a tax on something as "income" under the U.S. Constitution is not dependent on whether that "something" fits the constitutional definition of income.

[Famspear]

Oh, this is so wonderful that you couldn't make it up. What poor Fammy-o doesn't know is that my intention with the question was threefold, namely:

1. emphatic redundancy
2. stating a correct sentence without pleonasms.
3. setting a trap.

Answer 1: In your case, grasshopper, trying to persuade the rest of us of your supposed intellectual brilliance doesn't work -- especially after I've already called you on something.

[ . . . ] because I happen to be familiar with ALL of the definitions of "lying" or "to lie", one of which is "to create a false impression" or "to tell lies or untruths" - see Merriam-Webster and Thefreedictionary.com - and "lie - noun" defined as "an untrue or inaccurate statement that may or may not be believed true by the speaker or writer".

See Answer 1, above.

But hey, apparently Fammy-o is the one with the trap

Yes, I'm the one with the trap. That's the whole point.

Oh daddy is going to be sleeping like a baby tonight - yes he is, yes he iiiiiss, your daddy is.

No, you're not sleeping like a baby tonight.