Statutory Gross Income: Another Look

Subjugation by taxation

Table of Contents

I wrote this in regard to IRC section 61:

"All income from whatever source derived" is a phrase you will see again in another chapter. This phrase has a specific meaning under the U.S. Constitution. As such it has specific limits as to what it covers. Section 61 is written so that the average reader will think "income" means revenue, receipts, or "all that comes in".

The Supreme Court tells us that the phrase "All income from whatever source derived" has a specific meaning:

COMMISSIONER v. GLENSHAW GLASS CO., 348 U.S. 426 (1955) at footnote 11:

"In discussing 61 (a) of the 1954 Code, the House Report states:

"This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby.

Section 61 (a) is as broad in scope as section 22 (a).

"Section 61 (a) provides that gross income includes `all income from whatever source derived.' This definition is based upon the 16th Amendment and the word `income' is used in its constitutional sense." H. R. Rep. No. 1337, supra, note 10, at A18. A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168."

House Ways and Means Committee, in a report to accompany H. R. 8300, a bill to revise the Internal Revenue Laws of the United States, Now known as the 1954 Internal Revenue Code, Dated March 9, 1954 states:

“Section 61. Gross income defined. This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of the statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22 (a). Section 61 (a) provides that gross income includes "all income from whatever source derived." This definition is based upon the 16th Amendment and the word "income" is used in its constitutional sense.”

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Senate Committee on Finance, in a report to accompany H. R. 8300, a bill to revise the Internal Revenue Laws of the United States, Now known as the 1954 Internal Revenue Code, Dated June 16, 1954 states:

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         Statutory gross income existed BEFORE the Constitutionally defined "All income from whatever source derived" phrase was included in the definition of Statutory gross income.

        In the last chapter, you examined how "All income from whatever source derived" can only mean "All [Return on Investment Income] from whatever source [investment] derived".

        Items of generic income such as compensation for services come from a different source². A source² that is not included in the "whatever source¹" of section 61. With this new understanding, you probably should go back and re-read the chapter on the 861 evidence.

"All income^x from whatever source¹ derived" does NOT mean "all income^y from whatever source² derived."

Income^x - "Return on Investment".
Source¹ - Invested property.
Income^y - Generic meaning
Source² - Activity

With a proper knowledge of the U.S. Constitution in your mind, you can re-read IRC section 61 and clearly see the obfuscation and legerdemain.

Internal Revenue Code
Sec. 61. Gross income defined

(a) General definition
Except as otherwise provided in this subtitle, [statutory] gross income means all [return on investment] income from whatever [investment] source derived, including (but not limited to) the following items [of gross income]:

(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) [generic] Gross income derived from business;
(7) Dividends;

        With the word "source" in section 61 properly understood to mean the source of investment return, you now understand that the word income in section 61 is NOT the generic meaning of income.

          Section 61 does NOT automatically make every single dollar of generic income you receive into statutory "gross income". From now on, you must remember the Constitutionally defined meaning is not the same as the generic meaning. Likewise a statutory definition is not the same as the generic meaning.

        From section 61 we get a statutory definition that reads in effect like this:

Gross income includes but is not limited to gross income derived from business.

It appears senseless until you understand that generic income is not statutory income. Law does not act upon generic definitions when statutory definitions are provided. The parse above is the case of taking a specific generic meaning of income and corralling it in the statutory meaning of gross income.

There is Constitutional income and there is generic income.
There is statutory gross income and there is generic income.
There is statutory taxable income and there is generic income.
Statutory gross income, statutory taxable income, and Constitutional income can all be referred to generically as income.

Internal Revenue Code
Sec. 61. Gross income defined

(b) Cross references
For items specifically included in [statutory] gross income, see part II (sec. 71 and following). For items specifically excluded from [statutory] gross income, see part III (sec. 101 and following).

A previous question asked can now be answered.

If gross income means all income from whatever source derived, why would there be a need to specifically include certain items in gross income?

Because the income described by "all" is return on investment (Constitutional) income brought into the statutory definition. This does NOT bring other monetary items of generic income into statutory gross income.

This certainly puts the Treasury Regulations that interprets the IRC statutes in a different light.

U.S. Federal Income Tax

Subjugation by taxation

Statutory Gross Income: Another Look