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U.S. Taxes


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Grateful
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Joined: 21 Mar 2004
Posts: 1377


PostPosted: Tue Dec 07, 2004 3:07 am Post subject: U.S. Taxes Reply with quote
Golden Eagle Consulting does business with PIPS members only. 800 360 1599 They are PIPS members themselves.

jazzmark wrote:
I would like to add one more thing about James and David. Many of you have seen the 'opinion' posted at the PIPS USA site. I am not at liberty to disclose the information, however, I will tell you that part of the opinion states that PicPay is a financial institution and legally has to be reported to the IRS.

Golden Eagle Consulting does not agree - nor do the accountants that work with them. They treat PicPay just like PayPal. PayPal is not a financial institution and neither is PicPay. They are simply Payment Gateways.

Therefore, your PicPay account does NOT have to be reported to the IRS as a foreign bank account.


DarkBlade wrote:
THE FAQ is out of date compared to more recent revisions presented elsewhere...

rags2riches wrote:
I have read a lot of these tax threads and I still do not see any authoritative answer on the tax issue. I think there are some good posts, but someone else has as good a post that counteracts it.

One matter I don't see much discussion about is JURISDICTION. PIPS is in Malaysia. A business activity is conducted there as we make loans to the company. We get ROI from that activity. We decide whether it stays in the Malaysian jurisdiction or whether it is sent to our USA bank account in the jurisdiction of the USA. It seems to me that what comes to our bank account is fully taxable because it is in the jurisdiction of the USA. But what gives the USA precedence to take taxation control over our money that is in a foreign jurisdiction, ie Malaysia?

If I have posed these scenarios correctly where does the USA's JURISDICTION end? Or what gives them the right to exert taxation control in (over) a foreign jurisdiction?


It would seem that jurisdiction alone would mean that you don't owe taxes on foreign income, but that isn't true.
IRS requires a U.S. Citizen to pay taxes on any and all sources of income no matter what that source is.
Even if you received income from someone in Tin Buk Tu, and they put it in bank account in YOUR NAME, you would be liable.
If IRS could claim that you received income that you didn't report, even if that income was held in a foreign entity that you can't reach but are the beneficiary of, they could say that you 'created' that entity to evade taxes and impose taxes on you that you don't have money to pay! Shocked

Consider for example foreign annuities used to be tax free,
but IRS took that advantage away by requiring foreign countries to report that income and stating in code that it is tax evasion if you don't report any and all foreign investment accounts.

The KEY element needed to determine our liability in owing taxes from PIPS is knowing when we receive ownership or realize it as income.
When we put money into a Trust Debenture, that money is no longer ours.
A trustee receives the money and he becomes responsible to make sure it is used according to a trust agreement.
We are NOT beneficiaries to the trust agreement, PIPS is.
We entered a discretionary loan agreement when we joined PIPS.
We agreed that PIPS 'could' pay us back at rate of 2% per day.
Here is where the confusion lies. Confused

For Members, ROI is NOT Return on Investment, it isn't even realized interest.
For PIPS, ROI is definitely a Return on Investment!

But what are the tax implications of ROI for Members?
A. IS ROI 'perceived' interest?
or
B. IS ROI realized income?

Because ROI, Return On Investment, seems to imply we have an 'investment account', most accountant's will assume it is B.
That's crazy because we don't own any money that is held in the debenture.
PIPS owns every single dollar we put into the account along with with all ROI that we let PIPS reinvest.
When we adjust the percentages, we ADVISE the trustee to let us manage ROI by converting into AF.
Just because it is AF, it is not income, because we still do not own it, yet.
In the old 2% program, we could manually determine how units were bought and withdrawals were made.
In the new program ROI temporarily becomes AF and based on the percentages we set.
The system script automaticly takes care of managing the funds.
In either case, we still do not own Available funds!
It's available for us to decide how it is managed.
It is not until we REQUEST a withdrawal does it become income.

My opinion on this matter is that we never realize income until it leaves PIPS' control
and we receive the funds via bankdraft or goods and services bought with PICPAY.
In this way, it is no different then if someone owed you money.
Until they pay you back and you realize interest income,
Do you really believe that you should pay taxes on money that you haven't and possibly might never see? Rolling Eyes
Money that is NOT even yours! Rolling Eyes
Keep it simple and pay taxes on the realized interest income.
or we can have another entity such as a Limited Liability Company receive the income and have it pay us a salary.

Quote:
By Common Law definition of Loan, we never realize income until it leaves PIPS' control
and we receive the funds via bankdraft or goods and services bought with PICPAY.
In this way, it is no different then if someone owed you money.
Until they pay you back and you realize interest income,
Do you really believe that you should pay taxes on money that you haven't and possibly might never see? Rolling Eyes
Money that is NOT even yours! Rolling Eyes
Keep it simple and pay taxes on the realized interest income.
or we can have another entity such as a Limited Liability Company receive the income and have it pay us a salary.


Remember most of the people in the forum are confused because several of them
have asked CPAs, Tax attorneys, and IRS agents to provide a definitive answer to these questions.
They have asked several times only to receive conflicting answers.
But because members show those people ROI which seems to imply that they received 'Return on Investment',
most of respondents will have concluded that they have INVESTMENT INCOME held in an INVESTMENT ACCOUNT,
that is OWNED by the member.

NOTHING COULD BE FURTHER FROM THE TRUTH...


Dave_PIPS wrote:
rajin wrote:
Could you share any insight you've learned? Anything you didn't know before that we might now either?


Well, at least for me, I learned a lot about the need for a CPA if I'm going to get my Taxes done right Embarassed

I think a lot of people stumbled on that, but in the end, it became clear that PIPS doesn't work like a 401K plan because it is a Debenture, which means a loan and NOT an investment. After the initial loan is paid back (after 57 trading days) you need to pay taxes on the interest and re-"investing" at 100% doesn't mean you don't pay taxes until you actually move the money to Picpay or a bank account. You need to declare the interest (ROI) once it is paid to you. As you can see, it can get confusing so a CPA is recommended.

Bryan, did mention that in Vegas, a CPA firm (Nevada Corporate Headquarters ) actually joined PIPS and has setup a phone number for pipsters for one free consultation regarding this taxation matter. I'm not sure exactly what the number is but If you PM Tex (who setup the Vegas meeting) he can direct you to the right people.


goldfinger wrote:
Yes indeed, many thanks to all that helped make the New York meeting possible. It went with no hitch.

I had a brief conversation with Bryan and Sharon during lunch. They are both very approachable, humble,
generous with their thoughts, and basically down to earth people.
Had I met them not knowing who they are I wouldn't have guessed the important position they hold in providing us, Pipsters , the opportunity to fulfill our dreams and hopes.

Thank you Bryan and Sharon! Laughing Laughing

Bryan's presentation was extremely informative.
It brought out many points that I was not aware of, and reassured me that I made the right decision in joining PIPS.

For us USA Pipsters, at least for me, it was disappointing to find out that I have to pay taxes on funds that I had not withdrawn yet.
Regardless of where the funds are, reinvested or AF, I have to pay taxes on all interest received beyond the 52 days.

I believe this is the reason Bryan stresses the point that we are not investing, but we are lending our money. Also, that what we are receiving is interest, and not capital gains.

Well, on the way home while I was driving, I was still thinking about this.
It ocurred to me that we pay taxes on interest added to our savings or checking accounts. We pay those taxes while the interest is still in our account.
The same situation I believe applies to interest we receive in our PIPS account.

I wish somebody would tell me that this is not the case.

Laughing Laughing


Forum Admin wrote:
A clarification on what is taxable and what is not.

When you deposit funds you loan those funds to PIPS, the first 52 trading days are repayment of that loan, this is your money and is not therefore taxable. Any reinvestments you make and the first 52 days of those investments is still your money and is not taxable.

Any returns made on a loan after the 52nd trading day is interest and is therefore subject to tax.

Bryan


owler wrote:
As PIPS is not a recognised form of investment - nor is it a bankdeposit earning interest in the recognised sense I do not think the Tax authorities of any country can treat ROI as income.

As the rules of the PIPS investment stand, you give real money to pips and lose any right to that money thereafter - you cannot get it back whatever you do.

That payment is a payment to entitle you to a future income stream should you wish to take advantage of it - and if Pips can afford to pay it.

Reinvested ROI is also not money that will ever belong to you the investor, all that does is to increase the base for the future income stream.

I believe that any money not re-invested and which is therefore in AF is also not income. It will not be income until it is withdrawn as Pips is not a recognised financial institution and until the money is in your account, neither you nor the Tax authorities are certain that you will receive the money. So AF is not income. While you may ask that Pips send you money, you have no enforceable contract that ensures you get the payment.

The tax authorities will undoubtedly accept that cash received up to the point you get more than you put in is a return of capital. They may wish to argue that it is part capital and part income, but this would introduce the concept that Pips is a form of annuity - which it is not and can never be. Annuities CAN only be issued on a funded contractual basis.

The simple answer to the taxation debate is to declare income on a cash basis. ie if you have banked more than you put in - then that is the income for the year in which you declare your taxable income.

It is totally wrong to compare AF to money credited to a deposit account in a bank. The latter is bank money which is accessible. AF is private fund money which is not accessible until received in your own bank account.

owler



owler wrote:
Grateful, - it is very clear that what Pips purports to be and achieves so far, is a vehicle that can grow precisely BECAUSE it has no liabilities whatsoever to depositors.

Bryan has been very clever insetting the system up, and is providing a superb opportunity however, I am ABSOLUTELY sure that in the UK, the resultant returns can ONLY be treated as income on a cash basis. I am also 99% certain the same applies to the US.

I think Bryan is incorrect in stating that there is a tax liability arising where there is absolutely NO contractual obligation to pay the underlying amount. Pipsters are not parties to any contracts with trustees, and as a result, nobody is obliged to pay the income if any, to the investor.

To extend this argument - should it go to court then the test would be:

Is this money mine to take at any time?
For deposits no - lost after 180 days
For ROI reinvested - no never mine and lost after 180 days.
for ROI in AF - no cannot touch this myself.
For AF in picpay - perhaps - if Picpay becmes recognised as a Bank but not before.
For money transferred to my own bank account - yes so taxable if greater than my deposit igiven to Pips.

so rest easy.


rgds all
owler


owler wrote:
donna

an account is a method of storing data - in pips case storing the notional debt to you and the notional increases from ROI.

An Account in IRS parlance is a foreign bank or equivalent INTEREST earning deposit. Pips is neither. The money you gave to PIPS may even be deductable as a charitable donation! Not in the UK however!

In my opinion, you need to declare income from a foreign source When and If it arrives in your bank account. It is not interest - and it is NOT a foreign account in IRS parlance. It is not a Debenture in Investment parlance, it is not an Equity either. It isn't even a loan - loans retain value Pips lose theirs on the day you hand it over even though ROI exists on it for 180 calendar days.

Bryan's vehicle is sublime. He has created an entity to benefit people, which has drawn in a lot of wealth, is currently paying returns - BUT without any corporate Liabilities (except AF) and therefore the ability to borrow and manage very substantial funds. HOWEVER - his structure also ensures that the Income Tax regulations in UK and US do not encompass the structure he has created.

Tax Regulations have so far always been based on the concept of ownership and control. Pips has removed ownership and control - just returns an income flow. As you do not own the capital, it cannot be interest you are getting - it must be something else! If you don't own the capital you don't have what is called a "foreign account" you have a name and address to whiich money may be paid!

In my belief AF is not taxable - as you do not really have control as you would with a bank and as the "account" is not an "Account" you should not be taxable on this notional number.

Hope this helps PM if want further natter.

rgds
owler


(Total ROI) - (Original Deposit) - (Reinvestments) - (Fees Paid) = (Taxable Amount)

However, let me say again, this should be the same as AF (or very close to it).

picbuzz wrote:
What is "ROI", "reinvestment", "$25 units"?

Does it matter if the units are $1 or $50? What is the purpose of "units"? Are they for easy recording or an integral part of the loan?

Bryan says this is a loan and not an "investment". We got that clear so far. This means we shouldn't need to use terminology like "return on investment", etc.

What of the loan? Lets forget all the terminology and look at the terms and arrangements.

We LOAN to PIPS and they do whatever they want to do with it. We are just the lenders. PIPS say they will pay 2% a day and they also say this is high risk and no guarantee of repaying loan or interest on loan.

There are a number of options that the 2 parties (PIPS and the individual member) can agree to. A member says to PIPS they will have the "100% option" until further notice and PIPS goes along with this.

Then PIPS is liable to pay 2% per trading day on the loan. After 180 days the original loaned amount can be withdrawn or continue to stay on as a loan as agreed by both parties.

The loan continues to 'accumulate' at 2% a day past the 180 days. Whether PIPS can or will repay this amount is not verifiable. At some point the member may choose a percentage less than 100% and PIPS will pay back at a rate of 2% per day of the current accumulated loan amount as choosing an amount between 0% and 100% was part of the original loan agreement.

Since this is a LOAN it should be treated as a LOAN and we should not be mislead by terminology and arbitrary concepts like a "$25 unit". What "unit"? There is no "unit". This "unit" cannot be redeemed or sold at any open maket. A "$25 unit" only comes about because interest of 2% a day on the LOAN is being accumulated. Use of the word "unit" is MISLEADING in this LOAN situation.

The same with use of the terminology "reinvestment". How can there be a "reinvestment" when this is NOT an investment? It's just wrong terminology. We have to look at the facts of the case.

When both parties agree to the 100% option what we have in effect is an open ended LOAN at 2% per day interest payable at a point in time when the percentage is less than 100%. These are the TERMS of the LOAN.

How to summarise this? "I lend you $450 and the interest payable is 2% per day with compounding (each time the interest builds up to $25). I can recall the loaned balance at any time and you will repay me at 2% per day into an AF account which is available for immediate withdrawal".

Could be it argued that the 2% "could have" been withdrawable by setting the terms to 0% "reinvestment"? Each case should be viewed on the TERMS agreed to by both parties. If 100% was agreed to then thats the arrangement. In the 100% case there is a lot of unrealiased interest gains attached. If they opted for the 0% option these unrealised gains would not have been possible because of the compounding effect. You can't use the "IF" excuse. Each case on it's own TERMS of LOAN agreement.

Another factor is that PIPS themselves declare that this is "high risk" and no guarantee. They don't guarantee the return of original loan let alone a huge amount of UNREALISED interest gains.

Then there is the factor of verifying the unrealised gains that each member sees on their computer screen. How can a member be held liable for those onscreen gains when they cannot be verified that they exist? Or that if all members set their percentage to 0% they would get actual payouts?

If a member can't verify their own gains how can outsider hold them accountable?

On the other hand when actual gains are realised (AF into cash) in this "high risk" environment there is no disputing that.

Back to the terminology used. Why do we have "$25 units"? Why is the word "reinvestment" used when there is only ever a LOAN in place? Instead of "ROI" or "reinvestment" why not call it "EOL" (extension of loan) or something that better describes the LOAN situation?

Because we have some wrong terminology floating around it causes some outsiders to come to wrong conclusions on this issue.


DarkBlade wrote:
alamilrc wrote:
Total AF(yearly) - Total Initial Investment + all fees = taxable Interest income.


AGREED!

A Indentured Trust is private loan between PIPS and each of us.
The rules we agreed to when we joined was to be paid back on that loan
at rate of 2% per day.
Because it is a loan, not a stock or bank account, that money is NOT ours.
Until PIPS repays that loan in the form of AF, we have nothing and own nothing.
Although we can control when that loan is paid back, we only have a contract
that says that we are owed money.
ROI is not profit or money, it is perceived interest on principle.
Until you receive it, you can't spend it.

Imagine that you went to the bank and took out a loan for 1 Million dollars
at 10% interest.
If you never paid back the loan, how can the IRS expect that bank to pay
taxes on $100,000 of perceived interest income that it never actually received?
That's completely inconceivable! Shocked
They lost everything they lent out and owe taxes on the interest as well!


swalt6 wrote:
Okay, look ... Everyone has been side stepping this one VERY important piece of information in this thread and a lot of others dealing with the tax issue. PIPS is NOT a BANK, SAVINGS AND LOAN, or any kind of FINANCIAL INSTITUTION. PIPS is a company. PERIOD. The tax law is very specific about that. Your money is NOT in any kind of a financial institution. It is money you LOANED to the company, and they have agreed to pay you back with interest. But until you have your hands on it, it is not REAL, it is only a PROMISE. Once you have it in your bank account, NOT AF AND NOT PICPAY, BUT YOUR BANK ACCOUNT, it just ain't real. WHY??? Because if the company goes away, so does their promise to pay you back, and so does anything you may have had showing in your account, whether it was in PIPS, AF or PICPAY, cause the company owns them all, and if it goes away, so does the virtual money in those accounts. REMEMBER, THIS IS NOT INSURED! The taxman cannot make you pay tax on something you do not have!!! And you DO NOT HAVE anything that is in PIPS, AF or PICPAY. The company has it. Period.


father_of_five wrote:
pklong wrote:
Correct me if I'm wrong, but in serveral posts it states that Bryan said that the first 52 days of a unit is return of the Loan Principle. On the 53 rd interest is being paid on the unit.


I suppose that you could look at it like that, but in reality it is being repaid through interest payments, not actually returned, because the original deposit is still sitting in the Investment portion of your account until it expires after 180 days and gets turned over to PIPS Inc.

pklong wrote:
Also, if you set your percentage to o% eventually the account will drawn down to 36 units according the simulator. To me this is receiving both your loan principle and interest with the exception of the 36 units.


The reason it gets drawn down is because the units are expiring and becoming the property of PIPS Inc.

This has been said many times. If you want to say that all the ROI is constructively received (and therefore taxable) then all of the reinvestments are deductable just like your original deposit. It would be defined this way:

(taxable income) = (total ROI) - (original deposit) - (reinvestments) - (fees)

Guess what? That's the same thing as saying AF is the only thing that is taxed. Bryan says that the reinvestments are not taxable, NCH also says that AF is what is taxable. We also know that there are fees involved to withdraw funds from AF and get them to your bank. Those fees are deductable as well.

The answer is the same for all of the arguments for taxation. Very Happy


father_of_five wrote:
There are three basic views on what is taxable on your PIPS investment (loan).

1. Funds received in your bank account are taxable.

2. Any funds in AF are taxable.

3. All of the ROI is taxable.

Everyone agrees that your initial deposit is deductable and applies to all three views listed above.

My argument is that the answer is the same for all three views in the final analysis. Read on.....

Firstly, if you have funds in your AF you are going to withdraw them. Any fees associated with getting the funds from AF to your bank account are deductable. If PIPS dies before you withdraw them then you wouldn't claim them as income. Therefore, the first two views are virtually the same. The only difference may be in the timing of when you say the funds are constructively received.

Now, concerning the third view, if you claim all the ROI as income, then all of the reinvestments are made with after-tax dollars and are therefore deductable just like your original deposit. Bryan also has said that reinvestments are your money and not taxable. Therefore, if you subtract the original deposit and the reinvestments (and all internal account fees) from the total ROI all that is left is the money that goes into AF.

So you see, it doesn't matter which view you take, the answer is the same for all of them.

Very Happy Very Happy Very Happy


father_of_five wrote:
Let me try this one more time. This time we will just look at one unit.

Let's say you start your investment in PIPS with the purchase of one unit. According to Bryan, the first 52 days of ROI are the repayment of the loan ($25), the final 74 days of ROI is profit and taxable ($35). So you owe tax on $35. The total ROI for all 126 trading days was $60 so you could just as well said that the taxable amount was?

(taxable amount) = (total roi) ? (original deposit)

$35 = $60 - $25

Certainly everyone agrees with this so far. Now let?s reinvest and see what happens.

Since I already have said that I owe tax on $35 do I need to pay the tax now before I reinvest? How do you do that? Should I send some ROI to AF and take it out and put it in an account so that it will be there when tax time comes? You could do that, but is it necessary? No! You could just remember that you owe tax on $35 and make sure it is reported on your next tax return and pay it later. This happens all the time.

So we have $60 of ROI to reinvest. All of it is after-tax money because $25 was repayment of my loan and $35 we are going to claim as taxable income and pay the taxes on it later. Let?s reinvest 100% of our $60. Since it is all after-tax money then the first 52 days are repayment of that loan ($60) and the final 74 days is taxable income ($84).

So now?.

(taxable amount) = (total ROI) ? (initial deposit) ? (reinvestments)

($35+$84) = ($60 +$144) ? ($25) ? ($60)

Do you see how the math works out? All of the money we said we owe taxes on is still there. It didn?t get lost as some have thought. The formula is proven!

That?s not the whole answer just yet. There are some internal account fees which are deductable, so let?s add that to our formula.

(taxable amount) = (total ROI) ? (initial deposit) ? (reinvestments) ? (fees)

Now some will say, ?I haven?t taken any money out so I owe no tax?. Keep reading?

Remember, this is just one unit. Let?s apply our formula to a simulated account and see what happens.

Let?s make an initial deposit of $1000 and set the reinvestment to 80% for a year. According to the simulator, at the end of the year we have:

Initial deposit = $1,000
Reinvestments = $28,207
Total ROI = $35,496
AF = 6,756
Fees = 533

Now let?s apply our formula?

(taxable amount) = (total ROI) ? (initial deposit) ? (reinvestments)

($5,756) = ($35,496) ? ($1,000) ? ($28,207) ? ($533)

The taxable amount is $1000 less than the AF - just as it should be because your original deposit was $1000.

Conclusion
Using the directions supplied by Bryan we can see that the taxable amount can simply be calculated by taking your AF and subtracting your original deposit.


Very Happy

DarkBlade wrote:
rags2riches wrote:
I have read a lot of these tax threads and I still do not see any authoritative answer on the tax issue. I think there are some good posts, but someone else has as good a post that counteracts it.

One matter I don't see much discussion about is JURISDICTION. PIPS is in Malaysia. A business activity is conducted there as we make loans to the company. We get ROI from that activity. We decide whether it stays in the Malaysian jurisdiction or whether it is sent to our USA bank account in the jurisdiction of the USA. It seems to me that what comes to our bank account is fully taxable because it is in the jurisdiction of the USA. But what gives the USA precedence to take taxation control over our money that is in a foreign jurisdiction, ie Malaysia?

If I have posed these scenarios correctly where does the USA's JURISDICTION end? Or what gives them the right to exert taxation control in (over) a foreign jurisdiction?


It would seem that jurisdiction alone would mean that you don't owe taxes on foreign income, but that isn't true.
IRS requires a U.S. Citizen to pay taxes on any and all sources of income no matter what that source is.
Even if you received income from someone in Tin Buk Tu, and they put it in bank account in YOUR NAME, you would be liable.
If IRS could claim that you received income that you didn't report, even if that income was held in a foreign entity that you can't reach but are the beneficiary of, they could say that you 'created' that entity to evade taxes and impose taxes on you that you don't have money to pay! Shocked

Consider for example foreign annuities used to be tax free,
but IRS took that advantage away by requiring foreign countries to report that income and stating in code that it is tax evasion if you don't report any and all foreign investment accounts.

The KEY element needed to determine our liability in owing taxes from PIPS is knowing when we receive ownership or realize it as income.
When we put money into a Trust Debenture, that money is no longer ours.
A trustee receives the money and he becomes responsible to make sure it is used according to a trust agreement.
We are NOT beneficiaries to the trust agreement, PIPS is.
We entered a discretionary loan agreement when we joined PIPS.
We agreed that PIPS 'could' pay us back at rate of 2% per day.
Here is where the confusion lies. Confused

For Members, ROI is NOT Return on Investment, it isn't even realized interest.
For PIPS, ROI is definitely a Return on Investment!

But what are the tax implications of ROI for Members?
A. IS ROI 'perceived' interest?
or
B. IS ROI realized income?

Because ROI, Return On Investment, seems to imply we have an 'investment account', most accountant's will assume it is B.
That's crazy because we don't own any money that is held in the debenture.
PIPS owns every single dollar we put into the account along with with all ROI that we let PIPS reinvest.
When we adjust the percentages, we ADVISE the trustee to let us manage ROI by converting into AF.
Just because it is AF, it is not income, because we still do not own it, yet.
In the old 2% program, we could manually determine how units were bought and withdrawals were made.
In the new program ROI temporarily becomes AF and based on the percentages we set.
The system script automaticly takes care of managing the funds.
In either case, we still do not own Available funds!
It's available for us to decide how it is managed.
It is not until we REQUEST a withdrawal does it become income.

My opinion on this matter is that we never realize income until it leaves PIPS' control
and we receive the funds via bankdraft or goods and services bought with PICPAY.
In this way, it is no different then if someone owed you money.
Until they pay you back and you realize interest income,
Do you really believe that you should pay taxes on money that you haven't and possibly might never see? Rolling Eyes
Money that is NOT even yours! Rolling Eyes
Keep it simple and pay taxes on the realized interest income.
or we can have another entity such as a Limited Liability Company receive the income and have it pay us a salary.

Remember most of the people in the forum are confused because several of them
have asked CPAs, Tax attorneys, and IRS agents to provide a definitive answer to these questions.
They have asked several times only to receive conflicting answers.
But because members show those people ROI which seems to imply that they received 'Return on Investment',
most of respondents will have concluded that they have INVESTMENT INCOME held in an INVESTMENT ACCOUNT,
that is OWNED by the member.

NOTHING COULD BE FURTHER FROM THE TRUTH...


alamilrc wrote:
I. The Voluntary Nature of the Federal Income Tax System

A. Contention: The filing of a tax return is voluntary.

Some assert that they are not required to file federal tax returns because the filing of a tax return is voluntary. Proponents point to the fact that the IRS itself tells taxpayers in the Form 1040 instruction book that the tax system is voluntary. Additionally, the Supreme Court's opinion in Flora v. United States, 362 U.S. 145, 176 (1960), is often quoted for the proposition that "our system of taxation is based upon voluntary assessment and payment, not upon distraint."

The Law: The word "voluntary," as used in Flora and in IRS publications, refers to our system of allowing taxpayers to determine the correct amount of tax and complete the appropriate returns, rather than have the government determine tax for them. The requirement to file an income tax return is not voluntary and is clearly set forth in Internal Revenue Code ?? 6011(a) , 6012(a) , et seq., and 6072(a). See also Treas. Reg. ? 1.6011-1(a).

Any taxpayer who has received more than a statutorily determined amount of gross income is obligated to file a return. Failure to file a tax return could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties. In United States v. Tedder, 787 F.2d 540, 542 (10 th Cir. 1986), the court clearly states, "although Treasury regulations establish voluntary compliance as the general method of income tax collection, Congress gave the Secretary of the Treasury the power to enforce the income tax laws through involuntary collection . . . . The IRS' efforts to obtain compliance with the tax laws are entirely proper."


Constitution-Related Arguments

1.
First Amendment
These arguments focus on using the Freedom of Religion clause of the First Amendment to reduce income tax liability. A common scheme calls for individual taxpayers to obtain minister's credentials and a church or religious order charter by mail for a fee. The individuals set up a new organization that purports to be a church, religious order, or other religious organization. They then take a "vow of poverty" and assign their assets and income to the new organization. However, filtering money through a purported church to fraudulently claim charitable contribution deductions is illegal. The tax law affords benefits to churches and other religious organizations and to those who make gifts or contributions to these organizations. The law requires, however, that such organizations actually be operated for religious purposes and not for the private benefit of individuals.
2.
Fourth and Fifth Amendments
These arguments claim that filing an income tax return violates the Fourth Amendment right to privacy or the Fifth Amendment right against self-incrimination. However, the courts have consistently held that disclosure of routine financial information required on a tax return does not incriminate an individual or violate the right to privacy.
3.
Sixteenth Amendment
These arguments claim that the constitutional amendment establishing the basis for income tax was never properly ratified. However, the courts have held that none of the points presented undermine the fact that the Sixteenth Amendment was indeed ratified in 1913.

IRS Steps Against Noncompliance

The Internal Revenue Service has focused its efforts against noncompliance by adopting a multi-functional compliance approach:

* Helping otherwise innocent taxpayers, who have been misled by others, to rejoin the system; and
* Vigorously pursuing enforcement actions against those who continue to promote schemes or entice others to violate the law.

Regardless of the arguments used, they have two things in common:

* The arguments are consistently rejected by the courts; and
* The participants may face IRS enforcement.

The IRS has one of the highest conviction rates in federal law enforcement. In addition to serving substantial prison sentences imposed by the courts, those convicted must also pay fines, taxes, civil penalties, and, frequently, court costs.


DarkBlade wrote:
krmarketing wrote:
Aileen~
Thanks for your reply! I'm always glad to hear from you.
In my research, the term "taxpayer" is the problem, because they are the ONLY ones "subject to" an internal revenue tax. And in further research, very few of us who work in the 50 states are actually "subject to" that tax. You see, the congress has NEVER authorized the direct taxation of the population, because according to the constitution they cannot. The Supreme Court has stated quite emphatically that the 16th ammendment "added NO NEW POWER of taxation." My question is and has always been, if congress did not have the power to tax you and me directly, and the 16th ammendment DID NOT give them any NEW power to tax us, then WHAT makes me a TAXPAYER? I submit that there is NOTHING that makes me a "taxpayer" except the lack of education. This is me trying to help educate the public, because the more of us who know the truth, the shorter lived will the fraud be.

Ken


I understand what you are saying, but you have to be VERY careful.
Even though some of what you say is true, we are not governed by objective law, but subjective law.
The Constitution is NOT a legal binding contract, it never was...
For example,
Article 1, Section 10 of the Constitution says that no State
shall "make any Thing but gold and silver Coin a Tender in Payment of Debts"
This 'law' hasn't been followed for a LONG time...
Why didn't they have to pass the Patriot Act as an ADMENDMENT to the constitution?
Why didn't they have actually ratify the 16th ADMENDMENT?
Because constitution is not really a contract and has no real power.

http://www.jim.com/treason.htm

It's the USA courts that determine whether you are RIGHT or WRONG.
And they don't even follow the precidents set in previous cases.

My point is if you are a U.S. Citizen, you 'legally' required to pay taxes.
This is evading taxes and you would have to renounce your citizenship to be free of that obligation.
No court in the USA, will give you a victory over the IRS.
Your argument will considered 'frivolous' without regard whether you are right or not!


maddie wrote:
My son and I were at our CPA the other, he's very expensive, one of the top CPA's in our state. Well I wasn't going to get into how to handle the tax computation on PIPS, but what are the other issues.

The following advice cost us a pretty penny, and we want to share it and you do with it what you will.

Recently legislation has dramatically impact reporting of offshore financial activity by US citizens.

If you are subject to filing the TD F 90-22.1 and you don't the fine is up to $100,000 or 50% of the amount of transactions, so they are serious.

The form is called a Report of Foreign Bank and Financial Accounts, and with it you disclose any and all offshore activity subject to the form when the aggegrate value reaches $10,000 or more in the tax year. For 2004 you have until June 30, 2005.

IF YOU DIDN'T DRAW ANY FUNDS YOU MUST STILL REPORT IF YOU MEET THIS CRITERIA, THIS IS DISCLOSURE OF ACCOUNTS ETC, NOT A TAX COMPUTATION FORM.

So I asked a good of the CPA? Well if I am making a loan to an individual or company offshore, is that a "foreign financial account?" Remember, read the title of the form it says "Bank and Financial Accounts." So my question was really, "Is a loan to PIPS a 'financial account?"

This is where it got more expensive?

The answer was 30 pages of code from the legislation that enacted this form. The answer was also "probably."

In these 30 pages there are many more descriptions of what a "foreign financial account" is than those in the instructions for the TD F 90-22.1 and monetary instruments came closer as to them they said the IRS could argue that a loan is usually backed by an agreement and note. However, we got 3 CPA's at this major firm involved before we were done and the range of answers was "probably" to "most likely" even where there is a gray area, and there is with this, if the aggregate value is $10,000 or more it could be worth the IRS to argue it is. But realize that it is not clear cut. They are conservative and said that if it sort of smells like an account, and it does because you have a PIPS account number and printouts that look like accounts, they are likely to argue it is reportable. Further there was a section on "financial interest" in a foreign country, and they said almost surely, but not absolutely, in their experience PIPS does represent something you have a "financial interest" in and we should report it with the TD form. The penalties are severe.

So there you have it. Regardless of your opinion of the need to file or not, and we only offer this info to share it with you from some experts, there are more issues than tax computation of PIPS returns, and that is you can even pay tax and get in trouble because you did not file a TD F 90-22.1 and the penalties are severe for not filing the disclosure. Remember it is not part of your tax return per se.

So get your advice and include this issue in your tax planning. Remember this form may be required even if you left your PIPS account at 100% reinvestment all 2004. It's not about tax.


DarkBlade wrote:
Any IRS agent, Accountant, Lawyer, that suggests you report and pay taxes on income earned by PIPS Incorporated (aka ROI) are wrong. They do not understand that you DO NOT OWN a dime held in ROI or Account Value. In fact, the Account is NOT even yours! Tell them that you cannot withdrawal a DIME held in the account and you forfeited all rights to any money you deposited the very day you agreed to loan PIPS the money.

All you have is LOAN CONTRACT guys. If you show those boys the ROI, and they concluded from that you own ROI, you misled them and they thought you had an Foreign investment account.

I'm saddened to think that a loan becomes a Foreign investment account without ANY evidence to the contrary.

How preposterous does this sound:

So, if I loan someone $1000 dollars and they make $1Mil dollars
from that $1000, I owe taxes on $999,000! Shocked
Even if I never receive ONE DOLLAR of that $1000 dollars back! Shocked

Please ask them the questions, "Why am I paying taxes on income earned by PIPS incorporated?"
"Where does it say anywhere that I invested? But it clearly states here that I put money into a Trust Debenture which is a loan."

Additional NOTE, just because you can withdrawal AF it is NOT yours. PIPS promised to pay you back on the amount equal to AF if you request that amount. Until PIPS actually DOES pay you that amount, that AF is just another meaningless number.


DarkBlade wrote:
alamilrc wrote:
They can tax you on starting at AF - since you have posetion of monies there ( because you then move to PICpay and to the bank.


I admit I was completely wrong in the past when I stated AF is the same as income.

Actually that is completely wrong. You do not posess AF because it only virtual money! A loan agreement requires you to actually receive the money before it becomes a constructive receipt.
you must understand that when you make a withdrawal from AF you are REQUESTING the funds. Unless PIPS meets that loan agreement and pays you those funds, you have NOTHING!
If are going to report AF you might as well report ROI, because they are exactly the same thing.
And if your report ROI, the loan is a sham and your leave yourself in an impossible, nearly worthless position.


cyclepro1 wrote:
I am a long time member but I rarely post and I have been watching and reading this forum almost daily. DarkBlade I have been reading your post since you were a Newbie!!

I met with my CPA (have been using his service for over 10 years) this week and explained to him that I was involved with and overseas debenture. I explained the process of loaning PIPS money, setting daily returns, AF, and withdrawls to picpay. That is all the info I gave him.

I then told him the totals in the accounts I "manage" (I do not say own because that money is no longer mine) and what I have actually withdrawn and received in my US bank account (I do not use the debit card option).

I ask him what amount do I owe taxes on for 2004 and he did not even hesistate and said I owe taxes only on what I have physically recieved and could spend.

I then threw at him all the constructive reciept arguements, ROI, etc.... blankety blank just for good measure. He laughed and said with all of the restrictions on access to the payback of intial loan and interest and especially since I could at no point request the full account balances in total at any time it was not mine and I did not have to pay taxes on it. He also went on to say that I am a cash basis tax payer and that would also require that I only pay on the funds I withdraw and can actually spend.

Hope this helps some. I am very happy to pay taxes on what I owe but not a dime more!

Cyclepro1


DarkBlade wrote:
Pipmania I have to say, thank you.

You and many others have led me on this crusade.
My goal has always been to combat ignorance, and provide a common understanding.

In order for someone who doesn't know which way to vote,
I'm going to provide some of the articles I have written on this subject.
If anyone has questions, ASK, my analysis is currently unchalleged, so CHALLENGE IT!

Quote:

I have read a lot of these tax threads and I still do not see any authoritative answer on the tax issue. I think there are some good posts, but someone else has as good a post that counteracts it. One matter I don't see much discussion about is JURISDICTION. PIPS is in Malaysia. A business activity is conducted there as we make loans to the company. We get ROI from that activity. We decide whether it stays in the Malaysian jurisdiction or whether it is sent to our USA bank account in the jurisdiction of the USA. It seems to me that what comes to our bank account is fully taxable because it is in the jurisdiction of the USA. But what gives the USA precedence to take taxation control over our money that is in a foreign jurisdiction, ie Malaysia? If I have posed these scenarios correctly where does the USA's JURISDICTION end? Or what gives them the right to exert taxation control in (over) a foreign jurisdiction?



It would seem that jurisdiction alone would mean that you don't owe taxes on foreign income, but that isn't true.
IRS requires a U.S. Citizen to pay taxes on any and all sources of income. No matter what that source is.
Even if you received income from someone in Tin Buk Tu, and they put it in bank account in YOUR NAME, you would be liable.
If IRS could claim that you received income that you didn't report, even if that income was held in a foreign entity that you can't reach but are the beneficiary of, they could say that you created that entity to evade taxes and impose taxes on you that you don't have money to pay! Shocked

Consider for example, foreign annuities used to be tax free.
But IRS took that advantage away by requiring foreign countries to report that income and stating in code that it is tax evasion if you don't report any and all foreign investment accounts.

The KEY element needed to determine our liability in owing taxes from PIPS is knowing when we receive ownership or realize it as income.
When we put money into Trust Debenture, that money is no longer ours.
A trustee receives the money and he becomes responsible to make sure it is used according to a trust agreement.
We are NOT beneficiaries to the trust agreement, PIPS is.
We entered a discretionary loan agreement when we joined PIPS.
We agreed that PIPS could pay us back at rate of 2% per day.
Here is where the confusion lies. Confused

For Members, ROI is NOT Return on Investment, it isn't even realized interest.
For PIPS, ROI is definitely a Return on Investment!

But what are the tax implications of ROI for Members?
A. IS ROI perceived interest?
or
B. IS ROI realized income?

Because ROI, Return On Investment, seems to imply we have an investment account, most accountants will assume it is B.
That's crazy because we don't own any money that is held in the debenture.
PIPS owns every single dollar we put into the account along with with all ROI that we let PIPS reinvest.
When we adjust the percentages, we ADVISE the trustee to let us manage ROI by converting into AF.
Just because it is AF, it is not income, because we still do not own it, yet.
In the old 2% program, we could manually determine how units were bought and withdrawals were made.
In the new program ROI temporarily becomes AF and based on the percentages we set.
The system script automaticly takes care of managing the funds.
In either case, we still do not own Available funds!
It's available for us to decide how it is managed.
It is not until we REQUEST and RECEIVE a withdrawal, goods or services that have any value do we receive income.

Based on Common Law, we know that it is A, not B.

We never realize income until it leaves PIPS' control and we receive the funds via bankdraft or goods and services.
In this way, it is no different then if someone owed you money.
Until they pay you back and you realize interest income,
Do you really believe that you should pay taxes on money that you haven't and possibly might never see? Shocked
Money that is NOT even yours! Shocked
Keep it simple and pay taxes on the realized interest income.
or you can have another entity such as a Limited Liability Company receive the income and have it pay a salary.

Remember most of the people in the forum are confused because several of them
have asked CPAs, Tax attorneys, and IRS agents to provide a definitive answer to these questions.
They have asked several times only to receive conflicting answers.
But because members show those people ROI which seems to imply that they received 'Return on Investment' or contructive receipt.
Most of respondents will have concluded that they are receiving INVESTMENT INCOME held in an INVESTMENT ACCOUNT,
that is OWNED by the member.

NOTHING COULD BE FURTHER FROM THE TRUTH...


Disclaimer: Any and all views expressed are opinions and no legal advice was given or could be assumed from the statements made. These statements were provided, based on the author's honest interpetation and understanding of the law. No liability can be assigned to the author for what a reader does or does not do with any of these opinions.


DarkBlade wrote:
Hey guys...

It sounds like some you think that these TAX DEBATES are only important
to US citizens, but that is completely wrong.
If you read my previous articles closely (there are a lot of them)
you will notice that I consider ALL countries in my analysis.
You are a member right? Yes, my analysis applies to you too.
If you don't understand why, you don't understand PIPS!

Scrilla due you understand the the difference between a LOAN and an INVESTMENT?
The difference between being a lender or an investor?
The difference between being an observer and an owner?
By Common Law, once you lend money to someone (THIS INCLUDES PIPS!),
you no longer have anything but a PROMISE!
The accounting you see in a PIPS account is NOT money but only a statement of debt.
Legally, PIPS is also not legal banking institution to which FORM TD F 90-22.1 applies.
.

General Instructions

Who Must File this Report Each Unites States person, who has a
financial interest in or signature authority, or other authority over any
financial accounts, including bank, securities, or other types of
financial accounts in a foreign country, if the aggregate value of
these financial accounts exceeds $10,000 at any time during the
calendar year, must report that relationship each calendar year by
filing TD F 90-22.1 with the Department of the Treasury on or before
June 30, of the succeeding year.

So, in effect by filing incorrectly you are saying never loaned money at all and are investing in PIPS.
PIPS just took that money from you and are holding that money in the 'International Bank of PIPS' (which does not exist yet).
But please tell me, anyone, where is the LEGAL PIECE of PAPER
with your signature on it that says that you OWN a PIPS account?
I've asked this same question over 100 TIMES and
NO ONE has been able to answer this simple question!

If you actually own the money in a PIPS ACCOUNT what form is it in?
Cash, Gold, Stock, Bond, Options, Futures, Property, etc!
A REAL owner can always answer this question.
A PHANTOM owner can only guess the answer to this question.
Which one are you?

As I've repeatedly stated over and over again, you have NO LEGAL requirements to report income EARNED BY PIPS Corporation international.
This includes ALL activity in a PIPS account because this is not real INCOME.
Anything that PIPS pays you via bank cheque, wire or goods and merchandise, I will agree is INCOME.
You earned that income by LENDING that money and now PIPS is PAYING you BACK.
Based on a Common Law Loan, even AF is NOT income...
You DO NOT have a foreign financial account in PIPS...
Outside you might...

NOTE: To Non-US Citizens, understanding how and when you receive income from PIPS should be very important to you.
Until you actually are PAID in Legal cash you don't have any legal liablity.
Why create a liablity that only exists in your imagination?
All of these CPAs, etc. that consider ROI, ROL or whatever income need to be the ones paying, then they would understand.
How would YOU like to paying taxes on someone else's income in addition to your own?
Doesn't sound fair does it?
That's what you are doing when you report and pay taxes on PHANTOM Income.

Best Regards,

DarkBlade


linkity wrote:
There are only 2 words here that need to be understood and the distinction between what those 2 words are.

LOAN and INVESTMENT

Once you finally understand the difference between those 2 words you will know how to file your taxes in the USA. You must also make the person who is doing your taxes understand the difference between those words.

It is not that difficult to understand the difference between those 2 words. Or is it.If your having trouble simply pick up your nearest copy of a dictionary and look it up. The word that you will have the worst time with is investment because that word has many uses but the word loan does not. What you are dealing with is the fact that you are investing your money in a loan. Bottom line is it is still a loan and not an investment and the book has been written regarding what to do with a loan and the interest made from a loan. The first 52 days you are receiving your principle back so it is not interest that you earned on the loan. The remaining days of interest earned are the profits you made on the loan. Your profit is taxable income unless you loan it back. When you loan it back it becomes an expenditure a business expense and can not be counted as a profit received until it is received. Ask your banker if they have paid taxes on the money they have loaned you or if they only pay taxes on interest you pay them. Then ask them if they loan that profit from your interest out if they still pay taxes on it or is it a business expenditure and not considered profit.
Its really not that hard but you need to be talking to the same kind of taxman that does the taxes for financial service businesses so they know what to do. The taxes from PIPS income should be done the same way as any other business that loans money as a business. Loaning PIPS money is our business and how we make a profit from that business even though it is on a personal level between us and PIPS. We dont actually loan anyone else money as a business just PIPS


alamilrc wrote:
alamilrc wrote:
IRS has rules for debentures in PUB505

Look on the first page in your backoffice -- It says you are putting your money into a debenture.


this is the only tax info you need -- no need to specullate.

IRS has been collecting taxes on debentures [( debts) (loans) depends which side you are on what you call it] for years -- I have been doing debentures with my family for 10 yrs and these are the only rules that the IRS have -- you don't need to make up all these complicated stuff that don't really relate.

It's like trying to cut your own throat with a dull razor.


The publication is actualy pub550.

http://www.irs.gov/publications/p550/ch01.html#d0e852


YOu will find the following.

Discount on Debt Instruments
Terms you may need to know (see Glossary):
Market discount
Market discount bond
Original issue discount (OID)
Premium

In general, a debt instrument, such as a bond, note, debenture, or other evidence of indebtedness, that bears no interest or bears interest at a lower than current market rate will usually be issued at less than its face amount. This discount is, in effect, additional interest income. The following are some of the types of discounted debt instruments.

*

U.S. Treasury bonds.
*

Corporate bonds.
*

Municipal bonds.
*

Certificates of deposit.
*

Notes between individuals.
*

Stripped bonds and coupons.
*

Collateralized debt obligations (CDOs).


father_of_five wrote:
I can hear it now, "Oh no, another tax thread." Sorry, but as I continue to give this more thought I find easier ways to explain it so that no one pays more tax than is necessary.

Here is what Bryan posted regarding PIPS and taxes.

Forum Admin wrote:
A clarification on what is taxable and what is not.

When you deposit funds you loan those funds to PIPS, the first 52 trading days are repayment of that loan, this is your money and is not therefore taxable. Any reloans you make and the first 52 days of those loans is still your money and is not taxable.

Any returns made on a loan after the 52nd trading day is interest and is therefore subject to tax.

Bryan


Point #1
Here is the first point that must be understood. Bryan states that there is no difference between your initial loan to PIPS and any reloans that are made with ROL. He says "it is your money and not taxable" in both cases. It has also been demonstrated (by cptsteadman) that even if you set your withdrawal to 100% and buy your new units with outside money it works out the same as buying units with ROL. There is no difference from a tax standpoint. Initial loans and reloans can be treated the same.

Point #2
There are approximately 126 trading days in the life of a unit (loan). Bryan says that the first 52 days of ROL is not taxable because it is the repayment of your loan and that the remaining 74 days of ROL is interest and therefore taxable. This is the same thing as saying that all 126 days of ROL is taxable but you can deduct the loan amount. Therefore.....

(taxable amount) = (total ROL) - (loans)

Point #3
Deductions for $20/month account fees and charitable contributions from your PIPS account is also deductable from a tax standpoint from ROL. Nobody disputes this. Therefore......

(taxable amount) = (total ROL) - (loans) - (fees) - (charity)

Point #4
Each day when ROL is paid it can only go to three places....
1. Available Funds (AF)
2. new loans (reloans)
3. Fees (or charity)

If you deduct all of the loans, fees, and charity from the ROL all that is left is AF. Therefore.....

(taxable amount) = (AF) - (initial loan) for Year 1
(taxable amount) = (AF) for Years 2+

I must add one caveat to this. Since AF is not really in your control it cannot be considered income until it is converted to money in a bank account in your name or on a debit card.


father_of_five wrote:
Grateful wrote:
Can't we also deduct the 2% withdrawal fee, $25 and other WT fees?


Yes, these fees are deductable as well.

Grateful wrote:
What about Convention attendance, airfare to and from, meals etc?


I think these will only be deductable if PIPS is part of a business for which you are an active participant. I suggest you research this one.


deekramer wrote:
Grateful wrote:
Can't we also deduct the 2% withdrawal fee, $25 and other WT fees?

What about Convention attendance, airfare to and from, meals etc?

Grateful

Hi Grateful,

This from IRS website:

Expenses of Producing Income

You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). To be deductible, these expenses must be ordinary and necessary expenses paid or incurred:

1. To produce or collect income, or
2. To manage property held for producing income.

The expenses must be directly related to the income or income-producing property, and the income must be taxable to you.

The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income.

You can read the whole thing here:
http://www.irs.gov/publications/p550/index.html

As far as deducting trips etc, you can deduct all or a portion depending on the business structure that you have set up, but only if you are set as up as a business with the business owning the Pips account.

You can also read more about what a business can and can't deduct on the IRS site if you look around.

Dee


father_of_five wrote:
boo wrote:
Very Happy

So is that basically what ends up in Picpay less charity donations?

(Here's hoping I read it right...... Embarassed )


boo


Not quite. Once your Picpay has been wired to your bank or moved to speedywallet it is then income. The withdrawal delays have demonstrated that we really don't have control over picpay either.


Last edited by Grateful on Thu Apr 28, 2005 2:21 pm; edited 7 times in total
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PostPosted: Sun Jan 30, 2005 9:06 am Post subject: Reply with quote
DarkBlade wrote:
I've stated this at least ten different ways but, obviously members need to show CPAs a more informed legal opinion.

WHEN YOU LOAN MONEY TO PIPS, YOU ALSO AGREED THAT:

I DON'T OWN ANYTHING IN A PIPS ACCOUNT.
A PIPS ACCOUNT IS A STATEMENT OF DEBT OWED TO ME.
I CANNOT CLAIM WHAT IS EARNED BY PIPS INCORPORATED AS MY OWN.
ALL I HAVE IS PROMISE FROM PIPS TO BE PAYED BACK AT LATER DATE.
A PROMISE THAT MEANS NOTHING TO ANYONE BUT PIPS AND I.

You need to carefully read what I'm saying.

In order to properly determine your tax liablity, you must determine what income is yours.
By common law, once you lend money to someone you give it away COMPLETELY.
You do not retain ANY ownership of it whatsoever.
Once that money is in PIPS' hands, it is gone for good.
I'm sorry but, this isn't just a opinion this is how the banking system works.
A bank will not accept a ROL (monopoly money) payment on a loan and you have no obligations to do the same.
When PIPS pays in real cash that is different story entirely, and
you DO have income which follows exactly with the definition of LOAN.

HERE IS THE CHALLENGE TO ANYONE WHO DISAGREES...

Please present any legal documentation that states,
that a MEMBER OF PIPS has anything other than a loan.
Only by proving that a member either has an investment,
(a legal title, trust document, IBC, stock certificate, bank account
signature authority, other contract or abstract signed by the member that
states a PIPS account contains money or property invested on behalf of
the member by PIPS.)
or by proving that a member can withdrawal the SUM TOTAL account value (thus proving they own the account) in a reasonable FIVE business days.

IF YOU CANNOT PROVIDE REASONABLE PROOF OF OWNERSHIP,
PLEASE STOP TELLING MEMBERS TO DO ANYTHING OTHER THAN PAY TAXES ON
REAL VALID INTEREST INCOME RECEIVED IN THE FORM OF LEGAL MONEY.

Any IRS argument or ruling to the contrary must explain the precending statement in order to objectively accepted legally in a tax court.

Two more recent cases ruled on this very matter...

Black & Decker VS. the IRS
and
Contec VS. IRS

There is nothing ILLEGAL in loaning money to foreign company in order to reduce your tax liablity.
Just like this is nothing ILLEGAL in loaning money to PIPS in order to earn money on interest income.
The IRS LOST both cases on grounds that there was real economic substance for the companies involved.
We as members have real econcomic substance for loaning money to PIPS -- Interest Income.
It doesn't matter how PIPS earns the money to pay that interest as long as it is 100% legal and they do pay us back.

CONCRETE EXAMPLE: The PIPS model

Person A = A PIPS Member (YOU) lender
Person B = PIPS (COMPANY) borrower

Say person A lends person B the amount of $425 on a unsecured basis...
Loans are not on an annual basis, but rather a semi-annual basis.
In the agreement, person B promises to either pay person A
each business day at rate of 2% per day in green cash
OR
Create a NEW loan equal to the 2% in addition to what is already owed.
Each business day, as agreed by person A and B,
the same scenerio is repeated over and over again until one of the loans,
in roughly 180 days expires...
Since, new loans were created to offset the loss, in effect extending the loan,
the