Famspear's secret information

[Farmer Giles]

Everyone on the board has so far agreed with me:

Not even close.

yet you go on to AGREE with me...with a contradiction.

There is always a taxless alternative.

No, there are instances where a transaction does not lead to taxes and there are items excluded or deducted from gross income, but there is NOT always a taxless alternative..

if there is EVEN ONE instance then ALL trade or business can be modeled on that structure. there are MORE than one of these instances, and the odds overall in a world of otherwise equal opportunites are against the ONLY one that is the subject of "gross income".

So yes there is always a way out. Its not a loophole, though...its called the Eternal Universe. Everything else a very small mind hates to conceive. A lot of people get hung up on images and assumptions and it is my personal hobby to burst bubbles. There is no way you are going to invent an artificial system that takes in Life, The Universe, and Everything.

That the original equity is routinely discounted.

You are misusing accounting terms. Equity contributions by an owner in a company increase stockholders' equity but do not result in income.

apparently I'm using them well enough if an increase in wealth does not result in income, since thats MY STATED GOAL. I know, the accountants say: "no, you have to have income!"...i hear desperation. Next comes the 'Arguement Clinic': "no, you cant do that". I ALREADY DID. Ive yet to see even one poster simply respond with the tax consequences of a given transaction. Not the one YOU want ME to make, the one I have ALREADY DONE. So far, its Quatloos, zero. I can only surmise that there is no tax liability to spending groceries, which is what i thought.

Like, "equity contributions by an owner of personal net worth increase the stakeholders' equity but do not result in income." yeah, that works for me. Now I have something to bond. Or redeem.

That accession is different from succession.

Yes, those words have different meanings.

So tell us all about "Succession to Wealth, Fully Realized". And tell us why the law is SO SPECIFIC to use this word inevery enabling clause. Based on your understanding of the rules and definitions, what would be different if the law read instead:

"Income from any Source." Do you think it would make a difference? Why is it so crucial to restrict the concept to DERIVED?


Not that I have any hope you'd actually respond to to the matter at hand. I far more expect to see a diversion, a strawman, ANYTHING other than simply respond to a question. Thats not the Law School Way.

That the same transaction can equally be categorized in some nonliable manner, and any limitation to this is artificial. Since it can’t be found in nature, it has to come by attachment.

If the law says no, then no you cannot categorize a transaction in any manner that you see fit. See 26 USC 446. BTW, except as otherwise provided by law, the taxable income from farming of a corporation or partnership engaged in the trade or business of farming shall be computed using the accrual method of accounting.

Why the hell do i care about taxable income if I haven’t got any? You want like the so many-headed to somehow FORCE, or maybe trick, me into receiving “gross income”. F* Gross Income!!!

this stuff about bonding the grocery and crediting the owners is pure gibberish.

You’re just mad because it puts people like you out of business, and you would have to actually do something productive, like farmwork. Which leaves less room for Profit by the Exploitation of Others.

Incidentally, another example of accruing income for tax purposes is original issue discount under Section 1272 of the Code. Suppose you buy a $10,000 zero-coupon bond (i.e., a bond that pays no interest) that matures in 7 years. Because it doesn't pay any interest, the bond is sold at a discount -- that is, you will pay less than $10,000 when you buy it. The bond will increase in value over time as it approaches the maturity date, and the law requires that you report this increase in value as income. In accounting terminology, the statute requires that you use the accrual method to report the income represented by the increase in the bond's value.

I think that only applies to certain securities dealers. Post the cite and lets have a look at it. Maybe the solution is to keep the lien static and avoid the impression of income. In fact I dont need to buy any bonds at all, I need to redeem, spend, and credit and debit them.

By the way, your original claim that one can avoid taxation by mortgaging a house and allowing the lender to foreclose is pure nonsense, as Famspear has indicated. Just ask anyone who was burned in the real estate downturn of the 80's. Foreclosure can lead to very serious tax consequences. That's why the Code was amended in 2007 and 2008 to give relief to homeowners who were under water with respect to their mortgates (i.e., the home was worth less than the balance on the debt) -- otherwise, they might have to recognize income on foreclosure.

Thanks for trying to obfusticate. Famspear seems to agree with me (tho' he might not care for the reference) so if you bothered to read his responses it was clear there is at least one way for credit/default to come out tax-free. I guess you are obliquely referring to the “windfall deficiencies” from personal loan forgiveness. It’s off topic for now, but if the past is any experience you people are probably concealing the remedy there as well. Nonetheless it’s a piss-poor attempt at trying to frighten off anyone loking for remedy.

Another poster shows his color. I expect no different, but it’s telling how much effort you people make just to keep the lid on a boiling pot. Amazing it never occured to you that there is actually more money to be made in freeing people than enslaving them. You lay many burdens on men’s shoulders, but lift not a finger to remove them.

[Farmer Giles]

As near as I can tell, FG's contribution to jurisprudence is the principle that you can have a job and work without owing any taxes as long as you don't get paid.

And that's true as far as it goes, but I don't know if FG has yet figured out how to pay for food and shelter. I'm sure that once we get that teensy-weensy little detail worked out, it will all be clear as mud.

Actually thats a welcome point! As long as I dont pay for food or shelter, as long as access become success, the tax-sytem doesnt even see it happening. In other words, when you live in reality, in a secure now, and not dancing across some speculative or hypothetical territory that no one can actually prove exists, da big bad boogieman goes away!

You finally made a good post. Do you know why food and shelter dont need paying? Because they already exist. There is nothing more that can actually be done with a house but live in it, or land in OZ on top of the Wicked Witch.

[Farmer Giles]

Farmer Giles, I have not the faintest clue what you are talking about, Could you explain it, step by step, in plain English?

He doesn't know English.

colorless green ideas sleep furiously.

[Farmer Giles]

FG maybe you didn't stop in your haste to post your theory's

why dont you take your own advice and actually read some law and cases? Go find the Browns and have a look. Its an edifying experience.

Now I really can't imagine doing my own taxes when H&R Block does them for $39 it would just take too much time and effort, and I might screw something up.

if i was worried about taxes i would give the IRS power of attorney (yes, that can be done) and let them file for me, since they're so smart. thats the best "tax protest" anyone could ever do, make them walk two miles with me instead of one. This way the ball's in their court, and we'll see if they can make a coherent case. maybe they're right! but i wont pre-judge.

[Farmer Giles]

Farmer Giles, I have not the faintest clue what you are talking about, Could you explain it, step by step, in plain English?

You''ll have to more specific. that was plain English. Pick an actual point, and ask a directed question.

[Dr. Caligari]

You''ll have to more specific. that was plain English. Pick an actual point, and ask a directed question.

You said, way back, "i'll bond your grocery and credit the value. Then I'll sell at cost and avoid any gains." OK, suppose that I own Dr. Caligari's Grocery Store and Cabinet Shoppe. What, exactly, do you propose to do, step by step?

[Farmer Giles]

You''ll have to more specific. that was plain English. Pick an actual point, and ask a directed question.

You said, way back, "i'll bond your grocery and credit the value. Then I'll sell at cost and avoid any gains." OK, suppose that I own Dr. Caligari's Grocery Store and Cabinet Shoppe. What, exactly, do you propose to do, step by step?

Its a general idea and if it were something I needed the first thing I’d want is more than one qualified onion. If there’s any point to this exercise it’s showing the need for enlightenment and some sense of self-direction in order to even stand a chance of finding the right people to help you. That doesnt mean I will change in principle, because Mr/Ms.. Expert is only worth their fee if they help me on my way, not misdirect me. This is one of many alternative models proposed so far.


I have a bunch of money.

You have a Grocery Store

I credit you with the corresponding value. There is your money.

Now get to work and sell everything at full price. No profits. How no profits? You are just disposing of my collateral, its not even your problem. The receipts bypass to me. I wrote before, “at cost”, but I meant “you have no basis cost or your profits are equal to the cost”

I got my money back, and release you from further performance.

Any Gross Income?

[The Operative]

You''ll have to more specific. that was plain English. Pick an actual point, and ask a directed question.

You said, way back, "i'll bond your grocery and credit the value. Then I'll sell at cost and avoid any gains." OK, suppose that I own Dr. Caligari's Grocery Store and Cabinet Shoppe. What, exactly, do you propose to do, step by step?

Its a general idea and if it were something I needed the first thing I’d want is more than one qualified onion. If there’s any point to this exercise it’s showing the need for enlightenment and some sense of self-direction in order to even stand a chance of finding the right people to help you. That doesnt mean I will change in principle, because Mr/Ms.. Expert is only worth their fee if they help me on my way, not misdirect me. This is one of many alternative models proposed so far.


I have a bunch of money.

You have a Grocery Store

I credit you with the corresponding value. There is your money.

Now get to work and sell everything at full price. No profits. How no profits? You are just disposing of my collateral, its not even your problem. The receipts bypass to me. I wrote before, “at cost”, but I meant “you have no basis cost or your profits are equal to the cost”

I got my money back, and release you from further performance.

Any Gross Income?

Yes. It would be stupid for Dr. Caligari to borrow the amount necessary to fund his inventory and then sell the inventory at full cost and turn over the entire sales amount to you. He wouldn't make any money at all.

Dr. Caligari's store has $100,000 in inventory. That is what he paid for it. If he sold all of his inventory at the prices he has posted, assume that he would get $150,000. If he gave you a note and you gave him $100,000. He then proceeds to sell all of his inventory and forwards all receipts to you, he earns no money and his net worth has not increased.

If he gave you a note and you gave him $150,000. HE STILL HAS INCOME. Basically, this is no different than selling the inventory all to you. HE STILL HAS INCOME.

[Farmer Giles]

Any Gross Income?

Yes.

prove it.

[Farmer Giles]

I have a bunch of money.

You have a Grocery Store

I credit you with the corresponding value. There is your money.

Now get to work and sell everything at full price. No profits. How no profits? You are just disposing of my collateral, its not even your problem. The receipts bypass to me. I wrote before, “at cost”, but I meant “you have no basis cost or your profits are equal to the cost”

I got my money back, and release you from further performance.

And to finally distribute the equity, redeem everyone's share and dissolve the partnership. repeat as often as needed.

[Dr. Caligari]

I have a bunch of money.

You have a Grocery Store

I credit you with the corresponding value. There is your money.

We are going to have to take this a step at a time. How do you "credit me with corresponding money"? What do you mean? Are you going to buy my store?

[Farmer Giles]

Yes and when the credit [sic] takes possesion to affect [sic] discharge that is outside the scope of income.

You are very, very wrong. I would tell you why, except that Famspear has indicated that he will do so and I don't want to step on his toes.

he already said in the previous thread that at least full recourse loans worked this way. verify this statement.

[Farmer Giles]

I have a bunch of money.

You have a Grocery Store

I credit you with the corresponding value. There is your money.

We are going to have to take this a step at a time. How do you "credit me with corresponding money"? What do you mean? Are you going to buy my store?

Apparently not, I wrote: "credit". I wil credit or lend you the value of your whole operation, whatever is needed to finance the scope of this transaction. There is your money, youhave it. it is "loan proceeds".

[Dr. Caligari]

Apparently not, I wrote: "credit". I wil credit or lend you the value of your whole operation, whatever is needed to finance the scope of this transaction. There is your money, youhave it. it is "loan proceeds".

Fine, I have loan proceeds, which are not taxable-- if I pay the loan back in full. If I don't pay the loan back in full, I have gross income from the foregiveness of debt. If I sell my groceries and give the money to you, thus repaying the loan, you have gross income if you get back more than you loaned me. If you don't get back more than you loaned me, why would you do it?

[The Operative]

Farmer,

This has been explained to you before, but I will try one more time...

It would be stupid for Dr. Caligari to borrow the amount necessary to fund his inventory and then sell the inventory at full cost and turn over the entire sales amount to you. He wouldn't make any money at all.

For example, Dr. Caligari's store has $100,000 in inventory. That is what he paid for it. If he sold all of his inventory at the prices he has posted, assume that he would get $150,000. If he gave you a note and you gave him $100,000. He then proceeds to sell all of his inventory and forwards all receipts to you, he earns no money and his net worth has not increased. He earns no money, but you do.

Second example, if he gave you a note and you gave him $150,000. HE STILL HAS INCOME. Basically, this is no different than selling the inventory all to you. HE STILL HAS INCOME. His receipt of the $150,000 cash becomes an asset for him and he records a corresponding liability (the note to you). At that point, he does not have any income. However, as the inventory is sold, he does receive income.

Let's assume the value of all of his other assets is $1,000,000. So, his total assets are $1,000,000 + $150,000 that you loaned to him + $100,000 inventory = $1,250,000. The only liability he has is the note to you for $150,000. His owner's equity is $1,100,000.

The book value of his inventory is still $100,000. He cannot simply increase that value simply because you tell him to. In fact, under U.S. GAAP, he can't increase the value of inventory he already purchased at all due to the lower of cost or market rule. Therefore, as he sells the inventory and records revenue of $150,000, his cost of goods sold is $100,000. After the sale, and before he pays you back, he now has assets of $1,000,000 + $150,000 cash that you gave him + $150,000 cash from the sales = $1,300,000. His liabilities are still $150,000. His income is $50,000 and his owner's equity is now $1,150,000.

He withdraws $150,000 in cash and pays you for the note. His assets are now $1,000,000 + $150,000 cash from the sales. He has no liabilities since he paid you back. Therefore, his owner's equity is still $1,150,000. That is proper accounting (simplified to save space) and is what myself and others have been telling you all along. Do you finally see your error?

[Farmer Giles]

Apparently not, I wrote: "credit". I wil credit or lend you the value of your whole operation, whatever is needed to finance the scope of this transaction. There is your money, youhave it. it is "loan proceeds".

Fine, I have loan proceeds, which are not taxable-- if I pay the loan back in full.

when people go to foreclosure and there is no deficiency forgiveness, do you think this creates gross income? It does not.

If I don't pay the loan back in full, I have gross income from the foregiveness of debt.

if you leave things as they are, the whole thing just expires eventually. no one needs to forgive anything, everyone got what was wanted anyway. If the debt is forgiven well you lost the collateral as well, didnt you. See that point about foreclosures.

if I sell my groceries and give the money to you, thus repaying the loan, you have gross income if you get back more than you loaned me.

Thats why its important that that the loan equal the sales.

If you don't get back more than you loaned me, why would you do it?

Obviously I want as part of the collateral, and equity share in the loan proceeds the company enjoys, and when we redeem the partnership theres my increase, without having traversed the "fully realized" rule.

But it could be a "straw" party as well. Yes we are dealing with strawmen.

[Farmer Giles]

Farmer,


It would be stupid for Dr. Caligari to borrow the amount necessary to fund his inventory and then sell the inventory at full cost and turn over the entire sales amount to you. He wouldn't make any money at all.

yes thats the goal here. maybe its seems counter-intuitive but then again he did get satisfied with all those loan proceeds.

I mentioned a 'straw party' above I mean this legal fiction doesnt really need to make any money for itself if its only purpose is to 'end-run' the tax system. but as a marketed business it would need to capture its share of equity of course.

[Paul]

yet you go on to AGREE with me...with a contradiction.

English as a second language has met its limitations.

[Nikki]

Okay.

Grocer starts out with nothing.

You lend him $100,000.

He buys inventory, spending all $100,000, and sells it for $100,000.

He pays you back the $100,000.

A few simple questions:

Where does he get the money to keep the lights on in his store?
How does he buy the gasoline to drive from is home to his store?
Does the entire staff of the store work because they're on court ordered community service, or would they like to get paid, too? If so, where does the money come from to pay them?

[The Operative]

Farmer,


It would be stupid for Dr. Caligari to borrow the amount necessary to fund his inventory and then sell the inventory at full cost and turn over the entire sales amount to you. He wouldn't make any money at all.

yes thats the goal here. maybe its seems counter-intuitive but then again he did get satisfied with all those loan proceeds.

I mentioned a 'straw party' above I mean this legal fiction doesnt really need to make any money for itself if its only purpose is to 'end-run' the tax system. but as a marketed business it would need to capture its share of equity of course.

Nonsense. I see you didn't bother reading the rest of my post. Or, you just chose to ignore it since it contradicts everything you just said.

He doesn't get 'satisfied' because you are paying him only $100,000 for inventory that he has to sell for $150,000 to pay you back. He is gaining nothing. Not only does he not have income, he doesn't receive any money in excess of what he had before he entered the deal with you. In fact, he would have to remove EXISTING EQUITY from his store in order to have funds on which to live. However, in that transaction where he sells a $150,000 bond to you for $100,000 cash and he pays you the $150,000 at a later date, RESULTS IN INCOME FOR YOU!!!! You purchased his bond at a discount (look it up).

Your second paragraph is word salad nonsense because you do not understand what you are talking about.