The Education Of Bobby Evans
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The Education of Bobby Evans [Bobby]
Bobby Evans.
[dad]
How you doing, Bobby.
[Bobby]
Hi, Dad, good to hear your voice.
[Dad]
You got a minute?
[Bobby]
Sure, what’s up.
[Dad]
Can we talk safely?
[Bobby]
I don’t know why not; everybody else has gone home.
[Dad]
What I mean is, are we on a safe phone?
[Bobby]
Well, I think that…
[Dad]
Then there’s no spyware in your computer, is there?
[Bobby] Daddy, I think I’m high enough up the food chain; I don’t get monitored anymore, why what’s the problem? [Dad] I’m going to want you to click on some web pages you maybe wouldn’t want certain parties to know you clicked on. [Bobby]
What in the world are you talking about?
[Dad] I just don’t want you getting in any trouble because of me. This is potentially explosive. Maybe we ought to meet in the lobby at the Marriot. I can bring my laptop. [Bobby]
Oh, come on, Daddy I’m as safe here as anywhere. What’s this about.
[Dad] Snipes?
Wesley Snipes, that’s what I’m calling about. You know about Wesley
[Bobby]
Yeah.
[Dad]
Are you involved in that prosecution?
[Bobby] one.
No, that’s out of the Tampa office. I know the guys but, no, I’m not on that
[Dad]
Bobby, I’m telling you this case is going to blow up in their face.
[Bobby]
What do you mean?
[Dad]
Have you looked at the indictment?
[Bobby]
Not really, I read about it in the Sentinel.
[Dad]
Are you at your computer?
[Bobby]
Yeah.
[Dad]
Well, get the indictment on the screen.
[Bobby]
Ok. Wesley Snipes. Indictment—ok.
[Dad]
Yeah, I want you to scroll down, now, to page five.
[Bobby]
Alright, page five, the conspiracy charge.
[Dad]
Scroll down to manner and means.
[Bobby]
Manner and means.
[Dad] See where it says the other two guys used deceit, craft, trickery and dishonest means to make it appear as if defendant Snipes had no liability for federal income taxes when, in fact, defendant Snipes had such liability. [Bobby]
Yeah, yeah, they said in that 861 argument…
[Dad]
But the important thing is you say Snipes had tax liability.
[Bobby]
Sure he had tax liability; the guy made millions.
[Dad]
Scroll down, now, to page ten.
[Bobby]
Page ten.
[Dad] The bottom line is all that deceit and craft and trickery is making it appear that he had no liability for taxes is a violation of Title 18, Section 371, see that? [Bobby] Right, right, conspiracy to defraud the United States. I mean, you can’t make millions and then come up with a scheme saying you don’t have to pay taxes. The guy’s a crook, Daddy. [Dad]
No, the jury decides whether or not he’s a crook.
[Bobby]
Well, we think he’s a crook.
[Dad] I’d save that for closing arguments, son. You know, long before closing arguments you got to have an indictment. [Bobby]
Well, we got an indictment.
[Dad] What the indictment really says is that Wesley Snipes never had a tax liability and if he never had a tax liability he couldn’t have violated Section 371. [Bobby]
How do you get that? That sounds crazy.
[Dad] Well, I’m going to show you how crazy. I’d like you to scroll down to page twelve. [Bobby]
Alright, that would take us to counts three through eight.
[Dad] Yeah, these are the failure to file charges that the conspiracy and fraud counts are based on. If Wesley’s innocent of failure to file, well then the conspiracy and fraud can’t stand and your prosecution is dead in the water. [Bobby]
Well, so where do counts three through eight say there’s no tax liability?
[Dad] Read it carefully, Bobby. Defendant was required by law to make an income tax return to an authorized representative of the Internal Revenue Service stating specifically the items of the gross income and, now get this, Bobby, any deductions and credits to which he was entitled. [Bobby]
So?
[Dad]
Why did they put deductions and credits to which he was entitled in there?
[Bobby] Because the law says he’s got to state on the return any deductions and credits to which he was entitled, that’s the law. [Dad]
Of course, it’s the law. Have you ever looked at that law?
[Bobby]
Well, I haven’t exactly committed it to memory, Daddy.
[Dad] Well, let’s do a search. Go to your United States Code and type in quotation marks, deductions and credits, in quotation marks. Got it? [Bobby]
Deductions, credit—ok.
[Dad]
Well, how many articles you get?
[Bobby]
Only sixteen.
[Dad] Sixteen mentions of deductions and credits in the entire US Code and note that they’re found only in Title 26. [Bobby]
Sure, the Internal Revenue Code.
[Dad]
Ok, let’s start clicking on the articles. What does the first one say?
[Bobby] Subchapter ten, tax based on income from source within or without the United States, non-resident aliens and foreign corporations. Foreign corporations—here it is, Section 882, tax on income of foreign corporations connected with United States business. [Dad]
So, is Wesley Snipes a non-resident alien or a foreign corporation?
[Bobby]
Could be, I don’t know.
[Dad] Well, your indictment says he’s a resident of Florida and if you go to his fan site you can find out that he was born in Orlando. So, unless your people can show he’s expatriated or incorporated himself on foreign soil I’m going to have to think that Wesley Snipes is a US citizen, not an alien. [Bobby]
Well, they may have evidence.
[Dad]
I don’t think they do or they’d have included it in the indictment.
[Bobby]
Well, maybe, I don’t know.
[Dad] Well, scroll, now, down to Section 882 and the deductions and credits part, past the imposition of tax on foreign corporations and the gross income of foreign corporations to paragraph (c). [Bobby]
Ok, allowance for deductions…
[Dad]
Read the general rule.
[Bobby]
Ok.
[Dad] In the case of foreign corporations; it says nothing about the case of United States citizens—right? [Bobby]
Well, maybe elsewhere.
[Dad] We’ll see. Part (b) lets the foreign corporations claim deductions for charitable contributions. Now read paragraph two. [Bobby]
Deductions and credits.
[Dad]
Read it out loud, Bobby.
[Bobby] Foreign corporations shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return in the manner prescribed in Subtitle (f) including therein all the information in which the Secretary may deem necessary for the calculation of such deductions and credits. Ok, so what? [Dad] Bobby, that’s the requirement to file that Wesley Snipes willfully failed to comply with. [Bobby]
No, that applies to foreign corporations.
[Dad]
Right, Bobby. It doesn’t apply to US citizen, Wesley Snipes.
[Bobby]
So where’s the deductions and credits statutes for US citizens?
[Dad] You tell me, Mr. Prosecution team. Let’s go back to those sixteen articles. It’s bound to be in there somewhere. Click on number two. [Bobby]
Wait a second—here we go.
[Dad]
You there?
[Bobby]
Yeah. Ok, section 1398, rules relating to individuals Title 11 cases.
[Dad]
Bankruptcy rules. The indictment doesn’t mention bankruptcy.
[Bobby]
Yeah, and that’s inapplicable here. Ok…
[Dad]
In section 931.
[Bobby] 931, income from source within Guam, American Samoa, the Northern Mariana Islands. [Dad] 931 applies to bona fide residents of Guam, American Samoa or the Northern Marianas. The indictment says nothing about Wesley Snipes being a resident of any of these places. [Bobby]
Alright, so we go to the next one, here.
[Dad] This is the law that says you can’t receive the benefit of deductions and credits without filing a return. Read it to me, Bobby. [Bobby] A return pre-requisite to allowance, a non-resident alien individual shall receive the benefit of the deductions and credits allowed him in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return in the manner prescribed in subtitle (f). [Dad]
That apply to Wesley?
[Bobby]
Well, somewhere there’s got to be a rule that applies to US citizens.
[Dad]
Well, let’s look at the next article, then.
[Bobby]
Ok, States, trusts and beneficiaries.
[Dad]
Would you say this section imposes any liability?
[Bobby]
No, this is just about grantors or owners of trusts being treated as in….
[Dad]
Ok, next section, 45 (f), employer provided child care.
[Bobby]
Nothing there. So let’s go to…
[Dad] Well, this section empowers the Secretary to disallow the benefit of deductions and credits to acquisitions of property made for the purpose of evading or avoiding federal income tax. This couldn’t apply to Wesley since he failed to apply for deductions and credits. [Bobby]
Right—ok. Down to…
[Dad] Section 1312, that’s about the erroneous allowance of deductions and credits to a taxpayer. Again, that’s not applicable to Wesley Snipes who didn’t seek deductions and credits. [Bobby] Well, next is 932, income from sources without the United States. Ok, treatment of United States residents—ah ha, this subsection shall apply to an individual for the taxable year if such individual is a citizen or resident of the United States. There, that’s Wesley Snipes. [Dad]
Well, keep reading.
[Bobby] And has income derived from sources within the Virgin Islands or effectively connected with the conduct of a trade or business within such possessions. [Dad]
You got evidence that Wesley’s income was sourced in the Virgin Islands?
[Bobby]
I don’t know.
[Dad] You better hope so because if not, Wesley’s off the hook, here, too. Well, let’s go down to the next article, Subpart (a), non-resident alien individuals. Scroll down and you’ll see it’s all about aliens, residents of possessions and expatriation. Nothing here would apply to Wesley Snipes or any other US citizen, for that matter. [Bobby]
Ok, ok, Section 1357.
[Dad] About determining corporate tax on international shipping activities using per ton rates. Scroll down and you’ll see this section is only about denial of deductions and credits that have been filed for and Wesley didn’t file. We only got a few more. Now, next is 1311. [Bobby]
Correction of error.
[Dad] Well, this is another section about disallowing deductions and credits that have been filed for. [Bobby] And Wesley didn’t file. Ok, next is subpart (e), grantor and others treated as substantial owners. [Dad]
Way outside the scope of Wesley’s indictment—not applicable.
[Bobby]
And then Section 482, accounting periods and methods of accounting.
[Dad] This is about allocating deductions and credit between two or more organizations, trades or businesses owned by the same interests and has nothing to do with Wesley Snipes. [Bobby] Ok, ok, now here it is. Section 269 (a), personal service corporations formed or availed of, to avoid or evade income tax. Wesley contracted with studios through loan out companies for the purposes of avoiding income taxes, we know that. [Dad] Sure he did; it’s legal to do that. He wasn’t indicted for contracting with studios through loan-out companies. All Section 269 (a) does is permit the IRS to reallocate deduction and credit allowances between service corporations and their employee owners. It doesn’t make Wesley or the loan-outs liable for filing a return and applying for deductions and credits. There’s nothing about Wesley in this section, either. And that leaves us with just one more law, Section 118. [Bobby]
Yeah, contributions to the capital of an organization.
[Dad] And in this section the only mention of deductions and credits is their disallowance again. Nothing here required Wesley Snipes to do anything. Bobby, warn
your people, their indictment charges Wesley Snipes with doing something he was never legally obligated to do unless he’s an alien or a foreign corporation or has income from the Virgin Islands or United possessions like Guam or American Samoa. [Bobby]
God almighty.
[Dad] Now, let’s go back to the first page of the Code and do a Boolean search of deductions and credits, in quote, and United States citizens, in quote. Surely if US citizens should be charged with failing to state deductions and credits there would be a law—you got it? [Bobby]
And quote, United States citizens…
[Dad]
Yeah.
[Bobby] Ok, only one article and it takes us back to section 931, the section about the Virgin Islands. [Dad] And US citizens engaged in business in the US possessions which excuses Wesley Snipes. [Bobby]
God almighty. Daddy, how did you get this stuff?
[Dad]
I had a client back in the nineties. Do you remember Jack Beasley?
[Bobby]
The name rings a bell.
[Dad] Jack tried to use 861 argument to get a refund on taxes he paid. The IRS denied his claim, just like they did Wesley Snipes. [Bobby]
Yeah, Snipes wanted refunds on like millions of…
[Dad]
Jack wanted a lot less, but hey, it’s no crime to request a refund.
[Bobby]
True.
[Dad] Then Jack stopped filing and after a couple of years the IRS sent out a special agent to question him and I looked to see how he might get charged criminally and that took me to Section 7203, willful failure to file. [Bobby]
Willful failure to file, yeah.
[Dad] So I looked to 7203 indictments filed over the past twenty years and found they’re all worded the same like Wesley’s, they all mention gross income tied to deductions and credits.
[Bobby]
So was Jack Beasley charged?
[Dad] Well, the IRS referred him to the Justice Department for prosecution and the US attorney offered us a conference. We accepted the offer and asked the IRS to bring all the evidence they had that Jack Beasley was an alien or a foreign corporation or had Virgin Islands or possessions income and a few weeks later the referral was dropped and there never was a conference. [Bobby]
That’s it?
[Dad] Well, let me put it this way, it’s been eleven years. Jack Beasley is one happy client. [Bobby]
Is he talking about it?
[Dad] but his own.
Absolutely not. I told him his income tax situation is nobody’s business
[Bobby]
That’s smart, Daddy.
[Dad] But I’m concerned about your Snipes’ indictment, Bobby. You can’t move forward on it. [Bobby]
You think not?
[Dad] It’s a false document, son. You’ve accused an American citizen of failing to do something only aliens and foreign corporations are required to do. Wesley Snipes hasn’t willfully failed to do anything. You’re oppressing a man under color of revenue law and that’s a crime punishable by up to five years in prison, Bobby. Look at Section 7214 in the tax code, offenses by officers and employees of the United States. [Bobby]
Well, what are you going to do with this? Are you in touch with Snipes.
[Dad] No, I have to respect the trust he puts in his attorneys. The best I can do is warn my family when I see trouble ahead. You that crazy about your job, Bobby? [Bobby]
Well, I’m going to have to think about this. Thanks for calling, Daddy.
[Dad]
I love you, son.
End *********************************************************************** * Home Search Download Classification Codification About 16 documents found (16 returned) for U.S. Code Query :
('deductions and credits') AND ((26) ADJ USC):CITE SIZE SCORE DOCUMENT
1.
13967 100 26 USC Sec. 882 01/03/05 Sec. 882. Tax on income of foreign corporations connected with United S
2.
15675 99 26 USC Sec. 1398 01/03/05 Sec. 1398. Rules relating to individuals' title 11 cases
3.
21922 99 26 USC Sec. 931 01/03/05 Sec. 931. Income from sources within Guam, American Samoa, or the North
4.
5555 99 26 USC Sec. 874 01/03/05 Sec. 874. Allowance of deductions and credits
5.
7196 98 26 USC Sec. 671 01/03/05 Sec. 671. Trust income, deductions, and credits attributable to grantor
6.
12139 98 26 USC Sec. 45F 01/03/05 Sec. 45F. Employer-provided child care credit
7.
5516 98 26 USC Sec. 269 01/03/05 Sec. 269. Acquisitions made to evade or avoid income tax
8.
6293 98 26 USC Sec. 1312 01/03/05 Sec. 1312. Circumstances of adjustment
9.
9704 97 26 USC Sec. 932 01/03/05 Sec. 932. Coordination of United States and Virgin Islands income taxes
10.
2320 97 26 USC Subpart A - Nonresident Alien Individuals 01/03/05 SUBPART A NONRESIDENT ALIEN INDIVIDUALS
11.
3085 97 26 USC Sec. 1357 01/03/05 Sec. 1357. Items not subject to regular tax; depreciation; interest
12.
5278 97 26 USC Sec. 1311 01/03/05 Sec. 1311. Correction of error
13.
1639 97 26 USC Subpart E - Grantors and Others Treated as Substantial Owners 01/03/05 SUBPART E - GRANTORS AND OTHERS T
14.
3814 97 26 USC Sec. 482 01/03/05 Sec. 482. Allocation of income and deductions among taxpayers
15.
3241 97 26 USC Sec. 269A 01/03/05 Sec. 269A. Personal service corporations formed or availed of to avoid
16.
14156 97 26 USC Sec. 118 01/03/05 Sec. 118. Contributions to the capital of a
corporation
The first one is TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter N - Tax Based on Income From Sources Within or Without the United States PART II - NONRESIDENT ALIENS AND FOREIGN CORPORATIONS Subpart B - Foreign Corporations -HEADSec. 882. Tax on income of foreign corporations connected with United States business
(c) Allowance of deductions and credits (1) Allocation of deductions
(A) General rule In the case of a foreign corporation, the deductions shall be allowed only for purposes of subsection (a) and (except as provided by subparagraph (B)) only if and to the extent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; (2) Deductions and credits allowed only if return filed A foreign corporation shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F, including therein ll the information which the Secretary may deem necessary for the calculation of such deductions and credits. Sec. 931. Income from sources within Guam, American Samoa, or the Northern Mariana Islands Sec. 874. Allowance of deductions and credits -STATUTE(a) Return prerequisite to allowance A nonresident alien individual shall receive the benefit of the deductions and credits allowed to him in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F (sec. 6001 and following, relating to procedure and administration), including therein all the information which the Secretary may deem necessary for the calculation of such deductions and credits. Sec. 932. Coordination of United States and Virgin Islands income taxes -STATUTE(a) Treatment of United States residents (1) Application of subsection This subsection shall apply to an individual for the taxable year if (A) such individual (i) is a citizen or resident of the United States (other than a bona fide resident of the Virgin Islands during the entire taxable year), and (ii) has income derived from sources within the Virgin Islands, or effectively connected with the conduct of a trade or business within such possession,
Bobby Evans.
[dad]
How you doing, Bobby.
[Bobby]
Hi, Dad, good to hear your voice.
[Dad]
You got a minute?
[Bobby]
Sure, what’s up.
[Dad]
Can we talk safely?
[Bobby]
I don’t know why not; everybody else has gone home.
[Dad]
What I mean is, are we on a safe phone?
[Bobby]
Well, I think that…
[Dad]
Then there’s no spyware in your computer, is there?
[Bobby] Daddy, I think I’m high enough up the food chain; I don’t get monitored anymore, why what’s the problem? [Dad] I’m going to want you to click on some web pages you maybe wouldn’t want certain parties to know you clicked on. [Bobby]
What in the world are you talking about?
[Dad] I just don’t want you getting in any trouble because of me. This is potentially explosive. Maybe we ought to meet in the lobby at the Marriot. I can bring my laptop. [Bobby]
Oh, come on, Daddy I’m as safe here as anywhere. What’s this about.
[Dad] Snipes?
Wesley Snipes, that’s what I’m calling about. You know about Wesley
[Bobby]
Yeah.
[Dad]
Are you involved in that prosecution?
[Bobby] one.
No, that’s out of the Tampa office. I know the guys but, no, I’m not on that
[Dad]
Bobby, I’m telling you this case is going to blow up in their face.
[Bobby]
What do you mean?
[Dad]
Have you looked at the indictment?
[Bobby]
Not really, I read about it in the Sentinel.
[Dad]
Are you at your computer?
[Bobby]
Yeah.
[Dad]
Well, get the indictment on the screen.
[Bobby]
Ok. Wesley Snipes. Indictment—ok.
[Dad]
Yeah, I want you to scroll down, now, to page five.
[Bobby]
Alright, page five, the conspiracy charge.
[Dad]
Scroll down to manner and means.
[Bobby]
Manner and means.
[Dad] See where it says the other two guys used deceit, craft, trickery and dishonest means to make it appear as if defendant Snipes had no liability for federal income taxes when, in fact, defendant Snipes had such liability. [Bobby]
Yeah, yeah, they said in that 861 argument…
[Dad]
But the important thing is you say Snipes had tax liability.
[Bobby]
Sure he had tax liability; the guy made millions.
[Dad]
Scroll down, now, to page ten.
[Bobby]
Page ten.
[Dad] The bottom line is all that deceit and craft and trickery is making it appear that he had no liability for taxes is a violation of Title 18, Section 371, see that? [Bobby] Right, right, conspiracy to defraud the United States. I mean, you can’t make millions and then come up with a scheme saying you don’t have to pay taxes. The guy’s a crook, Daddy. [Dad]
No, the jury decides whether or not he’s a crook.
[Bobby]
Well, we think he’s a crook.
[Dad] I’d save that for closing arguments, son. You know, long before closing arguments you got to have an indictment. [Bobby]
Well, we got an indictment.
[Dad] What the indictment really says is that Wesley Snipes never had a tax liability and if he never had a tax liability he couldn’t have violated Section 371. [Bobby]
How do you get that? That sounds crazy.
[Dad] Well, I’m going to show you how crazy. I’d like you to scroll down to page twelve. [Bobby]
Alright, that would take us to counts three through eight.
[Dad] Yeah, these are the failure to file charges that the conspiracy and fraud counts are based on. If Wesley’s innocent of failure to file, well then the conspiracy and fraud can’t stand and your prosecution is dead in the water. [Bobby]
Well, so where do counts three through eight say there’s no tax liability?
[Dad] Read it carefully, Bobby. Defendant was required by law to make an income tax return to an authorized representative of the Internal Revenue Service stating specifically the items of the gross income and, now get this, Bobby, any deductions and credits to which he was entitled. [Bobby]
So?
[Dad]
Why did they put deductions and credits to which he was entitled in there?
[Bobby] Because the law says he’s got to state on the return any deductions and credits to which he was entitled, that’s the law. [Dad]
Of course, it’s the law. Have you ever looked at that law?
[Bobby]
Well, I haven’t exactly committed it to memory, Daddy.
[Dad] Well, let’s do a search. Go to your United States Code and type in quotation marks, deductions and credits, in quotation marks. Got it? [Bobby]
Deductions, credit—ok.
[Dad]
Well, how many articles you get?
[Bobby]
Only sixteen.
[Dad] Sixteen mentions of deductions and credits in the entire US Code and note that they’re found only in Title 26. [Bobby]
Sure, the Internal Revenue Code.
[Dad]
Ok, let’s start clicking on the articles. What does the first one say?
[Bobby] Subchapter ten, tax based on income from source within or without the United States, non-resident aliens and foreign corporations. Foreign corporations—here it is, Section 882, tax on income of foreign corporations connected with United States business. [Dad]
So, is Wesley Snipes a non-resident alien or a foreign corporation?
[Bobby]
Could be, I don’t know.
[Dad] Well, your indictment says he’s a resident of Florida and if you go to his fan site you can find out that he was born in Orlando. So, unless your people can show he’s expatriated or incorporated himself on foreign soil I’m going to have to think that Wesley Snipes is a US citizen, not an alien. [Bobby]
Well, they may have evidence.
[Dad]
I don’t think they do or they’d have included it in the indictment.
[Bobby]
Well, maybe, I don’t know.
[Dad] Well, scroll, now, down to Section 882 and the deductions and credits part, past the imposition of tax on foreign corporations and the gross income of foreign corporations to paragraph (c). [Bobby]
Ok, allowance for deductions…
[Dad]
Read the general rule.
[Bobby]
Ok.
[Dad] In the case of foreign corporations; it says nothing about the case of United States citizens—right? [Bobby]
Well, maybe elsewhere.
[Dad] We’ll see. Part (b) lets the foreign corporations claim deductions for charitable contributions. Now read paragraph two. [Bobby]
Deductions and credits.
[Dad]
Read it out loud, Bobby.
[Bobby] Foreign corporations shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return in the manner prescribed in Subtitle (f) including therein all the information in which the Secretary may deem necessary for the calculation of such deductions and credits. Ok, so what? [Dad] Bobby, that’s the requirement to file that Wesley Snipes willfully failed to comply with. [Bobby]
No, that applies to foreign corporations.
[Dad]
Right, Bobby. It doesn’t apply to US citizen, Wesley Snipes.
[Bobby]
So where’s the deductions and credits statutes for US citizens?
[Dad] You tell me, Mr. Prosecution team. Let’s go back to those sixteen articles. It’s bound to be in there somewhere. Click on number two. [Bobby]
Wait a second—here we go.
[Dad]
You there?
[Bobby]
Yeah. Ok, section 1398, rules relating to individuals Title 11 cases.
[Dad]
Bankruptcy rules. The indictment doesn’t mention bankruptcy.
[Bobby]
Yeah, and that’s inapplicable here. Ok…
[Dad]
In section 931.
[Bobby] 931, income from source within Guam, American Samoa, the Northern Mariana Islands. [Dad] 931 applies to bona fide residents of Guam, American Samoa or the Northern Marianas. The indictment says nothing about Wesley Snipes being a resident of any of these places. [Bobby]
Alright, so we go to the next one, here.
[Dad] This is the law that says you can’t receive the benefit of deductions and credits without filing a return. Read it to me, Bobby. [Bobby] A return pre-requisite to allowance, a non-resident alien individual shall receive the benefit of the deductions and credits allowed him in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return in the manner prescribed in subtitle (f). [Dad]
That apply to Wesley?
[Bobby]
Well, somewhere there’s got to be a rule that applies to US citizens.
[Dad]
Well, let’s look at the next article, then.
[Bobby]
Ok, States, trusts and beneficiaries.
[Dad]
Would you say this section imposes any liability?
[Bobby]
No, this is just about grantors or owners of trusts being treated as in….
[Dad]
Ok, next section, 45 (f), employer provided child care.
[Bobby]
Nothing there. So let’s go to…
[Dad] Well, this section empowers the Secretary to disallow the benefit of deductions and credits to acquisitions of property made for the purpose of evading or avoiding federal income tax. This couldn’t apply to Wesley since he failed to apply for deductions and credits. [Bobby]
Right—ok. Down to…
[Dad] Section 1312, that’s about the erroneous allowance of deductions and credits to a taxpayer. Again, that’s not applicable to Wesley Snipes who didn’t seek deductions and credits. [Bobby] Well, next is 932, income from sources without the United States. Ok, treatment of United States residents—ah ha, this subsection shall apply to an individual for the taxable year if such individual is a citizen or resident of the United States. There, that’s Wesley Snipes. [Dad]
Well, keep reading.
[Bobby] And has income derived from sources within the Virgin Islands or effectively connected with the conduct of a trade or business within such possessions. [Dad]
You got evidence that Wesley’s income was sourced in the Virgin Islands?
[Bobby]
I don’t know.
[Dad] You better hope so because if not, Wesley’s off the hook, here, too. Well, let’s go down to the next article, Subpart (a), non-resident alien individuals. Scroll down and you’ll see it’s all about aliens, residents of possessions and expatriation. Nothing here would apply to Wesley Snipes or any other US citizen, for that matter. [Bobby]
Ok, ok, Section 1357.
[Dad] About determining corporate tax on international shipping activities using per ton rates. Scroll down and you’ll see this section is only about denial of deductions and credits that have been filed for and Wesley didn’t file. We only got a few more. Now, next is 1311. [Bobby]
Correction of error.
[Dad] Well, this is another section about disallowing deductions and credits that have been filed for. [Bobby] And Wesley didn’t file. Ok, next is subpart (e), grantor and others treated as substantial owners. [Dad]
Way outside the scope of Wesley’s indictment—not applicable.
[Bobby]
And then Section 482, accounting periods and methods of accounting.
[Dad] This is about allocating deductions and credit between two or more organizations, trades or businesses owned by the same interests and has nothing to do with Wesley Snipes. [Bobby] Ok, ok, now here it is. Section 269 (a), personal service corporations formed or availed of, to avoid or evade income tax. Wesley contracted with studios through loan out companies for the purposes of avoiding income taxes, we know that. [Dad] Sure he did; it’s legal to do that. He wasn’t indicted for contracting with studios through loan-out companies. All Section 269 (a) does is permit the IRS to reallocate deduction and credit allowances between service corporations and their employee owners. It doesn’t make Wesley or the loan-outs liable for filing a return and applying for deductions and credits. There’s nothing about Wesley in this section, either. And that leaves us with just one more law, Section 118. [Bobby]
Yeah, contributions to the capital of an organization.
[Dad] And in this section the only mention of deductions and credits is their disallowance again. Nothing here required Wesley Snipes to do anything. Bobby, warn
your people, their indictment charges Wesley Snipes with doing something he was never legally obligated to do unless he’s an alien or a foreign corporation or has income from the Virgin Islands or United possessions like Guam or American Samoa. [Bobby]
God almighty.
[Dad] Now, let’s go back to the first page of the Code and do a Boolean search of deductions and credits, in quote, and United States citizens, in quote. Surely if US citizens should be charged with failing to state deductions and credits there would be a law—you got it? [Bobby]
And quote, United States citizens…
[Dad]
Yeah.
[Bobby] Ok, only one article and it takes us back to section 931, the section about the Virgin Islands. [Dad] And US citizens engaged in business in the US possessions which excuses Wesley Snipes. [Bobby]
God almighty. Daddy, how did you get this stuff?
[Dad]
I had a client back in the nineties. Do you remember Jack Beasley?
[Bobby]
The name rings a bell.
[Dad] Jack tried to use 861 argument to get a refund on taxes he paid. The IRS denied his claim, just like they did Wesley Snipes. [Bobby]
Yeah, Snipes wanted refunds on like millions of…
[Dad]
Jack wanted a lot less, but hey, it’s no crime to request a refund.
[Bobby]
True.
[Dad] Then Jack stopped filing and after a couple of years the IRS sent out a special agent to question him and I looked to see how he might get charged criminally and that took me to Section 7203, willful failure to file. [Bobby]
Willful failure to file, yeah.
[Dad] So I looked to 7203 indictments filed over the past twenty years and found they’re all worded the same like Wesley’s, they all mention gross income tied to deductions and credits.
[Bobby]
So was Jack Beasley charged?
[Dad] Well, the IRS referred him to the Justice Department for prosecution and the US attorney offered us a conference. We accepted the offer and asked the IRS to bring all the evidence they had that Jack Beasley was an alien or a foreign corporation or had Virgin Islands or possessions income and a few weeks later the referral was dropped and there never was a conference. [Bobby]
That’s it?
[Dad] Well, let me put it this way, it’s been eleven years. Jack Beasley is one happy client. [Bobby]
Is he talking about it?
[Dad] but his own.
Absolutely not. I told him his income tax situation is nobody’s business
[Bobby]
That’s smart, Daddy.
[Dad] But I’m concerned about your Snipes’ indictment, Bobby. You can’t move forward on it. [Bobby]
You think not?
[Dad] It’s a false document, son. You’ve accused an American citizen of failing to do something only aliens and foreign corporations are required to do. Wesley Snipes hasn’t willfully failed to do anything. You’re oppressing a man under color of revenue law and that’s a crime punishable by up to five years in prison, Bobby. Look at Section 7214 in the tax code, offenses by officers and employees of the United States. [Bobby]
Well, what are you going to do with this? Are you in touch with Snipes.
[Dad] No, I have to respect the trust he puts in his attorneys. The best I can do is warn my family when I see trouble ahead. You that crazy about your job, Bobby? [Bobby]
Well, I’m going to have to think about this. Thanks for calling, Daddy.
[Dad]
I love you, son.
End *********************************************************************** * Home Search Download Classification Codification About 16 documents found (16 returned) for U.S. Code Query :
('deductions and credits') AND ((26) ADJ USC):CITE SIZE SCORE DOCUMENT
1.
13967 100 26 USC Sec. 882 01/03/05 Sec. 882. Tax on income of foreign corporations connected with United S
2.
15675 99 26 USC Sec. 1398 01/03/05 Sec. 1398. Rules relating to individuals' title 11 cases
3.
21922 99 26 USC Sec. 931 01/03/05 Sec. 931. Income from sources within Guam, American Samoa, or the North
4.
5555 99 26 USC Sec. 874 01/03/05 Sec. 874. Allowance of deductions and credits
5.
7196 98 26 USC Sec. 671 01/03/05 Sec. 671. Trust income, deductions, and credits attributable to grantor
6.
12139 98 26 USC Sec. 45F 01/03/05 Sec. 45F. Employer-provided child care credit
7.
5516 98 26 USC Sec. 269 01/03/05 Sec. 269. Acquisitions made to evade or avoid income tax
8.
6293 98 26 USC Sec. 1312 01/03/05 Sec. 1312. Circumstances of adjustment
9.
9704 97 26 USC Sec. 932 01/03/05 Sec. 932. Coordination of United States and Virgin Islands income taxes
10.
2320 97 26 USC Subpart A - Nonresident Alien Individuals 01/03/05 SUBPART A NONRESIDENT ALIEN INDIVIDUALS
11.
3085 97 26 USC Sec. 1357 01/03/05 Sec. 1357. Items not subject to regular tax; depreciation; interest
12.
5278 97 26 USC Sec. 1311 01/03/05 Sec. 1311. Correction of error
13.
1639 97 26 USC Subpart E - Grantors and Others Treated as Substantial Owners 01/03/05 SUBPART E - GRANTORS AND OTHERS T
14.
3814 97 26 USC Sec. 482 01/03/05 Sec. 482. Allocation of income and deductions among taxpayers
15.
3241 97 26 USC Sec. 269A 01/03/05 Sec. 269A. Personal service corporations formed or availed of to avoid
16.
14156 97 26 USC Sec. 118 01/03/05 Sec. 118. Contributions to the capital of a
corporation
The first one is TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter N - Tax Based on Income From Sources Within or Without the United States PART II - NONRESIDENT ALIENS AND FOREIGN CORPORATIONS Subpart B - Foreign Corporations -HEADSec. 882. Tax on income of foreign corporations connected with United States business
(c) Allowance of deductions and credits (1) Allocation of deductions
(A) General rule In the case of a foreign corporation, the deductions shall be allowed only for purposes of subsection (a) and (except as provided by subparagraph (B)) only if and to the extent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; (2) Deductions and credits allowed only if return filed A foreign corporation shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F, including therein ll the information which the Secretary may deem necessary for the calculation of such deductions and credits. Sec. 931. Income from sources within Guam, American Samoa, or the Northern Mariana Islands Sec. 874. Allowance of deductions and credits -STATUTE(a) Return prerequisite to allowance A nonresident alien individual shall receive the benefit of the deductions and credits allowed to him in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F (sec. 6001 and following, relating to procedure and administration), including therein all the information which the Secretary may deem necessary for the calculation of such deductions and credits. Sec. 932. Coordination of United States and Virgin Islands income taxes -STATUTE(a) Treatment of United States residents (1) Application of subsection This subsection shall apply to an individual for the taxable year if (A) such individual (i) is a citizen or resident of the United States (other than a bona fide resident of the Virgin Islands during the entire taxable year), and (ii) has income derived from sources within the Virgin Islands, or effectively connected with the conduct of a trade or business within such possession,
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