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Chapter2_2of3 - Chapter 2(Part 2 of 3 Tax Practice and...

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Chapter 2 ( Part 2 of 3) Tax Practice and Research
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PRIMARY AUTHORITIES STATUTORY SOURCES OF FEDERAL TAX LAW
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S T AT UT ORY Sources of Federal Tax Law THE SOURCE It all starts here! The halls of Congress
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S T AT UT ORY Sources of Federal Tax Law S T AT UT ORY Definition Enacted, regulated, or authorized by statute. Statute: a law enacted by a legislature Unlike GAAP, these tax rules have legal authority. Three sources of statutory tax law 1. Constitution 2. Treaties 3. Acts of Congress
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Here are two examples of “laws” or provisions related to the income tax enacted by Congress. Section 61 Gross income defined . (a) General definition. Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: . . . Section 162 Trade or business expenses . (a) In general. There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including—
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Constitution 16th Amendment ratified February 3, 1913 authorizes Congress to impose taxes Amendment XVI The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration S T AT UT ORY Sources of Federal Tax Law
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I was President when the 16 th amendment was ratified Woodrow Wilson (1856-1924) 1912-1920: 28th president Democrat Professor Princeton (1879) PhD Johns Hopkins (1886) (History, Political Science)
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Check out these recent “constitutional issues.” Note that today it is rare to see a tax issue involving the constitution. RECENT NONTAX CONSTITUTIONAL ISSUES : Is death penalty for juveniles (< 18 at time of offense) unconstitutional ? Supreme Court said death penalty for juveniles is unconstitutional (3/1/05) Are dog searches of a car stopped for a traffic violation unconstitutional ( i.e., a violation of our right to privacy under the Fourth Amendment)? Supreme Court said dog searches are allowed (1/24/05) Is it unconstitutional to display the Ten Commandments on public property? Do candidates, committees, special interest groups and individuals have the constitutional right to spend all the money they wish for campaign advertisements?
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Constitution (16 th Amendment in 1913) We are a nation born of tax protestors (remember the Boston Tea Party) and some have continued to argue that the income tax is unconstitutional but with no success Check Internet for: unconstitutional income tax S T AT UT ORY Sources of Federal Tax Law
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The 16th Amendment is moot. The so-called 16th Amendment legalizing income tax was most probably never fully ratified and therefore does not exist. But even if it does, two Supreme Court cases ruled it moot. The 16th Amendment is nothing more than double talk. The IRS operates on 90 percent bluff. But that is only the first part.
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