Catalog of Elections and Entity Types in the Internal Revenue Code

1. Introduction

Throughout this site, we frequently state that “elections” of all kinds are to be avoided because they constitute the pursuit and acceptance of privileges or benefits that result in a needless surrender of property and autonomy. The purpose of this article is to catalog all such elections and references to elections throughout the Internal Revenue Code and Treasury Regulations.

The result of all elections is that you elect to convert YOURSELF or YOUR PROPERTY from PRIVATE to PUBLIC and thus:

1. Lose exclusive control or some degree of ownership over that property.
2. Convert ownership of the property from ABSOLUTE to QUALIFIED.
3. Convert some aspect of control of the property from PRIVATE to PUBLIC.

If the election changes YOUR own civil status to PUBLIC/DOMESTIC, the result is that you literally ELECT yourself into a public office, status, or position that comes with obligations you should avoid.

We wish to preface this discussion by emphasizing that vast majority of Americans are American Nationals:

1. Whose entire earnings are not STATUTORY “gross income” under federal law.
2. Whose entire earnings are EXCLUDED from income taxation by 26 U.S.C. §872. See:
   Excluded Earnings and People, Form #14.019
   https://sedm.org/Forms/14-PropProtection/ExcludedEarningsAndPeople.pdf
3. Who DO NOT need “exemptions” or deductions of any kind when they file a tax return, because all their earnings are excluded rather than exempt anyway under the constitution itself by default.
4. Who often file the WRONG income tax form, the 1040 form, resulting in making THEMSELVES and THEIR ENTIRE EARNINGS PUBLIC, DOMESTIC, and taxable that previously were NOT if they have filed the correct income tax return. See:
   Why It’s a Crime for a Private American National to File a 1040 Income Tax Return, Form #08.021
   https://sedm.org/Forms/08-PolicyDocs/WhyCrimefileReturn.pdf
5. Who are usually a victim of FALSE information returns that connect them with a privileged “trade or business” even though they are NOT so engaged. See:
   Correcting Erroneous Information Returns, Form #04.001
   https://sedm.org/Forms/04-Tax/0-CorrErrInfoRtns/CorrErrInfoRtns.pdf

Below is the catalog of elections that the vast majority of Americans DO NOT NEED because their earnings are not “gross income” or even “U.S. source income”:

2. Entity Types and their corresponding Tax Return and Withholding Characteristics

#	Entity Type	Tax Return Forms	Withholding Forms	Reporting Forms	Notes
1	U.S. person	1040 Form 8865 on foreign partners	W-9	1099 W-2 on employees
2	Foreign person	1040-NR	W-8BEN	Foreign: 1042, 1042s Domestic: 1099
3	Nonresident Alien	1040-NR	W-8BEN	Foreign: 1042, 1042s
4	Sole Proprietorship	Foreign: 1040-NR Domestic: 1040	Foreign: W-8BEN Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099
5	Association	Foreign: 1120-F Domestic: 990, 1120, 1120-H	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099
6	Partnership	Foreign: None Domestic: 1065	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099	Foreign election with 1065 filing, click here.
7	C Corp	Foreign: 1120-F Domestic: 1120	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099
8	S Corp	Foreign: 1120-F Domestic: 1120-S	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099
9	Limited Liability Company (L.L.C.)	Domestic: 1065 Foreign: 1120-F	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099	Single Member treated as disregarded entity.
10	Trust	Foreign: 1040-NR, 3520-A (U.S. person trustees) Domestic: 1041	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099
11	Foundation	Foreign: 990-F Domestic: 990	Foreign: W-8BEN-E Domestic: W-9	Foreign: 1042, 1042s Domestic: 1099

NOTES:

1. “Domestic” is defined in 26 U.S.C. §7701(a)(4) as “created or organized under the laws of the United States” (national government, and not any state of the Union). People or entities with a foreign domicile outside the exclusive jurisdiction of Congress such as within the exclusive jurisdiction of a constitutional state would not be “domestic”.
2. American nationals born or residing in constitutional states are STATUTORY “nonresident aliens” and not “U.S. Persons”.
3. Withholding forms are mandated in:
   3.1. 26 U.S.C. §1441
   3.2. 26 C.F.R. §1.1441-1
4. For a summary of the many different characteristics of the above business entity types, see:
   Comparison of Business Entity Types*, Family Legacy Training and Management System (FLTMS), requires subscription
   https://fltms.famguardian.org/comparison-of-business-entity-types/
5. For considerably more detailed information relating to business entities listed above, see:
   Creating and Running a Business, Trust, or Estate, Form #09.079** (Member Subscriptions)
   https://sedm.org/product/creating-and-running-a-business-form-09-079/
   This table was adapted from section 11.3 of the above document.

3. Election to become an “individual” by pursuing privileged deductions on a 1040-NR return as an American National

Throughout the Internal Revenue Code, aliens (foreign nationals) are always privileged and therefore are “individuals” and “persons”. However, American Nationals, which the code calls “nationals of the United States” in 26 U.S.C. §873 are not always privileged “individuals” or “persons”.

26 U.S.C. §873 is the only place in the Internal Revenue Code that recognizes a “national of the United States” as a “nonresident alien INDIVIDUAL”. That section deals with privileged “trade or business” deductions under 26 U.S.C. §162. These are “benefits” that have commercial value and thus, represent a waiver of immunity and a transition from being a “non-person” to a “person” and an “individual” as documented in:

Acquiring a Civil Status (!Important), FTSIG
https://ftsig.org/civil-political-jurisdiction/acquiring-a-civil-status/

The great irony is that most American Nationals do not even NEED deductions because the vast majority of most Americans is already excluded rather than exempted from gross income anyway as described in:

Excluded Earnings and People, Form #14.019
https://sedm.org/Forms/14-PropProtection/ExcludedEarningsAndPeople.pdf

Understanding this concept is important, because 26 C.F.R. §1.1441-1(c)(3) says foreign person withholding applies only to aliens but then points back to “persons” who are “nonresident aliens” in 26 U.S.C. §7701(b)(1)(B). The only “nonresident aliens” who are “persons” are privileged. Those not privileged who have no tax liability and do not pursue deductions would NOT be “persons” or “individuals” and therefore would NOT be subject to “foreign person” withholding.

This subject is further covered in:

META AI: “Nonresident Alien” v. “non-resident alien”, Question 18
https://ftsig.org/meta-ai-nonresident-alien-v-non-resident-alien/

4. Form 1040 and 26 U.S.C. §1: Making an ELECTION as an American national to file a 1040 RESIDENT tax form instead of the ONLY proper tax return, which is the 1040NR.

This causes:

1. All worldwide earnings to be taxable instead of only those from the statutory geographical “United States” (District of Columbia) and from the government as a legal fiction.
2. EVERYTHING earned to be “trade or business” earnings under 26 U.S.C. §162 connected to a public office created with your consent and participation.
3. Makes you a public officer within the Treasury Department reporting to the Treasury Secretary. See:
   How American Nationals Volunteer to Pay Income Tax, Form #08.024
   https://sedm.org/Forms/08-PolicyDocs/HowYouVolForIncomeTax.pdf
4. The election is illegal, because it is a criminal violation of 18 U.S.C. §911, impersonating a CIVIL/DOMICILED U.S.** citizen**+D.
5. 26 U.S.C. §6013(g) and (h): Election of a nonresident alien married to a statutory “U.S. citizen” to be treated as a “resident alien”.

5. Entering anything but PROFIT as “income” or “effectively connected” income on a tax return

Most people MISTAKENLY enter ALL THEY MAKE in a particular category on the tax return as “income”. This is a HUGE mistake that amounts to an ELECTION to treat ALL their earnings as PROFIT within the meaning of the Sixteenth Amendment.

The definition of “income” for the purposes of the Sixteenth Amendment is ONLY profit. The income tax is an indirect excise tax on PROFIT. It is NOT a tax on GROSS RECEIPTS, because that would make it a tax on CAPITAL and therefore PROPERTY, which would make

“We must reject in this case, as we have rejected in cases arising under the Corporation Excise Tax Act of 1909 (Doyle, Collector, v. Mitchell Brothers Co., 247 U.S. 179, 38 Sup. Ct. 467, 62 L. Ed.–), the broad contention submitted on behalf of the government that all receipts—everything that comes in-are income within the proper definition of the term ‘gross income,’ and that the entire proceeds of a conversion of capital assets, in whatever form and under whatever circumstances accomplished, should be treated as gross income.  Certainly the term “income’ has no broader meaning in the 1913 act than in that of 1909 (see Stratton’s Independence v. Howbert, 231 U.S. 399, 416, 417 S., 34 Sup. Ct. 136), and for the present purpose we assume there is not difference in its meaning as used in the two acts.”

[Southern Pacific Co., v. Lowe, 247 U.S. 330, 335, 38 S.Ct. 540 (1918)]

In fact, under the Constitution, Congress cannot even DEFINE the word “income” because the constitution itself defines it. Below is the most complete definition of “income” the U.S. Supreme Court has ever given after the Sixteenth Amendment:

The Sixteenth Amendment must be construed in connection with the taxing clauses of the original Constitution and the effect attributed to them before the Amendment was adopted. In Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601, under the Act of August 27, 1894, c. 349, § 27, 28 Stat. 509, 553, it was held that taxes upon rents and profits of real estate and upon returns from investments of personal property were in effect direct taxes upon the property from which such income arose, imposed by reason of ownership; and that Congress could not impose such taxes without apportioning them among the States according to population, as required by Art. I, § 2, cl. 3, and § 9, cl. 4, of the original Constitution.

Afterwards, and evidently in recognition of the limitation upon the taxing power of Congress thus determined, the Sixteenth Amendment was adopted, in words lucidly expressing the object to be accomplished: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among 206*206 the several States, and without regard to any census or enumeration.” As repeatedly held, this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the States of taxes laid on income. Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, 17-19; Stanton v. Baltic Mining Co., 240 U.S. 103, 112 et seq.; Peck & Co. v. Lowe, 247 U.S. 165, 172-173.

A proper regard for its genesis, as well as its very clear language, requires also that this Amendment shall not be extended by loose construction, so as to repeal or modify, except as applied to income, those provisions of the Constitution that require an apportionment according to population for direct taxes upon property, real and personal. This limitation still has an appropriate and important function, and is not to be overridden by Congress or disregarded by the courts.

In order, therefore, that the clauses cited from Article I of the Constitution may have proper force and effect, save only as modified by the Amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not “income,” as the term is there used; and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

The fundamental relation of “capital” to “income” has been much discussed by economists, the former being likened to the tree or the land, the latter to the fruit or the crop; the former depicted as a reservoir supplied from springs, the latter as the outlet stream, to be measured by its flow during a period of time. For the present purpose we require only a clear definition of the term “income,” 207*207 as used in common speech, in order to determine its meaning in the Amendment; and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue.

After examining dictionaries in common use (Bouv. L.D.; Standard Dict.; Webster’s Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton’s Independence v. Howbert, 231 U.S. 399, 415; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185) — “”Income may be defined as the gain derived from capital, from labor, or from both combined,” provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case (pp. 183, 185).

Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The Government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word “gain,” which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. “Derived — from — capital;” — “the gain — derived — from — capital,” etc. Here we have the essential matter: not a gain accruing to capital, not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value proceeding from the property, severed from the capital however invested or employed, and coming in, being “derived,” that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal; — that is income derived from property. Nothing else answers the description.

[Eisner v. Macomber, 252 U.S. 189, 205-207 (1920;
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

6. Entering earnings from your own personal labor on a Tax Return to Make them Taxable even though they are NOT

Earnings from your own labor are not taxable unless you DONATE them to a public use by entering them on a tax return and thereby connecting them to a “trade or business” in the case of the 1040 form or “effectively connecting” them in the case of the 1040-NR. Below is how we describe this in the 8275 attachment submitted with our standard 1040-NR attachment:

2. REASONS WHY EARNINGS FROM MY LABOR ARE NOT INCLUDED IN GROSS INCOME ON THIS SUBMISSION

Earnings from my own absolutely owned, constitutionally protected, private labor are not included as “gross income” on this submission because:
(a) I choose not to “effectively connect” my earnings and thus exclude them from the 1040-NR return. I am the only one who can “effectively connect” and thus DONATE private property to a public use.

(b) The labor was and is performed by a nonresident alien not engaged in a “trade or business” from without the statutory geographical “United States”. It is therefore excluded from “gross income” under 6 U.S.C. §872 and 26 C.F.R. §1.872-2(f) and 26 C.F.R. §1.871-7(a)(4) and 26 U.S.C. §861(a)(3)(C)(i).

(c) My earnings are expressly excluded from “wages” by 26 CFR §31.3401(a)(6)-1(b) and 26 CFR §31.3121(b)-3(c)(1) because services performed outside the United States.

(d) There are no voluntary 26 USC 3402(p) agreements in place that would donate my private earnings to a public use.

(e) 26 C.F.R. §1.871-7(a)(2) specifies that ONLY earnings within the meaning of “gross income” under 26 U.S.C §61 are to be taxed at the 30% rate found in 26 U.S.C. §871(a) in the case of nonresident aliens not engaged in a “trade or business” such as myself. Since my own labor is not included in “gross income”, then earnings from my labor such as military service are not taxable under 26 U.S.C. §871(a).

(f) The U.S. Supreme Court acknowledged that involuntary taxation of humans on their own labor is unconstitutional. “Every man has a natural right to the fruits of his own labor, is generally admitted; and no other person can rightfully deprive him of those fruits, and appropriate them against his will…” [The Antelope, 23 U.S. 66; 10 Wheat 66; 6 L.Ed. 268 (1825)].

More detailed information on the above is contained at: Proof that Involuntary Income Taxes on Your labor are Slavery, Form #05.055; https://sedm.org/Forms/05-MemLaw/ProofIncomeTaxLaborSlavery.pdf.

[1040-NR Attachment, Form #09.077, 8275 Attachment
https://sedm.org/Forms/09-Procs/1040NR-Attachment.pdf]

7. Form 1040NR and 26 U.S.C. §871: Entering any income from outside the statutory geographical United States” or which is not paid by the U.S. government

1. In the case of the 1040NR “effectively connected” section, this constitutes an “election” to donate the earnings as property to a public use, a public purpose, and a public office and make them taxable.
2. In the case of the Schedule NEC, this makes the earnings listed subject to a 30% tax.
3. Entering your own labor in the “effectively connected section” under Block 1a. This donates your labor to a public use and is not mandatory. The 1040NR instructions even say that. See:
   Proof that Income Taxes on Your Labor are Slavery, Form #05.055
   https://sedm.org/Forms/05-MemLaw/ProofIncomeTaxLaborSlavery.pdf
4. Entering any amount of “wages” on the 1040NR “effectively connected” section as someone working for other than the national government, because they are excluded per:
   4.1. 26 C.F.R. §31.3401(a)(6)-1(b) in the case of income tax.
   4.2. 26 C.F.R. §31.3121(b)-3(c)(1) in the case of Social Security. You can’t earn “wages” under 26 U.S.C. §3121(a) unless you are engaged in “employment” and there is no “employment” outside the “United States” federal corporation.
5. 26 U.S.C. §871(d), 26 C.F.R. §1.871-10, and 1040NR Schedule E Part II: Election to treat real property as “effectively connected with a statutory “trade or business”. See:
   5.1 26 U.S.C. §871(d)
   5.2 26 C.F.R. §1.871-10
   5.3 1040NR Schedule E Part II

8. Withholding

1. 26 U.S.C. §3401(c): W-4 constitutes an ILLEGAL election to be treated AS IF you are a statutory “employee” as defined here. That is a crime of impersonating a public officer in violation of 18 U.S.C. §912.
2. 26 U.S.C. §3402(p): Election to treat a “specified federal payment” as a payment of wages by an employer to an employee.
3. 26 U.S.C. §3402(p)(1)(C) defines what a “specified federal payment”.
   (i) any payment of a social security benefit (as defined in section 86(d)),
   (ii) any payment referred to in the second sentence of section 451(d) ¹ which is treated as insurance proceeds,
   (iii) any amount which is includible in gross income under section 77(a), and
   (iv) any other payment made pursuant to Federal law which is specified by the Secretary for purposes of this paragraph.

9. Artificial Entities

1. IRS Form 8832 Entity Classification Election: An artificial entity that may be nonresident elects to be treated as domiciled in or doing business in the statutory geographical “United States”
2. 26 U.S.C. §1362(a): Small business election to be an S-Corporation
3. 26 U.S.C. §83(b): Permits an employee of a privileged corporation to make an election to include all of their compensation for services connected with stock as “gross income”. Thus they pay what amounts to a direct unapportioned tax on the WHOLE amount or “gross receipts” of the stock involved instead of only profit as the Sixteenth Amendment requires.

10. Social Security Numbers

1. 26 C.F.R. §301.6109-1(b)(2)(v): A foreign person that makes an election under §301.7701–3(c);
2. 26 C.F.R. §301.6109-1(b)(2)(viii):  A foreign person that furnishes a withholding certificate described in §1.1446–1(c)(2) or (3) of this chapter or whose taxpayer identification number is required to be furnished on any return, statement, or other document as required by the income tax regulations under section 1446. This paragraph (b)(2)(viii) shall apply to partnership taxable years beginning after May 18, 2005, or such earlier time as the regulations under §§1.1446–1 through 1.1446–5 of this chapter apply by reason of an election under §1.1446–7 of this chapter.
3. 26 C.F.R. §301.6109-1(i): Special rule for qualified subchapter S subsidiaries (QSubs) under under § 1.1361–3 or if a QSub election that was in effect for the entity terminates under §1.1361–5.
4. 26 C.F.R. §301.6109-1(a)(4): Taxpayer Identification Number to be used by a Trust upon termination of an I.R.C. Section 654 Election.