Exempt income

Exempt income and exempt asset defined

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

Want to find definition yourself?

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

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

Exempt incomes are not listed. Why?

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

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).
  - CFR Sec. 1.861-8T(d)(2)(iii)

Income that is not exempt is taxable income. Do you earn any?

Only One definition

Because United States tax laws are codified, there is only One definition for Exempt Income, and Income that is not.

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

Can any other definition be more relevant or needed for determining an income tax?

Why aren't these required code definitions followed and obeyed by 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 United States Constitution,
"The Congress shall have Power To lay and collect Taxes."

So, why doesn't Congress know where Exempt income and Income that is not are defined? Are they pretending to not know? Don't they file taxes? How would they know what is taxed? Ask them, its their power to lay and collect. They must keep a list somewhere.

Ask your lawmaker, if you have the Power, why are you collecting from Americans not making any taxable income - Income thats not exempt?   And, because they don't know where they had defined Exempt income and Income that is not, you'll need to show them.

➜   If your politician (public servant) tells you its frivolous, tell them:

1. It's codified
2. Follow the law
3. Obey the law

Follow the law & obey

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's excluded?

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

✅ specific treatment for any item of income

✅ notwithstanding section 61 (in spite of)

✅ any gross income that is excluded by law

Excluded by what law?

Which gross incomes are taxable income? Which gross incomes get specific treatment and have deductions allowed?

✅   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
  (A) Foreign taxpayer ... gross income
  (B) International and Foreign sales corps
  (C) Dividends for which a deduction is allowed
  (D) Foreign earned income
  (E) Inclusions for which a deduction is allowed

Is your income taxable (not exempt), or was it excluded by law?

Did you notice?

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

Which do you have?
☑

☐ 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

Did you notice, 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, then name it Income not exempt?

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 we've earned from January 1st to mid-April to represent our average yearly tax bill. It means ~33% of our working years are used just to pay U.S. government's various taxes. (In New York its mid-May, 36%). The result? One day is spent to pay tax from each 3 days worked - 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 codified list of taxable income, why is it taxed?

Who is hiding law?

The tax imposed is upon taxable income.

Why has taxable income been renamed as "Income that is not considered tax exempt?"

If a tax is imposed upon taxable income, shouldn't the list of "taxable income" be written and codified using its actual name ... Taxable income? Why is renaming definitions legal?

Who would hide the list of taxable incomes in tax law under a different name: the Treasury, Fed, judges, politicians, tax collectors in IRS?   U.S. income tax is now worth approximately $3 trillion per year. Who profits?

Ignorantia juris non excusat

Refunds are due!

Own and control

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

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

Politicians are public servants, and only temp employees, not owners. Tell your servants to obey tax law; theft will not be tolerated. And, ask for your money back. (Isn't it yours?) Then show friends, neighbors, and co-workers their required, codified, income tax definitions ... Exempt income and Income that is not

Look, again. Is your income on the list?

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