Taxguy
http://www.petermacshow.com/challenge/
wick
Tax attorney, Please write your analysis of Larken’s work and post it on a website or here in complete form. I hope it makes more sense then what you have stated already.
It is amazing how you have brutalized this citation. Here’s the original phrase in the law and then the numerous ways you try to change it.
“The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections.” [26 CFR § 1.861-8(a)(1)]
But according to Tax Law it doesn’t mean that, he takes out the words ‘sources and activities’…
T.A. “Allan, I want you to read this closely. It says UNDER other sections of the code, referred to as operative sections.”
Now he thinks that it says under an operative section.
T.A. “we are required to look at sources or activities “under” an operative section.”
Oops, this time he gets rid of the words ‘referred to in this section as’ and substitutes a hyphen.
T.A. “It says income from specific sources and activities UNDER other sections - operative sections.”
And again.
T.A. “It says income from specific sources and activities UNDER other sections - operative sections.”
T.A. “You simply cannot pick and choose the words you like to fit your agenda.”
T.A. “Why don’t you just admit you are wrong?”
T.A. “Allan insists that operative sections are the same thing as “sources or activities.” “
According to Larken….
Each item on the list mentions a
section of Subchapter N (with one exception). Those sections mentioned
(like Section 871(b)) are “operative sections.” Each “operative section”
describes a “specific source or activity.” For example, Section 871(b)
talks about nonresident aliens doing business in the U.S. So, in that
example:
Operative section = Section 871(b)
Specific source or activity = nonresident alien doing business in U.S.
Statutory grouping = income from nonresident alien doing business in U.S.
(as described in 871(b))
Such income is taxable under 1.861-8.
Paragraph (f)(1) is a list of “operative sections” AND “specific sources and
activities.” Each items on the list gives a section number AND describes
the exact type of commerce (i.e. “specific source”) dealt with in that
section.
Now on to 1.861-8T(d)(2)(i)
T.A. “Allan - the rules Larken cites follow 1.861-8T(d)(2)(i)…and 1.861-8T(d)(2)(i) specifically addresses the rules that FOLLOW…which means, all the “stuff” Larken cites comes AFTER 1.861-8T(d)(2)(i). So when 1.861-8T(d)(2)(i) tells us about the rules Larken is citing - don’t you think its “kind of” important to read what they say?”
1.861-8T(d)(2)(i) (d) Excess of deductions and excluded and eliminated items of
income.
(1) [Reserved]
(2) Allocation and apportionment to exempt, excluded or eliminated
income–(i) In general. In the case of taxable years beginning after
December 31, 1986, except to the extent otherwise permitted by
Sec. 1.861-13T, the following rules [the following rules are A and B, not (f)(1). T.A. -“the rules Larken cites follow 1.861-8T(d)(2)(i)…and 1.861-8T(d)(2)(i) specifically addresses the rules that FOLLOW” ]shall apply to take account of income that is exempt or excluded, or assets generating such income, with respect to allocation and apportionment of deductions.
This is a following rule Allocation of deductions. In allocating deductions that are
definitely related to one or more classes of gross income, exempt income
(as defined in paragraph (d)(2)(ii) of this section) shall be taken into
account.
This is the other following rule Apportionment of deductions. In apportioning deductions that are definitely related either to a class of gross income consisting of
multiple groupings of income (whether statutory or residual) or to all
gross income, exempt income and exempt assets (as defined in paragraph
(d)(2)(ii) of this section) shall not be taken into account.
For purposes of apportioning deductions which are not taken into account
under Sec. 1.1502-13 in determining gain or loss from intercompany
transactions, as defined in Sec. 1.1502-13, income from such
transactions shall be taken into account in the year such income is
ultimately included in gross income.[Now we are at the end of the ‘following rules’]
Here is a new section of law that defines exempt assets, notice that it does not start with C. Notice how it has a new description for the new section and it plainly states what that section does. Exempt income and exempt asset defined–(A) In general. For
purposes of this section, the term exempt income means any income that
is, in whole or in part, exempt, excluded, or eliminated for federal
income tax purposes. The term exempt asset means any asset the income
from which is, in whole or in part, exempt, excluded, or eliminated for
federal tax purposes.
(B) Certain stock and dividends……”
I know you feel like this citation rebuts Larken’s work, but I feel there is a major flaw in claiming that 1.861-8T(d)(2)(ii) Is an extension of rules A and B from 1.861-8T(d)(2)(i).
My friends and I have a running joke about who can be the most condescending at any given moment. I fear you would put us all to shame.
I have a gig at Lake Havasu and won’t be back for a few days. I don’t think I’m going to see any girls gone wild, so it will just be me gone wild.
Have a good weekend.
Wick
Correction… “the following rules are A and B, not (f)(1).” I meant (2)(ii) instead of (f)(1).
Wick
Um, I was kidding by the way. Trying to reason with irrational people is not my idea of a good time.
As I have already pointed out, the challenge as written is worthless tripe. Notice that the host of the show gets to determine who is eligible and whether the answers are acceptable. If you look farther into the challenge, you see that the challenge changes from simply answering the questions to participating in some sort of “discussion”, the likes of which are not described. Will this discussion be between the host and the challenger, the challenger and callers, or all three? Also, the challenge is that the challenger must stick around until the entire “discussion” on all points is finished, no matter how many days it takes. It would be like entering a race without knowing what the rules were, what the length of the race was, while knowing that one of the people I was racing against gets to determine who the winner was. :rolleyes:
Czarcasm, a CPA or Attorney can arrange to call and debate Larken on the air for free.
As far as the challenge being worthless tripe, $2000 would be a lot to pay a tax expert to come in and say it’s frivolous because it’s frivolous without attempting to support the argument. You must admit the party offering the money must be able to make some stipulations. I do partially share your opinion that it doesn’t have an unquestionable appearance of fairness.
TaxAttorney “allow me to submit my analysis of the 861 argument to a neutral third party - say, a tax law professor of your choice from any ABA accredited law school. Sound good? Allow Larken to submit his argument to the same judge, and we’ll let the judge decide.”
This challenge sounds interesting to me except that the Implications of a law professor publicly upholding an analysis such as Larken’s may eliminate such a professor from being neutral. As the DOJ itself claims in U.S. vs Bell … “There is a substantial threat that the United States will suffer irreparable harm…” and “The threatened injury to the United States outweighs any injury an injunction will cause” . I don’t think a law professor could judge in favor of Larken as easily as for Taxattorney based on a reasonably foreseeable backlash having nothing to do with the words in the law but rather the political fallout. Still I will investigate the possibilities of such a challenge.
Wick