Mr. White Tries...and Fails

[Cpt Banjo]

It seems Mr. Weston White has tried to explain how it is that income from illegal activities is taxable within a CtC worldview:

To begin I imagine they are referring to cases pertaining to extortion, business fraud, embezzlement, etc., which if that is the case no response is really required, as these are individuals whom [sic] are potentially engaged in a taxable activity, although such activity is simply or merely being conducted in an illegal capacity, therefore they are still liable for any imposed taxes. If they are otherwise not engaged in a taxable activity though were charged with such tax evasion or other tax related charges, along with their illegal activity did they argue a "Tax Protester", "Tax Avoidance" or other subject matter type argument?

Now if they are referring to cases pertaining to say a bank robber being liable for their 'gain', etc.. So with that are there even any such cases? For example has a shoplifting subject ever been charged with failure to pay a sales tax from their gain from theft, (either petty or grand); an auto theft suspect ever charged for failure to report income gained from the selling vehicles they stole and sold to a chop shop; an armed bank robber for failure to report income gained from their robbery escapes; a drug dealer for failure to report income gained from their selling of heroin, crack, PCP, marijuana, a monetary counterfeiter, a illegal arms dealer, a product counterfeiter, etc., etc..

Now personally I have never heard of such cases, nor am I aware of it being common practice for police officers to report or forward crimes involving such cases to the FTB or the IRS.

This all being said if one would be otherwise engaged in an activity that is taxable one would owe the tax, simply because one conducted the activity illegally or fraudulently would not preclude, presume, establish, concur, or afford protection from such taxes.

http://www.losthorizons.com/phpBB/viewtopic.php?t=1112

Not surprisingly, Mr. White has missed the point. He has also forgotten the central dogma of CtC: that the federal income tax can be legally imposed only upon income attributable to the exercise of federally privileged activity:

Instead, it amounts, in its actual application, to a tax on only a specialized subset of the larger class of income, consisting exclusively of revenues attributable to the voluntary, profitable use of federal privilege, property or powers – that is, revenues in which the federal government has a direct ownership interest, and to which it can therefore exercise a direct claim as a matter of right...

So it is by confining itself exclusively to receipts proceeding from voluntary activities in combination with the federal government, either as a worker, investor, office-holder or relief beneficiary, that the “income tax” as practiced in America does not cross the line from an indirect tax to what would otherwise inescapably be a direct tax and one which would require the mechanism of apportionment in its administration. (emphasis added)

http://www.losthorizons.com/Intro.pdf

The cases dealing with illegally-obtained income do not involve the exercise of federal privileges. To the contrary, they involve activities that are expressly prohibited by either the federal government or a state government; engaging in such activity is thus the antithesis of privilege.

Yes, Mr. White, there are cases involving criminals who didn't report their illicit gains. See United States v. Sullivan, 274 U.S. 259 (1927) (violation of Prohibition laws); Rutkin v. United States, 343 U.S. 130 (1952) (extortion -- defendant failed to report money obtained by threats to kill); Johnson v. United States, 318 U.S. 189 (1943)(defendant received graft);Humphreys v. Commissioner, 125 F.2d 340 (protection payments to racketeer and ransom paid to kidnapper); Chadick v. United States, 77 F.2d 961 (graft); United States v. Commerford, 64 F.2d 28 (bribes); Patterson v. Anderson, 20 F. Supp. 799 (unlawful insurance policies); Petit v. Commissioner, 10 T. C. 1253 (black market gains); Droge v. Commissioner, 35 B. T. A. 829 (lotteries); Rickard v. Commissioner, 15 B. T. A. 316 (illegal prize fight pictures); McKenna v. Commissioner, 1 B. T. A. 326 (race track bookmaking).

Try again, Mr. White.

[Doktor Avalanche]

I wonder how Mr. White is going to spin it when Uncle Petey reverts to form and starts throwing his followers en masse under the bus in order to save his own ass from a lengthy stint in Club Fed.

Incidently, he's responded to your last post:

My "witty" retort, nowhere exactly have I forgotten what exactly?

"Graft", an illegal or unfair gain, now that is an impressive accomplishment I must say.

[Famspear]

Weston White at losthorizons wrote:

To begin I imagine they are referring to cases pertaining to extortion, business fraud, embezzlement, etc., which if that is the case no response is really required, as these are individuals whom [sic] are potentially engaged in a taxable activity, although such activity is simply or merely being conducted in an illegal capacity, therefore they are still liable for any imposed taxes.

Paging Mr. David Merrill Not Really So Very Much Van Pelt.....
Paging Mr. David Merrill Not Really So Very Much Van Pelt.....
Please pick up the courtesy phone in the lobby.....

[Doktor Avalanche]

Just...wow:

are you ever more vigilant and motivated? Are you a "Tax Protester" or are you are Freedom Fighter at a "red" [meaning are you are are race car at a red light]?

Please, let us get this out in the open now, our worries, concerns, ect., ergo, the truth, what is on our minds. Lets talk about now, really, honestly, and truly, all of us.

After reading about PH new journey, I will begin by saying I am evermore inspired and vigilant. Full pull, heck even full throttle, if you will!

Now who is with me? Be honest now!


Alright, still with me let us begin, these are exciting times now, are they not!

Question one, is a person that is worried, productive?

Question two, who here considers myself to be productive (it is OK, even if you work for the IRS, you can admit it, I will not hold it against you, really.)?

Question three, do you consider yourself to be productive?

Question four, in regards to PH current predicament do you consider yourself any combination of the following: scared/frightened/worried/afraid, or anything remotely bearing the similar?

Question five, does the U.S. Treasury and/or the IRS scare, frighten, worry, or make you afraid?

Question six, do you understand the following? ...

"
Who is the judge?
"The judge is God."
And why is he God?
"Because he decides who wins and looses, not my opponent."
And Who is your opponent?
"He doesn’t exist."
And why doesn’t he exist?
"Because he is a mere descending voice of the truth that I speak!"
That is right, speak the truth!
" - The Great Debates

If so please post your impression of that quote... thank you.


If you are a diehard CtCer, I 100% expect you to post in this thread, no excuses, period!

[Doktor Avalanche]

Wow! Weston never fails to keep entertaining:

Ask your broker to show you the federal connection to ING prior to when the feds bailed them out about what 2-months ago?

Other then that, unless there is an established federal nexus, none of that money belongs to the IRS and regardless on that of any realized gains.

As far as forms go, forms are not law, the source is the law.

[ASITStands]

Memo to Weston White:

You can register at the Quatloos forum and post your objections and comments firsthand.

Memo to Quatloos regulars:

Are we having fun exchanging barbs with a man who refuses to face us directly?

Kind of makes you wonder whether he's whistling past a graveyard or just plain nervous. The very fact he will not address the questions directly shows he's uncertain of his position.

Meanwhile some of you are either having too much fun or are simply not busy enough.

[Doktor Avalanche]

Meanwhile some of you are either having too much fun or are simply not busy enough.

It's my day off.

[Imalawman]

Meanwhile some of you are either having too much fun or are simply not busy enough.

It's my day off.

There's also "I'm looking for any excuse not to do all the work that I have piled up".

[webhick]

Meanwhile some of you are either having too much fun or are simply not busy enough.

I'm reading the forum during those five minute spans of time between donors and hoping that I'll have a "House" moment and magically find a way to fit 50 turkeys in freezers already loaded with 12 turkeys, and 52 pies, a couple dozen cakes, and about 20 loaves rolls of garlic bread. It's a real shame that Observer stole Igor from me. He knew the passcode to the portable space manipulator.

Now, if you'll excuse me, I think a freezer popped open.

[Cpt Banjo]

Incidently, he's responded to your last post:

My "witty" retort, nowhere exactly have I forgotten what exactly?

"Graft", an illegal or unfair gain, now that is an impressive accomplishment I must say.

The whooshing sound you hear is the point flying over White's head. I can't figure out if he is just too dense to grasp it, or whether he's simply avoiding it like all of the other CtC'ers.

Where's the federal privilege in kidnapping, Mr. White?
Where's the federal privilege in threatening to kill someone?
Where's the federal privilege in stealing money?

[Famspear]

Wow. Weston White appears to be on the verge of emotional meltdown now. He's started a new thread at losthorizons called Are you scared/frightened/worried/afraid or..., and here is his first post in the thread....

are you ever more vigilant and motivated? Are you a "Tax Protester" or are you are Freedom Fighter at a "red" [meaning are you are are race car at a red light]?

Please, let us get this out in the open now, our worries, concerns, ect., ergo, the truth, what is on our minds. Lets talk about now, really, honestly, and truly, all of us.

Take it easy, Weston! Breathe slowly and deeply.... slowly and deeply.

He continues:

After reading about PH new journey, I will begin by saying I am evermore inspired and vigilant. Full pull, heck even full throttle, if you will!

Ah, you mean, in the "Cracking the Code" sense of ever more inspired? Like Patrick Michael Mooney, who claims he took his Tax Court defeat as evidence and even further confirmation that Pete is right in everything he writes about the tax law?

Now who is with me? Be honest now!

This ain't as easy as you thought it would be, is it?

Alright, still with me let us begin, these are exciting times now, are they not!

Yeah, we can understand why those who have gotten themselves stuck head first into the losthorizons rabbit hole would be a little excited at this point, considering what you people over there are facing.

Question one, is a person that is worried, productive?

Weston, your sweat is showing.

Question two, who here considers myself to be productive (it is OK, even if you work for the IRS, you can admit it, I will not hold it against you, really.)?

Weston, it's getting worse.....

Question three, do you consider yourself to be productive?

I think that psychologists refer to this as decompensation. In the zoo, it's when the monkeys get so aggravated and upset that they start bouncing frantically off the walls of the cage.

Question four, in regards to PH current predicament[,] do you consider yourself any combination of the following: scared/frightened/worried/afraid, or anything remotely bearing the similar?

Gosh Weston, on this kind of thing, you know, if you feel the need to have to ask the question about others, you already know the answer with respect to you, yourself.

Question five, does the U.S. Treasury and/or the IRS scare, frighten, worry, or make you afraid?

Does the IRS scare, frighten, worry, or make Pete's followers afraid? Aw, come on now, that would never happen!

Question six, do you understand the following? ...

"
Who is the judge?
"The judge is God."
And why is he God?
"Because he decides who wins and looses [sic; why is it that so many tax protesters cannot spell the word "loses"?], not my opponent."
And Who is your opponent?
"He doesn’t exist."
And why doesn’t he exist?
"Because he is a mere descending voice of the truth that I speak!"
That is right, speak the truth!
" - The Great Debates

[ . . . ]

Ah, we're bakin' now, aren't we Weston? Mr. Mouth is running at 90 miles an hour, and we have no idea what he's sayin', or why he's sayin' it, do we?

Yes, Crackheads, some of you may have your **ses in a serious sling. Weston here is so upset, he's seriously on the verge of calling on God for deliverance.

If you are a diehard CtCer, I 100% expect you to post in this thread, no excuses, period!

In other words: "Hellllppppp! Helllppppp! Hellllppppp! Helllppppp! Hellllppppp! Helllppppp!"

[The Observer]

Like Patrick Michael Mooney, who claims he took his Tax Court defeat as evidence and even further confirmation that Pete is right in everything he writes about the tax law?

This is another statement that I cannot make sense out of. What would it have meant to Mooney if he had won his Tax Court case - that Pete was wrong about everything? And if Pete was wrong, and Mooney based his case on what Pete was wrong about, then how could he have won in the first place?

I sometimes wonder if we haven't somehow received a bunch of immigrants from Planet Bizarro where this kind of logic would work.

[Famspear]

Cpt Banjo wrote:

Where's the federal privilege in kidnapping, Mr. White?
Where's the federal privilege in threatening to kill someone?
Where's the federal privilege in stealing money?"

Weston White then asked:

So, anyone know the answer, anybody know where the taxable activity exists, if any?

This had the losthorizontals concerned. Finally, John J. Bulten responds:

Pretty simple. There isn't any, just like in every other case where private gains were taxed.

http://www.losthorizons.com/phpBB/viewtopic.php?t=1112

That's correct, John.

Now, watch John proceed to concoct another Bultenesque fantasy to explain it all away... (and here he goes....)

Instead, the taxable nature (i.e., the federal privilege) is routinely taken by the court to follow naturally from something in the taxpayer's own admissions or actions (a notable example being Dick Simkanin). Even in Commissioner v. Groetzinger (USSC, look it up), the Supremes didn't have any admitted term of art to hang their hats on, and were arguing about "trade or business" itself in relation to gambling winnings and losses; but since Groetzinger tried to deduct his losses via 1040, that itself was taken as demonstrating an admission that his activity sought "income", which proved its taxability, because "income" in the 16th can only mean income within Congressional jurisdiction to tax. The terms of art are always present. As usual, Banjo makes an excellent-sounding argument on a faulty premise.

Typical Crackhead behavior: Make up your own fantasy theory about what the court decided.

Bulten nervously closes with this last sentence:

Best to move on entirely.

This is not a happy time to be a follower of Pete Hendrickson.

[jg]

On the contrary, the true CtCer is commanded to ignore all such inconvenient items without inspection, discussion or debate:
[quote="Hendrickson in A Word To CtC State And National Forum Participants"
"]At the risk of vulgarity, I will say as plainly as possible what I have by necessity said many times before, but usually with more circumspection (and can't seem to say often enough): Any and all notions concerning the nature of the "income" tax-- how it is applied, why it can be thus applied, how it interfaces with the legal system and so forth-- which are not taught in CtC or on this site (exclusive of forum posts, of course) are just inherently wrong or are entirely irrelevant to the tax. They are raised or promoted either in ignorance or for ill purposes.

Such notions should not be debated or discussed-- doing either is a waste of valuable time and energy. There is one simple response that is appropriate when presented with "alternative" or "supplemental" notions of this sort: "You didn't find that in CtC or on losthorizons.com, so put it out of your mind. Here is what is actually true about that aspect of the tax..." If this gentle approach isn't effective, direct your correspondent to 'The Deniers Page'. If that doesn't suffice, let me know so that I can remove this individual-- now revealed as either uneducable or a deliberate "agent provocateur"-- from the forum.[/quote]

[wserra]

Instead, the taxable nature (i.e., the federal privilege) is routinely taken by the court to follow naturally from something in the taxpayer's own admissions or actions (a notable example being Dick Simkanin). Even in Commissioner v. Groetzinger (USSC, look it up) [480 U.S. 23 (1987) - wserra], the Supremes didn't have any admitted term of art to hang their hats on, and were arguing about "trade or business" itself in relation to gambling winnings and losses; but since Groetzinger tried to deduct his losses via 1040, that itself was taken as demonstrating an admission that his activity sought "income", which proved its taxability, because "income" in the 16th can only mean income within Congressional jurisdiction to tax. The terms of art are always present. As usual, Banjo makes an excellent-sounding argument on a faulty premise.

The contortions are comical. The Supreme Court doesn't so much as muse in passing as to whether Groetzinger's gambling winnings are income. That is completely taken for granted. The "trade or business" issue, of course, determines whether his gambling losses are fully deductible as a business expense per 26 USC 162(a), or are limited as a tax preference. The Court says as much in the very first sentence of the opinion: "The issue in this case is whether a full-time gambler who makes wagers solely for his own account is engaged in a “trade or business,” within the meaning of §§ 162(a) and 62(1) of the Internal Revenue Code of 1954, as amended, 26 U.S.C. §§ 162(a) and 62(1) (1976 ed. and Supp. V)."

Best to move on entirely.

I can see why he would feel that way.

This is not a happy time to be a follower of Pete Hendrickson.

Indeed. Lost Horizons must resemble the appendicitis ward at a Christian Science hospital.

[ASITStands]

Best to move on entirely.

So, is he tacitly admitting he doesn't know what federal privilege is involved?

Instead, the taxable nature (i.e., the federal privilege) is routinely taken by the court to follow naturally from something in the taxpayer's own admissions or actions (a notable example being Dick Simkanin). Even in Commissioner v. Groetzinger (USSC, look it up), the Supremes didn't have any admitted term of art to hang their hats on, and were arguing about "trade or business" itself in relation to gambling winnings and losses; but since Groetzinger tried to deduct his losses via 1040, that itself was taken as demonstrating an admission that his activity sought "income", which proved its taxability, because "income" in the 16th can only mean income within Congressional jurisdiction to tax. The terms of art are always present. As usual, Banjo makes an excellent-sounding argument on a faulty premise.

And, what exactly does he mean? That the Court 'traps' the taxpayer in his own admissions?

There wasn't any term of art regarding "trade or business" to hang their hat on, so the Court 'trapped' the taxpayer into admitting, "Aha! He filed on a form 1040, so it must be income!"

'Cracking the Code' proponents file on form 1040. Are those admissions of taxable activity?

Sometimes the logic fails all around, and you're left with nothing but a bunch of hot air.

[Cpt Banjo]

Instead, the taxable nature (i.e., the federal privilege) is routinely taken by the court to follow naturally from something in the taxpayer's own admissions or actions (a notable example being Dick Simkanin). Even in Commissioner v. Groetzinger (USSC, look it up), the Supremes didn't have any admitted term of art to hang their hats on, and were arguing about "trade or business" itself in relation to gambling winnings and losses; but since Groetzinger tried to deduct his losses via 1040, that itself was taken as demonstrating an admission that his activity sought "income", which proved its taxability, because "income" in the 16th can only mean income within Congressional jurisdiction to tax.

Even for the crackheads, this response is pathetic. First of all, a federal privilege isn't "routinely taken" by the courts to follow from anything the taxpayer does for the simple reason that since no court in history has ever held that a federal privilege is required for income taxation, they don't analyze income tax cases in such terms.

Second, Bulten mischaracterizes the Groetzinger case (a TP misrepresents a case? I'm shocked, shocked!), which involved the sole question of whether Mr. Groetzinger was in the trade or business of gambling for purposes of the alternative minimum tax (AMT). The issue wasn't, as Bulten suggests, whether Groetzinger's winnings were taxable (he had a net loss from his wagering activities). Instead, it was whether Groetzinger's loss was incurred in a trade or business; if it was, he owed no AMT, but if it wasn't, he did. The Court held that it was and never referred to the bogus concept of "federal privilege".

Third, Bulten once again raises the TP myth of "Congressional jurisdiction to tax", as if there were some kind of income Congress can't tax or as if there were any judicial authority anywhere supporting such a ridiculous claim.

Bulten probably knows better, but he has to do something to satisfy the concerns of the mental midgets at LH. Hence his admonition to move on ("Pay no attention to those illegal-income cases behind the curtain!").

[LPC]

Instead, the taxable nature (i.e., the federal privilege) is routinely taken by the court to follow naturally from something in the taxpayer's own admissions or actions (a notable example being Dick Simkanin). Even in Commissioner v. Groetzinger (USSC, look it up), the Supremes didn't have any admitted term of art to hang their hats on, and were arguing about "trade or business" itself in relation to gambling winnings and losses; but since Groetzinger tried to deduct his losses via 1040, that itself was taken as demonstrating an admission that his activity sought "income", which proved its taxability,

As wserra has pointed out, Bulten's argument about Groetzinger is specious because whether or not gambling winnings were income was not at issue in the case.

But Bulten's argument is specious in two more important other ways:

1. Bulten cited the Groetzinger case to illustrate his claim that courts will find "taxable nature (i.e., the federal privilege)" in "something in the taxpayer's own admissions or actions," but how would Bulten explain a case such as Sullivan (cited by Capt. Banjo at the beginning of this thread) in which the taxpayer filed no income tax return and was convicted of willfully failing to file an income tax return?

2. Even if the taxpayer has filed an income tax return, such as in the Rutkin case (also cited by Capt. Banjo at the beginning of this thread), how does the filing of an income tax return that does NOT report income from illegal activities constitute any kind of admission that the unreported income is taxable?

Capt. Banjo cited 11 cases at the beginning of this thread, and Bulten's response is a claim that is "supported" (supposedly) by only a different case with different facts addressing a different legal issue.

[Quixote]

Capt. Banjo cited 11 cases at the beginning of this thread, and Bulten's response is a claim that is "supported" (supposedly) by only a different case with different facts addressing a different legal issue.

A TP trifecta.