Allodial,
While I did not use that analogy, my response to Alex circled to that fact several times. How can Oregon come up with one set of numbers while IRS comes up with another. Oregon laws states that Oregon tax is based on adjusted gross income as determined on 1040 Line 4.In fact it is the very first item entered on Oregon Form 40. It is the taxable income that is the measure to determin the amount of Oregon tax. SO truly Oregon is not taxing the income but measuring the use of something based on income. We'll see how he responds.

There are some interesting discussions on the lawfulmoneytrust.com site. There are a few folks getting "Frivolous Position" letters from IRS and State agency.

The absurd thing is, in order to rectify the Oregon tax, the only thing to do is to repudiate my 1040 as submitted to IRS and has to my judgement been found to be accurate and refund processed. Or I can lie about the amount I put in Line 8 of OR Form 40 to make make the numbers come out as if Oregon was not based on Federal. Even though Alex states that even if there is no Federal Liability a State Liability can exist. I can't see this based on how the form is laid out.